Column | Healthcare Business Trends

The fall of Haven, but the persistence of Amazon

Column | Healthcare Business Trends

The fall of Haven, but the persistence of Amazon


In early January, it was announced that Haven, the ambitious healthcare company formed three years ago as a partnership between three titanic companies — Amazon, Berkshire Hathaway and JPMorgan Chase — was shutting down, with its operations ceasing by the end of February.a

Haven was a not-for-profit joint venture that aimed to tackle the high and escalating costs for employee healthcare for the partner companies and their hundreds of thousands of employees — and potentially for all Americans. 

Industry observers have posited several reasons for Haven’s failure, including:

  • Its vision-rich, strategy-poor nature
  • A lack of coordination among the three companies
  • The extreme geographic dispersion of the partner firms’ employee populations (which prevented Haven from having sufficient critical mass in markets to exercise sufficient leverage) 
  • The unique challenges and complexity of healthcare

Healthcare's unique challenges

The last reason warrants closer attention. Healthcare is indeed different, and its streets are littered with employer-led initiatives and technology innovations that failed to gain traction. Think of IBM’s offering its employees a healthcare app with a symptom checker, an overview of treatment options, a map showing facilities available with the employee’s insurance, out- 
of-pocket cost information and a free 24-hour video consultation with a physician. Unfortunately, the app wasn’t used.2 Think also of Microsoft HealthVault and Google Health, launched to much fanfare in 2007 and 2008, respectively. The latter was shuttered in 2012 and the former in 2019. 

Don't count Amazon out

So is Amazon done with healthcare? Hardly. The company famously has an extreme tolerance for failure and exemplifies a risk-taking learning organization. And the U.S. — which has been described as the largest and least efficient healthcare market in the world, with more than half a trillion dollars spent on prescription drugs annually — is just too attractive for Amazon to walk away from. 

In addition to its enormous market capitalization of over $1.6 trillion, Amazon continues to have many irons in the fire of healthcare, ranging from PillPack, the online pharmacy service Amazon acquired in 2018 (now branded as an Amazon company), to HIPAA-compliant Alexa, to partnerships with a wide range of organizations, including Atrium Health, Beth Israel Deaconess Medical Center, Boston Children’s Hospital, Cerner, Cigna, Express Scripts, the Pittsburgh Health Data Alliance, Providence health system and the United Kingdom’s National Health Service.c

Although it’s true that most of the previously mentioned partnerships are trial-balloon experiments, and the aforementioned experiences of IBM, Google and Microsoft showed how resistant the public can be to new technologies, if we’ve learned anything from society’s collective response to the coronavirus pandemic, it’s that necessity is indeed the mother of invention. And it is an inexorable force for adoption of new technologies. Need proof? Look at the rapid adoption of telehealth by many healthcare providers (and acceptance by consumers) soon after stay-at-home orders were issued throughout most of the United States from March through May 2020.

Albert Einstein famously said, “In the midst of every crisis, lies great opportunity.” Amazon evidently sees opportunity in the coronavirus pandemic. On Jan. 20, the day of President Joe Biden’s inauguration, Dave Clark, chief executive of the company’s worldwide consumer business, sent a letter to Biden, offering to help with the United States’ COVID-19 vaccination efforts. Amazon has an agreement with a licensed occupational healthcare provider to administer vaccines on-site at the company’s facilities, and Clark expressed a willingness to leverage Amazon’s “operations, information technology, and communications capabilities and expertise to assist your administration’s vaccination efforts.”d

Eye on the future

Amazon has also been preparing for the more distant future. In August 2020, the company received approval from the Federal Aviation Administration to operate its fleet of Prime Air delivery drones.d Also, in mid-January, Amazon announced the purchase of 11 Boeing 767-300 jets for Amazon Air, its air-cargo division.f Both of these moves support Amazon’s 30-minute delivery dream, which could come in handy during the next pandemic, severe drug shortage or natural disaster. 

Because of Amazon’s numerous healthcare-related initiatives, many in the industry perceive the company as a legitimate, committed player. In a recent national survey of 272 pharmacy leaders, 56% felt it is somewhat or very likely in the next five years that at least 75% of health systems will have external partnerships with online distributors such as Amazon that provide alternatives to the traditional wholesale distribution of drugs.g

Despite Haven’s well-publicized demise, we have not seen the last of Amazon’s bold ventures to improve healthcare. The company’s considerable resources, appetite for risk and learning orientation — combined with the healthcare industry’s mammoth size and enormous, changing needs — make this a certainty. 

Footnotes

a Swoboda, C., “What Jeff Bezos and Bill Gates learned about failure that made them successful,” Forbes, Aug. 24, 2020.

b Wilensky, G., “The ‘disruptors’ move into health care,” hfm, Feb. 28, 2018.

c Dyrda, L., “15 things to know about Amazon’s healthcare strategy heading into 2020,” Becker’s Hospital Review, Jan. 6, 2020.

d Reuters staff, “Amazon offers to help U.S. with vaccine in letter to President Biden,” Reuters, Jan. 20, 2021.

e Palmer, A., “Amazon wins FAA approval for Prime Air drone delivery fleet,” CNBC, Aug. 31, 2020.

f Day, M., and Black, T., “Amazon keeps buying jets to move closer to 30-minute delivery dream,” Transport Topics, Jan. 15, 2021.

g ASHP Foundation, Pharmacy Forecast 2021 Report, February 2021.

About the Author

Ken Perez

is vice president of healthcare policy, Omnicell Inc., Mountain View, Calif., and a member of HFMA’s Northern California Chapter.

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