News & Analysis

Healthcare Strategy: 4 Lessons from Amazon Care

Portrait of Dawn Carter

Dawn Carter

A mobile phone displays the Amazon logo on its home screen

You’ve heard the old adage to “fail fast, fail often, fail forward”? That seems to be the business philosophy at Amazon, which recently announced it would shutter the upstart Amazon Health division that had caused widespread consternation in traditional healthcare circles.

(As healthcare strategy consultants, we shared some of that consternation, as you can see from this 2021 blog post.)

Now that Amazon is pulling back its big bet on remote/hybrid healthcare delivery, should hospitals and health systems breathe a sigh of relief and go on with business as usual?

Obviously we believe the answer is “no.” Healthcare transformation continues at a breakneck pace, and corporations like Amazon are playing a big part. When a $500 billion behemoth announces a major pivot – the shutdown of Amazon Care happened almost simultaneously with the $3.9B acquisition of One Medical – legacy organizations should be looking for lessons of their own.

Here are four such lessons in healthcare strategy.

Embrace experimentation

From Wal Mart to Apple, big corporations are experimenting like crazy in healthcare. Even big government – typically not known as a champion of innovation – is pushing hard for experiments in healthcare transformation. (We’ve recently highlighted several of those experiments, from health equity to Health-Related Social Needs.)

Meanwhile, legacy providers tend to take a wait-and-see approach with healthcare strategy. Health equity and social drivers of health? Hospitals have been talking about those things for years, yet most will be caught totally flat-footed when new CMS requirements kick in next year.

As an industry, we tend to study things to death rather than taking proactive, purposeful steps toward trying something new. It would be great to see a little disruption starting from within.

Where to start? Look for an innovation that might have major benefits to operations and/or health outcomes, then set up small experiment with strict budgets and timelines. It probably won’t work out exactly as hoped, which is why the next lesson is so important.

Practice the pivot

The end of Amazon Care was actually the second major pivot in healthcare strategy for Bezos and company. In the mid-teens, Amazon formed a healthcare joint venture with JP Morgan and Berkshire Hathaway, then pulled the plug after four years.

“It looks like Amazon is following a rigorous innovation process where they test a hypothesis, experiment, learn and pivot,” Aaron Neinstein, vice president of digital health at UCSF Health, told Becker’s Hospital Review.

Yes, Amazon is a $500 billion company, but pivoting is about mindset, not just money. Healthcare executives are often stymied by governing boards that can’t tolerate any perceived “failure.” (And yes, sometimes the reverse is true.) From the C suite to the boardroom, we need leaders who understand that progress is a process.

Failure is guaranteed with any experiment, so the key is to learn, adapt, and try again. Remember, keep the budget small and pick a target where the potential payoff would outweigh the cost of getting there – even with multiple pivots.

That’s not a gamble. It’s growth.

Check your channels

Amazon is not getting out of primary care, but rather shifting its healthcare strategy to pair traditional delivery channels with more innovative channels.

Amazon Care represented a big bet that telehealth – plus a small in-home component – would be attractive to enterprise customers looking to shore up their benefits package. That clearly didn’t work out, so Amazon changed up its channel strategy by purchasing One Medical, with nearly 200 primary care sites plus a strong technology platform for virtual visits.

In other words, Amazon still believes in the value of primary care, but it’s adjusting the balance between traditional and innovative delivery. Hospitals and health systems should also be looking to balance their distribution channels, recognizing that the “tipping point” will be different for every community.

Perfect your partnerships

Amazon Care was being built from scratch, and that simply wasn't sustainable, despite seemingly bottomless pockets. The big pivot for Amazon was to admit its limitations and look for a partner (or acquisition target, in this case) that offered both scale and expertise.

For legacy healthcare, that’s a lesson worth learning. Looking to address social drivers of health? Partner with the local community college, YMCA, or other social service groups that have aligned missions and incentives. Shifting to value-based payment? Look for technology companies and device makers willing to share the risk and reward.

More and more, healthcare means caring for the whole person, and that will never be accomplished within the walls of any hospital. Smarter partnerships are the name of the game.