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Amazon could roll expanded healthcare plans, services into Prime: experts

Amazon.com Inc. is likely planning a suite of customized health plans and services aimed at businesses and consumers as it eyes growth in the multi-trillion-dollar U.S. healthcare industry, experts say.

In as little as five years, the Seattle-based e-commerce company could interlink its system of capabilities and assets to launch various healthcare products, insurance plans, virtual care services and digital health monitoring to a broader population. The rollout would be part of a larger plan by Amazon to deliver convenient, cost-effective access to care and medications across the U.S., likely tied to Amazon's Prime membership program, according to experts.

"In the next four or five years I would expect to see some sort of Amazon health platform," Morningstar analyst R.J. Hottovy said in an interview. "They will probably have some sort of wearable device they give you for free to track biometrics, and for a monthly subscription fee, you would get all your prescriptions sent to you for free."

Amazon confirmed some aspects of its current healthcare offerings but declined to comment on its broader ambitions.

The company expanded its presence in the healthcare sector during the last year. It has launched a joint venture that provides health services to its employees — including virtual care — as well as two other companies, and purchased health companies such as PillPack, an online pharmacy that ships medications directly to patients.

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Amazon is one of several tech firms vying for a share of the healthcare market where national spending is expected to reach $6.0 trillion by 2027, up from $3.6 trillion in 2018, according to the Centers for Medicare and Medicaid Services.

Healthcare plan push

Amazon made a big push into the health market in 2018 when the company announced that it teamed up with Berkshire Hathaway Inc. and JPMorgan Chase & Co.. to create a joint venture that provides simplified, transparent and less expensive healthcare to the three companies' employees and their families.

Observers saw the partnership between the three companies as a move that could shake up various healthcare industries and threaten incumbent players.

The joint venture, dubbed Haven, has shared few details of its initiatives since the 2018 announcement.

An Amazon spokesperson confirmed in an email that the company is offering healthcare plans to Amazon employees in Connecticut, North Carolina, Utah and Wisconsin. Those plans, the spokesperson said, were created in consultation with insurance providers and Haven.

The spokesperson declined to comment on other aspects of the plans, including copay prices and deductibles.

Analysts say Amazon is now testing and refining various healthcare plans, products, incentives and pharmaceutical delivery methods on Haven's combined workforce of 1.2 million U.S. workers. A possible next step would be to offer health services to Amazon's estimated 5 million seller businesses and eventually to its more than 100 million Prime members, according to experts.

Primed for growth

Prime members already have access to exclusive deals, video streaming and free grocery delivery . Amazon is likely looking at ways to address the healthcare needs of Prime members who are spending on care with other companies, said Stephen Beck, founder and managing partner of management consultancy cg42, in an interview.

For example, Amazon may decide to reward Prime members with incentives and points for healthy behavior and make online recommendations for healthy foods from its Whole Foods stores based on an individual's existing health goals, said Arielle Trzcinski, senior analyst with Forrester Research.

"Maybe it's eating a low-salt diet or a lower-calorie diet," Trzcinski said in an interview. "So [Amazon would] make recommendations to help you make that shopping list to help you achieve those goals."

Among those recommendations could be medication delivery services from PillPack, which Amazon bought in 2018 for $753 million. The deal gave Amazon a company that specializes in sorting medication by dosage and delivering pills in dispensers via mail.

"Many patients may or may not organize [pills] and they may or may not get the time of day right," Katherine McCarthy, vice president of growth and innovation for ClearData, a firm that provides cloud computing and infrastructure services for the healthcare industry, said in an interview. "Those things all actually really matter in terms of how well your body is going to make use of the drug."

Analysts say Amazon can capitalize on PillPack's business model by easily incorporating medication deliveries into its vast fulfillment network, which can provide free same-day delivery to 77.6 million Americans who live in ZIP codes where that service is available. Amazon could quickly ship time-sensitive drugs from PillPack like insulin medication to patients, along with other items such as groceries.

"They can deliver antibiotics to your door as well as maybe chicken noodle soup from Whole Foods," said Trzcinski of Forrester.

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Online pharmacy PillPack specializes in sorting medication by dosage and delivering pills and other medications in dispensers directly to patients.

Source: PillPack

The company is also testing its Amazon Care virtual clinic services to its employees in Seattle, intending to scale the program to other companies and individuals, Trzcinski said. Amazon Care services include in-app consultations with a healthcare professional, delivery for medications, and in-person services for testing or treatment. An Amazon spokesperson said PillPack remains a distinct entity but did not comment on whether the business uses Amazon's fulfillment network.

In October, Amazon added to those offerings when it acquired digital healthcare startup Health Navigator for an undisclosed price. Health Navigator's platform provides digital health solutions for clients such as telemedicine firms and insurers and will be offered as part of Amazon Care.

Amazon could weave its growing virtual care services into Prime memberships, analysts say.

"It could be an add-on for Prime members and you pay X amount of dollars per month to gain access to virtual care or monitoring or analytics that help you make better choices for your health," Trzcinski said.

Alexa, handle my health

Over time, Amazon could also leverage its line of voice-activated Alexa devices to regularly manage the health of patients across the country and provide suggested actions down to which pills to take and when.

"Alexa could pair with PillPack and say, 'It's time to take your thyroid medicine,' and by the way let's deliver your Whole Foods groceries on a meal plan that your doctor prescribes," said McCarthy of ClearData. "When you start marrying those things, they are going to able to do things like predict when I'm going to need more Vitamin C."

Amazon is already moving in that direction. In April, it announced that a version of its Alexa digital assistant technology is compliant with the Health Insurance Portability and Accountability Act of 1996, meaning it is available for applications that are subject to the data privacy and security requirements of HIPAA.

Companies including Cigna Corp. and Livongo Health Inc. have developed HIPAA-compliant Alexa features that allow consumers to book medical appointments, query their last blood sugar reading and check on the status of a home delivery prescription.

Trzcinski, of Forrester, noted that fully integrating Alexa into healthcare services will likely be incumbent upon Amazon purchasing a consumer data aggregator that would give the company the ability to access all types of health data,including medical histories, "regardless of what wearable or device you are using."

Competitive landscape

Amazon is one of several companies striving for growth in the healthcare sector.

Apple Inc. announced in 2018 that it added a feature to its health records app that allows users to see their available medical data records on iPhones. Alphabet Inc.'s Google LLC unit has numerous healthcare initiatives, including building algorithms to detect various clinical conditions such as breast cancer. Google also announced in November plans to purchase technology health solutions and wearables firm Fitbit Inc. for $2.1 billion. Microsoft Corp. and Walgreens Boots Alliance Inc. joined forces in early 2019 to build solutions to improve health outcomes and lower healthcare costs.

Meanwhile, traditional players are forming alliances to deal with rising healthcare costs.

CVS Health Corp. and insurer Aetna Inc. merged in a nearly $70 billion deal in 2018. The pharmacy chain offered some healthcare services before the deal, though the combined companies are pursuing further integration of pharmacies, benefits management and care.

In early 2019, CVS and Aetna also announced a $100 million health initiative to offer free health screenings and nonprofit assistance in communities across the U.S.

But Amazon, a technology company with 310 million active consumers and vast capabilities in data analytics and fulfillment, may have an edge with implementing a potential national health plan rollout, said McCarthy of ClearData.

Amazon is a "giant threat in this space in a way that the other big tech companies just aren't and can't be," she said.