Amazon’s plan to buy One Medical raises concerns

The $3.9 billion acquisition would give the retailer a foothold in in-office and virtual care delivery. But competition and privacy issues abound.

Amazon’s recently announced plan to acquire San Francisco-based One Medical for $3.9 billion is drawing opposition from some federal lawmakers as well as privacy groups, who have raised concerns about how which Amazon may access and use patient medical information.

The purchase, if approved by shareholders and federal regulators, would build on other moves by the Seattle-based online retail giant to expand its presence in the healthcare market. .

The deal would give Amazon access to years of longitudinal data from One Medical, which offers membership-based primary care services that emphasize the use of digital services. It operates 188 offices and has 767,000 members.

The agreement

Under the terms of the acquisition agreement, Amazon would acquire One Medical for $18 per share. The aggregate acquisition price of $3.9 billion also includes the assumption of One Medical’s net debt. “Completion of the transaction is subject to customary closing conditions, including One Medical shareholder approval and regulatory approval,” it said recently. joint announcement Noted. “Once completed, Amir Dan Rubin will remain CEO of One Medical.”

The deal would rank as Amazon’s third-largest acquisition, behind the June 2017 purchase of Whole Foods Market for $13.7 billion and the May 2021 purchase of Metro-Goldwyn-Mayer for $8.5 billion. billions of dollars.

For Amazon, One Medical represents a stepping stone to a new consumer-centric approach to healthcare. One Medical uses a subscription model for care delivered online or in-office. The concierge-style approach promises same-day or next-day appointments, as well as longer meetings with clinicians and convenient services, such as the ability to receive walk-in lab services at its offices.

John Moore, CEO, Chillmark Research

“This acquisition will have a greater impact on the business-to-business market than the business-to-business market.”

One Medical lost nearly $91 million in its most recent quarter, which ended March 31, although revenue hit $254 million, more than double the level a year earlier.

The health care provider accepts payments from various insurers; it reports that about 50% of its revenue comes from services provided to Medicare beneficiaries, according to its latest quarterly report. Last year, One Medical spent $2.1 billion to acquire Iora Health, which provides care for Medicare beneficiaries.

Other health initiatives

The ongoing acquisition of One Medical is the latest in a series of steps Amazon is taking in healthcare.

In June 2018, Amazon acquired Pillpack for $839 million; this company specializes in online ordering of pharmaceuticals and medical supplies.

Earlier this year, Amazon announced plans to expand its Amazon Care line of telehealth services, which offered home visits by medical professionals in eight cities starting in February, to 20 more cities this year. The hybrid programwhich launched with a pilot for Amazon employees in September 2019, gives Amazon the ability to tie care services to its Amazon Pharmacy and Pillpack mail-order businesses.

What is Amazon’s long-term health strategy?

The One Medical deal sparked a flurry of speculation about how Amazon could further penetrate the healthcare market. The move appears to mirror Amazon’s other forays into the space, working on a common foundation of improving the consumer experience and facilitating transactions across a variety of healthcare locations.

One Medical would give Amazon an entry point to interact with healthcare delivery systems, says John Moore of Chilmark Research.

“One Medical has built strong relationships with local healthcare systems in the markets it serves, and has approximately 8,000 employer customers,” says Moore. “So I am of the opposite opinion: this acquisition will have a greater impact on the business-to-business market than on the business-to-business market.”

Senator Bernie Sanders, I-VT

“At a time of increasing ownership concentration, the Department of Justice must deny Amazon’s acquisition of One Medical.”

Moore does not view the Amazon acquisition as a competitive threat to Walmart, CVS and Walgreens, which pursue different strategies to provide consumer care in retail establishments. More recently, CVS and Walgreens announcement initiatives to facilitate patient participation in clinical trials.

Moore expects Amazon to continue its expansion into health services that target employers, complementing the range of services it can offer large purchasers of care. “Its next acquisition will in all likelihood be a virtual provider of behavioral health services,” he predicts. “Ultimately, much like the platform Amazon built for online shopping, Amazon Health Services could also become a platform for employers.”

Amazon is well positioned to meet consumer preferences in new markets, which are growing in importance in a post-pandemic world, says Sanjula Jain, senior vice president of market strategy and director of research at Trilliant Health, a company market research and analysis. Shifts toward telehealth underscore the potential for direct-to-consumer care, she noted in a recent blog.

Concerns about the deal

But some federal lawmakers as well as consumer advocacy groups have expressed serious concerns about Amazon’s plans to acquire One Medical.

Last week, Sen. Bernie Sanders, I-Vt., called on regulators to reject the proposed deal.

The American Economic Freedoms Project

“Amazon has no business being a major player in healthcare.”

“The function of a rational health care system is to provide quality care to all in a cost-effective manner, not to further enrich billionaires like Jeff Bezos,” the senator said. wrote on social media, referring to the wealthy founder and executive chairman of Amazon. “At a time of increasing ownership concentration, the Department of Justice must deny Amazon’s acquisition of One Medical.”

The American Economic Liberties Project, a consumer advocacy group, also released a statement asking for the rejection of the agreement.

“Allowing Amazon to control the health data of over 700,000 more people is terrifying,” says Krista Brown, senior policy analyst at the American Economic Liberties Project. “The acquisition of One Medical will bolster Amazon’s growing presence in the healthcare industry, undermining competition.”

The consumer advocacy group also says the deal “will also pose serious risks to patients whose sensitive data will be captured by a company whose own main information security office was once describe access to customer data as “free for all”. Amazon has no business being a major healthcare player, and regulators should block this $4 billion deal to ensure it doesn’t become one.

Sen. Amy Klobuchar, D-Minn., Chair of the Senate Judiciary Antitrust Subcommittee, asked the Federal Trade Commission to investigate the proposed acquisition.

“This proposed transaction raises questions about potential anti-competitive effects related to the pharmaceutical services business that Amazon already owns and the preference of vendors who offer other services through Amazon,” Klobuchar wrote in his letter to the FTC.

Ramon J. Espinoza