Is Amazon Becoming a Healthcare Company?

For several years Amazon (NASDAQ: AMZN) has taken conscious steps into healthcare. Consumers can now purchase products on Amazon.com using their Flexible Spending Account (FSA), go to Amazon pharmacy to order online and deliver prescriptions, use Alexa to get medication reminders, and optimize packaging for multiple prescriptions with PillPack.

End of May, insider published a story in which Amazon was considering opening retail pharmacies in Whole Foods grocery stores. In minutes, investor reaction erased more than $ 6 billion from the market cap of Amazon’s pharmacy competitors; CVS, Ritual help, and Walgreens The stock was down 3% to 4%. Many analysts believe the decline is an overreaction by the market, but it is so severe that Amazon is targeting entire industries.

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What’s Next on Amazon’s Health Roadmap?

The pharmacy isn’t Amazon’s only healthcare ambition. Amazon has a long history of building a skill to serve its own business and then offering the same skill to customers. Amazon has turned to this playbook with its recently announced Amazon Care services.

Amazon provides on-site and virtual health care to its 1.3 million employees. Amazon is using its technology and operational know-how to streamline the tangle of health processes while working with health care providers such as Crossover Health for medical services. Amazon recently announced that it is expanding Amazon Care to its first employer customer. While this initial contract seems like just a step in the water, employers could be drawn to the service as they benefit from the size of Amazon.

As a logical continuation of the virtual care services, Amazon could use its Prime and Marketplace offers to also offer better services, prices and transparency in the physical part of the health market. For example, more than 40 million MRI scans are performed each year, with prices ranging from $ 600 to $ 4,000 in some regions. One could imagine healthcare providers offering their MRI services on the Amazon Marketplace with transparent prices, user reviews, convenient scheduling and one-click payment services. Amazon could also bundle free video advice or an expert second opinion with Prime membership. That type of service would be convenient, transparent, and satisfying – not the words normally associated with healthcare, but all the attributes we can expect from an Amazon foray into consumer health.

Amazon’s AI ambitions can help transform healthcare.

On Amazon’s business-to-business side, the latest product announcements from Amazon Web Services (AWS) also position Amazon for success in helping healthcare customers with their artificial intelligence (AI) projects. For example, Use of AI models for surgery has the potential to reduce the costs and complications of certain surgeries by 40 to 50%. AWS services can dramatically reduce the time and cost of AI data preparation and model development, which make up 80% of the typical AI project budget in healthcare.

The healthcare industry has been slow to adopt cloud services because of privacy, security, and data rights concerns. With the addition of high quality AI services, Amazon is well positioned to become the cloud technology partner of choice for healthcare companies by helping to transform their clinical and business processes cost-effectively.

You may find many other Amazon health services in your cart.

Amazon’s visionary statement from a 2006 company overview still sounds true; It aims to be “the most customer-centric company in the world; create a place where people can find and discover anything they want to buy online”. More and more people and businesses are finding more health services to buy online from Amazon. Newly announced Amazon CEO Andy Jassy, ​​who will take over in July, has led AWS from the start and is well positioned to take Amazon deeper into the healthcare business. That might not make Amazon a healthcare company, but it is becoming a force to be reckoned with in healthcare.

For investors wondering how Amazon will continue to grow its already gigantic $ 1.6 trillion market cap, the $ 4 trillion healthcare industry has an answer. Even Amazon can’t turn a deeply rooted industry upside down overnight, but it can in the long term Buy-and-hold investors, Amazon’s move into healthcare might just be the recipe for your portfolio.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

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