Last month, rumors spread of Amazon’s potential move into the pharmacy industry, resulting in speculation from many, including myself, on the potential impact. In my recent blog, I highlighted the fact that mail order pharmacies have been around for decades, so Amazon would have to set itself apart from the crowd in order to find success. To do this, I suggested Amazon integrate its drug delivery service with telemedicine services in order to reach potential patients most likely to embrace drug delivery.

Now, it seems, Amazon is creating its own telemedicine capabilities to do just that—recent reporting from CNBC suggests that a team, codenamed 1492, is working on a large scale entry into healthcare that extends beyond just the pharmacy and includes plans for telemedicine.

Telemedicine enables convenient access to medical expertise (particularly in medically underserved regions) and is a great option for people with conditions that need medical attention but don’t warrant an emergency room visit. But, before Amazon dives into the telemedicine space, it would be wise to consider the experience of retail clinics, and use it to frame how the company enters the market.

Building on the experience of retail clinics

Retail clinics provide care, typically delivered by a nurse practitioner, on a walk-in basis for simple acute conditions and are commonly located within pharmacies, grocery stores, and large retail stores. They have emerged as a more convenient and less expensive alternative to the doctor’s office for minor issues in well populated regions. The ability to see patients on a walk-in and low-cost basis makes them an appealing option for those unable to access care on account of lack of insurance coverage or scheduling issues at physician offices.

A recent study  on the market impact of retail clinics found that among commercially insured and Medicare populations, 58% of visits to retail clinics are considered new utilization, or care that would otherwise not have been sought out. This new utilization occurred despite merely 12.5% of retail clinics being located in medically underserved regions where access concerns are most prominent.

This means that the basic services offered on a walk-in basis by retail clinics thrive upon nonconsumption—the inability of a potential consumer to access and use a product or service due to lack of convenience, affordability, and/or simplicity—in even competitive U.S. healthcare markets where services are available. Unfortunately it is impossible to know the full magnitude of nonconsumption of basic healthcare services in the present. But based on the success of retail clinics in competitive markets, Amazon’s potential for growth by reaching medically underserved regions (where healthcare access is of utmost concern) with convenient access to professional medical expertise is likely to be significant.

How can Amazon capitalize?

In order to take full advantage of nonconsumption, and pick up where retail clinics left off, Amazon should first attempt to build a foothold market in medically underserved regions. Starting here, Amazon can leverage telemedicine to offer basic healthcare services to those who traditionally must go out of their way to attain them (and thus, all too often forgo them).

As opposed to improving convenience and access in regions that already have relatively easy access to care, Amazon can separate itself from the competition by making healthcare in the home an actuality for those with little to no convenient options for care in the first place.

By first building a foothold in nonconsumption, Amazon can figure out the best ways to truly improve its healthcare offerings, as opposed to focusing on how to best compete against incumbent offerings. Upon improving along the dimensions it finds to be important for patient experience, Amazon will attract patients from more and more competitive healthcare markets—patients willing to put their faith in telemedicine and embrace the added convenience of healthcare in the home. As this process unfolds, Amazon may change the face of yet another industry by enabling convenience and furthering what consumers can access within the confines of their home.

For more, see:
How Disruption Can Finally Revolutionize Healthcare


  • Ryan Marling
    Ryan Marling