Amazon Unlikely to Pose Immediate Threat to At-Home Care Companies

Amazon (Nasdaq: AMZN) may be charting its own course to in-home care, but the Seattle-based retail and technology giant is unlikely to threaten traditional in-home care providers anytime soon.

Nonetheless, providers would be remiss to ignore Amazon’s actions, according to long-time home care leader Mark Heaney.

“Amazon makes no small plans, [but] I wouldn’t lose sleep overnight,” Heaney, the CEO of Magnet Health, told Home Health Care News. “However, I would accept that the fundamentals and consumer expectations that drive our current health care delivery system are — and will for the foreseeable future — change slowly.”

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Amazon’s small but important entrance into the in-home care space comes in the form of its new virtual care clinic, launched toward the end of September.

The goal of the clinic — dubbed Amazon Care — is to quickly connect certain eligible employees and their dependents to health care services delivered in the home setting without the formality of a standing appointment.

Examples of services include live video chats with physicians or nurse practitioners, in addition to in-home follow up visits and prescription delivery. Oasis Medical, a separate legal subsidiary from Amazon, is reportedly the contracted provider Amazon is working with through the virtual care clinic.

While Amazon Care is only open to Seattle-area employees and their dependents at the moment, it may signal greater health care moves to come.

In fact, Amazon has a robust history of expanding in-house initiatives that prove popular, Credit Suisse analyst Jailendra Singh wrote in a note. 

“If the Amazon Care program is a success, the company is likely to have all willingness to expand its offering to the broader U.S. market,” the note stated. “Historically, Amazon has experimented with new products on its employees first, before broadening them out to the general population.”

If Amazon does decide to expand its in-home care clinic to the wider market, it may have a distinct advantage over traditional providers if it can keep costs down.

Overall, the cost of non-medical home care rose by more than 7% in 2019 compared to 2018, according to the latest Genworth Cost of Care Survey. The cost of medical home health services climbed by about 4.5% during that period.

“As health care costs increase and outcomes become the critical metric, larger and more sophisticated providers, some of whom are not even in the market yet, will survive and thrive,” Heaney said.

Broadly, Amazon Care is in line with steps taken by other large U.S. retailers trying to build integrated health offerings organized around the home and community.

Walmart, for example, launched its own health care clinic in September — a 10,000-square-foot health center in Dallas, Georgia. Amedisys Inc. (Nasdaq: AMED) is among the providers known to have already established a presence there.

“Moving healthcare to the community is a ‘win’ for every constituent in the system — patients, families, health insurers, the government — every constituent in health care except hospitals,” ClearCare CEO and founder Geoff Nudd told HHCN. “[And] health care is one of the only industries measured in trillions of dollars, so it’s no surprise to see Fortune 10 players very focused on the transformation as health care moves to the home.”

ClearCare, a personal care technology platform, recently partnered with Amedisys on plans to build a nationwide network of home care agencies. Today, the Amedisys network exceeds 700 personal care agencies nationally.

TPG Capital-based WellSky announced plans to acquire ClearCare earlier this month.

Moving forward, Amazon may one day look to form its own relationships with home care providers and partners.

“We think the critical question for home care agencies to ask is: ‘How am I connected and coordinated with these other providers to deliver value?’” Nudd said. “When you look at partnerships like Amedisys announced with ClearCare, these kinds of coordinated models are what we think wins.”

Telehealth vendors could be a natural Amazon ally, according to SVB Leerink analyst Daniel Grosslight.

“AMZN is more likely to partner with telehealth vendors such as [Teladoc] rather than manage a virtual provider network itself,” Grosslight wrote in a note. “This would be a major new source of revenue for telehealth vendors, in our view.”

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