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"Oh, how the Mighty have fallen" Amazon

An Amazon spokesperson confirmed the changes to Healthcare Dive and said the company is reducing its investment in corporate office space given many One Medical corporate employees work remotely.

Amazon hasn’t broken out One Medical’s financial results since the acquisition, or its membership growth. The e-commerce giant has embarked on a number of initiatives to expand the primary care operator’s reach.

That includes cheaper memberships for users of Amazon’s Prime discount program, a gambit that’s had “very good take-up” since launching in November, Amazon CEO Andy Jassy told investors last week during the company’s fourth quarter earnings call.

But before that . . .

One Medical bought Iora for $2.1 billion in 2021, before Amazon bought One Medical for $3.9 billion in a deal that closed earlier this year (2023).

One Medical’s Iora acquisition confused some market watchers. At the time, the majority of One Medical’s business came from charging commercially insured members per-visit fees, while Iora made money by managing seniors’ care in full-risk arrangements in Medicare.

Despite the speedbumps to integration, the Iora acquisition has already proved a notable asset for One Medical’s topline. In November, the primary care provider reported capitated contracts (Medicare) accounted for half of its net revenue, despite at-risk members (Medicare patients) comprising just 5% of total membership.

Cannibalizing health care . . .

This may not be a bad move if you look at the number of players hoping to capitalize on the (still growing) Medicare demographic.

Prior to acquiring Iora, One Medical focused on the employer market and relied on patient fees (membership + copayments) to drive their revenue. Iora served the senior market exclusively and is in network for some of the larger MA carriers as well as serving the traditional Medicare market.

Capitated payments by MA carriers provides a steady, predictable income stream for what is now branded as One Medical 65+.

The AMZ acquisition is reducing office space for upper management (non-revenue generating staff) and focusing more on expanding foot traffic with lower entry fees (especially for Prime members) for paying patients.

AMZ has been evolving from just a book seller to a "mail order" distributor for almost every consumer item. A few years back they bought Whole Foods to capture a portion of the organic grocery market.

Top retailers in the organic grocery business include Walmart, Costco and Whole Foods (AMZ).

Love him or hate him, Bezos has become a master marketer and knows how to profitably target the value based consumer.
Another AMZ/O-M article perspective . . .

“We’re seeing very strong momentum and positive customer feedback across our healthcare offerings. As we continue our mission to make healthcare simpler for customers, we’re realigning some resources to help accelerate our efforts to deliver the best experience for our patients, customers, and members," Lindsay said in a statement to Fierce Healthcare.

We will continue hiring providers and investing in teams and technology that will help us provide high-quality and accessible care to more people," Lindsay said.

Lindsay said Amazon has seen "tremendous growth" in its healthcare businesses including Amazon Pharmacy, One Medical and Amazon Clinic.

The company recently announced it was integrating Amazon Pharmacy with One Medical primary care providers to provide access to medical consultations.

AMZ is the 500 pound gorilla for consumer products and services