The most popular answer: an industry well in need of digitalization and a laser-focus on the customer – the dysfunctional $3 trillion healthcare sector in the United States. It has been widely reported that Amazon has a “secret” team working on healthcare-related projects and has been developing a strategy for entering pharmacy services. It recently launched a one-hour delivery service for non- prescription drugs in the company’s favorite testing city, Seattle.
Amazon entering healthcare would not be surprising. The problems facing the industry are tailor-made for an Amazon solution: There’s a lack of price transparency in an ever-more expensive landscape; the inability to compare offerings from various types of providers; the programmatic inflexibility of an industry that is fragmented and difficult to navigate; and finally, its cleaving to brick-and-mortar solutions in a digitalized world.
One attractive plus for Amazon: It could enter the industry without ever having to buy a hospital or employ a large stable of providers.
HEALTHCARE MORE LIKE SHOPPING
In fact, a survey that we recently conducted of more than 2,000 US health consumers reveals that Americans – and young adults, in particular – are ready for a change. Millennials – 74 million strong in the US – seek a healthcare experience that looks like other experiences in their lives. They want healthcare that is personalized and digital and extends beyond the traditional world of sick care to areas like fitness and nutrition – in other words, healthcare that feels more like shopping on Amazon.
One attractive plus for Amazon: It could enter the industry and make an impact without ever having to buy a hospital or employ a large stable of providers. Just as it recognized in book publishing and other consumer product lines, Amazon would understand that the critical influence points in the healthcare system are not necessarily within healthcare’s traditional four walls.
The average American sees the primary- care physician about twice a year, but shops for food between once and twice a week and engages in exercise or sports for about two hours a week. Far more time is spent thinking about these wellness activities, considered peripheral to core healthcare services, than on actual healthcare. And with Americans paying more of their medical costs out of their own pockets, they are becoming more aware of the value of prevention versus spending money to get well.
A WELLNESS INFRASTRUCTURE
If Amazon decides to enter into this emerging wellness space, it would do so with an established infrastructure – the 431 Whole Foods stores. Given that Whole Foods is already a purveyor of fresh and organic foods, it wouldn’t be a stretch to re-invent the grocery store chain with an emphasis on nutritional health through the addition of nutritionists and advisors who could help consumers buy and cook healthy. A recent Oliver Wyman survey of shoppers in the United Kingdom found that 60 percent believe it is their supermarket’s responsibility to help them eat healthier, so consumers seem to want this.
Another US-focused Oliver Wyman survey found that almost 80 percent of consumers who had visited a health/wellness clinic within a grocery store, discount retail store, or drug store within the past two years described the experience as the same or better than a traditional doctor’s office. Amazon could follow the lead of Walmart and Target and also incorporate pharmacies in Whole Foods.
You also could imagine a business model in which Amazon acts as a supercharged health insurance broker, using its consumer insights to more accurately estimate each customer’s risk in order to pair them with an appropriately priced insurance product. This is what private exchanges attempt to do now, but in general have failed to make major in- roads, arguably because the information that is collected is relatively narrow, making the depth of personalization somewhat shallow.
INTEREST IN NEW HEALTHCARE PRODUCTS OR SERVICES BY GENERATION
Source: Oliver Wyman and Fortune Knowledge Group analysis
CREATING A MARKETPLACE
Amazon’s tech savvy also could transform telehealth services. The company is reportedly already exploring a telehealth platform and health apps for its Echo smart speaker. If these come to fruition, an Amazon app could help you order up a nurse practitioner or a personal trainer, or it could help you schedule an acupuncture session or refill a prescription. While there are already digital startups in this space, none have the breadth that an Amazon would have.
Ultimately, Amazon could create an online marketplace for healthcare services in the same way retailers sell their goods on the Prime platform, providing consumers Amazon- style reviews, transparent pricing, and comparative shopping. It already has built a similar marketplace for in-person services via its Amazon Home Services.
What Amazon offers the healthcare industry is a fast-track to a 21st century business model – one that consumers will find familiar and comfortable. While most of the industry would probably dread its arrival, Amazon may in fact be just what the doctor should be ordering.
About the Authors
Sam Glick is a San Francisco-based partner in Oliver Wyman’s Health & Life Sciences practice.
John Rudoy is a San Francisco-based principal in Oliver Wyman’s Health & Life Sciences practice.