Table of Contents
The purpose of this executive summary is to determine whether or not Amazon should go into the healthcare field. In January of 2018, Amazon declared that they were planning to make moves in healthcare by partnering with JP Morgan and Berkshire Hathaway. Amazon has recently discovered the challenges of getting into the healthcare business, which requires proper authorizing as well as appropriate delivery methods such as temperature controlled storage for certain drugs. But that hasn’t altered its desire thinking about its currently working on four different methods to take over more of the healthcare industry. Amazon (AMZN) is known for making waves when it enters a new industry. Although, it has developed a reputation of pounding the competition and taking over from defeated incumbents. In this report, we examine Amazon’s emerging healthcare methodology and where it may lead the organization later on. We see a tremendous measure of the potential for Amazon to build up itself as a key player in healthcare.
The purpose of this report is to:
- Determine and discuss the advantages, philosophy, and approach and current strategies of Amazon
- Where Amazon Should Enter Healthcare.
- Amazon, the Pharmacy.
- Claims Administration and Health Benefits Management.
- Amazon and Medicare/Medicaid management.
- Amazon for Providers.
- Amazon in the Lab.
FINDINGS & CONCLUSIONS
Amazon’s first endeavors have been focused on disrupting pharmacies. The online pharmacy segment makes great sense as an initial focus of Amazon’s healthcare ambitions. The companies currently dominant in the pharmacy space have already observed their front-of-store retail sales drop in favor of online shopping. Walgreens (WBA), CVS (CVS), and Rite Aid (RAD) have made endeavors to move online in their own right, planning to engage their customers in their new natural shopping environment. While that is an indication of their willingness to adapt to changing market dynamics, the big pharmacy chains have yet to budge fundamentally on their pricing. The study shows recent moves that Amazon sees the 18% of U.S. GDP devoted to health care as fertile ground for expansion. Think about its choice to seek after the market for pharmaceutical distribution or the ongoing announcement that it will be collaborating with Berkshire Hathaway and JPMorgan Chase to create joint solutions for reducing the health care spending of more than 1 million employees and their families.
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This latest move has engendered robust debate. Proponents liberally term it “disruptive,” seeing a natural diversification opportunity for the company that has aspired to be “Earth’s most customer-centric company.” However, skeptics highlight Amazon’s lack of expertise in health care, a sector that some deem curiously resistant to the competitive forces that characterize the retail and web services markets in which Amazon has thrived. Given this situation, it is worth thinking about Amazon’s efforts in a conditional manner, If Amazon succeeds in changing health care, how might it do so? While Amazon’s joint effort with Berkshire Hathaway and JPMorgan Chase would clearly use the buying intensity of three gigantic employers and could prompt to innovative insurance models, it seems that the bigger opportunity would be in improving how care is delivered to patients. At its root, health care is a service that needs to be delivered to a customer.
For existing health care companies, the operative words in that mandate have been “health care”; for Amazon, the operative words likely are “service that needs to be delivered to a customer.” To the extent that Amazon’s point of view is correct, it is worth considering the types of experience the company could apply to health care. I concluded that Amazon’s potential foray into healthcare has already caused players in the space to scramble and reevaluate their core competencies. While Amazon has barely scratched healthcare’s surface, it has the potential to upend the space with its e-commerce expertise. Without the need to make money in healthcare, the high margin and convoluted parts of the healthcare business are ripe for disruption. Amazon’s methodology allows different organizations to re-appropriate parts of their organizations that are muddled and outside their main focus.
RECOMMENDATIONS
As the debate over Amazon’s potential to change health care continues including discussions related to the implications of Amazon’s overall development for market competition and consumer privacy it is necessary to acknowledge that the company’s path forward in this sector is marked by some uncertainties. To the extent that success in transforming health care requires a more institutional knowledge of health, medicine, and insurance, Amazon may face an uphill battle. If, however, the way to success lies in greater attention to operational execution, information analysis, and customer service, Amazon may find a significant opportunity.
Recommendations for assuring Amazon’s potential success within the healthcare field are as follows:
- Healthcare acquiring choices are driven by a requirement for dependability, consistency, and quality: Timeliness of conveyance and a sufficient supply conveyed progressively is fundamental all together for a supplier to keep up patient fulfillment and operational effectiveness.
- Healthcare suppliers and their providers have officially built up an intricate buying system: The healthcare supply network has adjusted to the substances of exceptional administrative investigation through the making of a system of purchasers, dealers and agents under acquiring game plans that set compensate exchange offs and balance the requirement for quality, convenience, and cost-effectiveness. There has been a theory, in any case, regardless of whether the present doctor’s facility obtaining structure really sets aside extra cash or if it’s truly making small-scale medicinal services restraining infrastructures that permit go-between to pick up benefits by catching a piece of the overall industry to the most elevated bidder.
- Purchasing systems bring other intangible affiliation benefits: Through the current obtaining biological system, doctor’s facilities have built up long-standing associations with their wholesalers and GPOs, any of which may be run by or relationally integrated with health systems and provider networks, which are important partners of a hospital.
