While Amazon has historically been known as an online retailer and cloud services provider, it is making increasingly substantial moves in healthcare. In our view, the healthcare category represents one of the largest growth opportunities for Amazon over the coming decade. The TJI Amazon Healthcare Overview aims to outline both what Amazon is doing now across product categories and where Amazon could be going in the future.
TheTJI Amazon Healthcare Overview is intended to be a starting point for researchers and analysts to navigate the breadth and depth of Amazon’s healthcare initiatives. It was created and is edited by Justin Smith, Founder of TJI Research. This is an independent, unofficial resource and is updated on an ongoing basis. Please contact us with tips or to let us know of any errors or omissions below. TJI is not affiliated with or endorsed by Amazon.com, Inc.
I. Current Amazon Healthcare Initiatives
- Consumer Healthcare Supplies
- Business Healthcare Supplies
- Alexa Healthcare Skills
- AI Tools for Healthcare EMR Systems
- AWS Healthcare Solutions
- Haven (joint venture with Berkshire Hathaway and JP Morgan Chase)
II. Prospective Amazon Healthcare Initiatives
- Diagnostics and Testing
- Telemedicine and Evaluation
- Treatment and Fulfillment
- Physical Retail Pharmacies
- Health and Life Insurance
For many years, Amazon has been a retailer of consumer healthcare supplies. While it started as an online book retailer, over the years it has become more pharmacy-like. Today, Amazon sells a wide variety of OTC medications, first aid supplies, and personal care items.
Entering 2019, most studies indicate that Amazon does about half of all US e-commerce and about 5% of US retail sales overall — a substantial market share of retail generally. It also has growing online retail operations in many key markets in Europe and Asia.
In addition to Amazon’s overall online retail growth, two current key initiatives have the potential to drive growth in Amazon’s consumer healthcare supplies business: faster delivery/last-mile logistics, and private brands.
Prime Now is Amazon’s brand name for its two-hour (or less) delivery service. It is available in cities across the United States, Europe, and Asia that Amazon serves. With Prime Now, customers can get healthcare supplies delivered to their door quickly after ordering. Prime Now enhances Amazon’s overall healthcare offerings by reducing pharmacy trips when supplies are needed soon.
In our view, Prime Now is likely to become an increasingly important differentiator for Amazon over time because of how much Amazon is investing in its various last-mile logistics efforts and providers. As Prime Now matures, we expect it to employ increasingly multi-modal solutions optimized for the particular physical environment (i.e. city and route) at hand. While other retailers might employ third party delivery networks for fast fulfillment execution, Amazon is building this infrastructure in-house, and will realize efficiencies and be able to offer customer experiences that other retailers won’t be able to as a result.
In addition, Amazon has launched several private health care product brands as part of its Our Brands initiative. The Our Brands program includes both Amazon-owned private label brands and third-party-owned Amazon Exclusive brands. Amazon provides special placements for these brands in search results, as well as other marketing benefits that help them gain more visibility within Amazon retail environments.
Here’s a select list of healthcare-related Amazon “Our Brands.” Note, this list doesn’t include personal care brands, nutritional supplement brands, or cosmetics brands; for a full list of Amazon private brands, see the TJI Amazon Brand Database.
Amazon “Our Brands” Healthcare Brands – Private Label
Amazon “Our Brands” Healthcare Brands – Amazon Exclusive
- Basic Care
- Healthy Spirit
- Love & Care
- Mountain Falls
- Primary Health
- True Care
- Wellness Basics
In another experiment, Amazon is working with Xealth to enable doctors to recommend products on Amazon for their patients to buy via a mobile app. Per reports, Xealth and medical providers say they do not receive affiliate revenue on purchases made through the app.
And finally, starting in March 2019, Amazon started allowing customers to use FSA/HSA accounts for eligible healthcare purchases.
Big picture, as Amazon’s retail selection has grown, Amazon has become more pharmacy-like in its consumer retail offerings.
In addition to its more well-known consumer healthcare supplies business, Amazon also runs a very rapidly growing business healthcare supply operation. Amazon provides goods to hospitals, clinics, doctors, and dentists through Amazon Business, its business e-commerce service.
Amazon also allows doctors and other medical professionals to upload their license information and purchase professional healthcare supplies via an initiative called Amazon Business Professional Healthcare. It is available in “all US states with the exception of California, South Carolina, and Maryland,” per Amazon.
Amazon says it can supply professionals with the following licenses:
- Durable Medical Equipment (DME) Retailer
- Medical Doctor
- Naturopathic Physician
- Nurse Practitioner
- Osteopathic Physician
In addition to its Amazon Business healthcare supply offerings, Amazon also has larger, negotiated sales relationships with enterprise healthcare customers. As can be seen in Amazon’s efforts to hire national B2B healthcare sales leaders, Amazon says that its business healthcare supply sales operation is experiencing “rocket ship” growth. Amazon says it is hiring sales leaders who can “help enterprise healthcare organizations (acute and non-acute) reinvent the way they buy indirect supplies,” who have the “ability to converse with senior healthcare customer stakeholders including CPOs, VP’s Supply Chain, CIOs, and others,” and who have a “proven ability to close complex deals and help reps negotiate large deals.”
Furthermore, Amazon has worked hard to integrate Amazon Business into dozens of e-procurement/ERP purchasing systems in order to make it easier for customers to buy from Amazon as an approved vendor using existing purchasing tools, while also simultaneously threatening to displace traditional wholesale distributors both in healthcare and across verticals. Amazon says it has integrated with the following purchasing systems:
As Amazon has grown its retail distribution infrastructure, with a growing number of fulfillment centers and increasingly powerful logistics capabilities, this has made it a more attractive option to business customers as well. By layering enterprise purchasing tools on top, and hiring an enterprise sales team to work directly with doctors, hospitals, and clinics, Amazon is accelerating its B2B healthcare sales efforts.
Since it acquired PillPack in 2018, Amazon has operated a growing online pharmacy. While Amazon has not shared the number of customers PillPack had at the time of the acquisition, Amazon did say that it paid about $750 million, net of cash, for PillPack in its Q3 2018 earnings call.
How has Amazon evolved PillPack now that it’s officially a subsidiary of Amazon?
One, Amazon has created some new brand positioning for PillPack. In job descriptions, PillPack is now referring to itself as, “Earth’s most customer centric Pharmacy.” It’s a variation on Amazon’s own brand strategy. Amazon has been using the “customer-centric” branding since it launched in 1995, when it said its mission is “to be Earth’s most customer-centric company.”
Two, PillPack has also been applying for more licenses to ship drugs to customers in more states from more facilities. per reports. These steps lend credence to the idea that Amazon intends to expand PillPack’s operating capacity so that it can serve Amazon’s massive customer base.
Amazon has said that it has over 100 million Prime customers worldwide, and likely needs to significantly ramp up the number of PillPack facilities in operation to better compete with CVS Caremark, Optum, and Express Scripts. Amazon has a lot of experience scaling physical operations, and we anticipate Amazon will rapidly expand the number and/or size of PillPack pharmacies in operation over the coming years.
As Amazon increases its pharmaceutical capacity, and shortens delivery times via the many logistics options available in its Prime Now last mile delivery networks, Amazon should be able to offer rapid delivery for many types of medical products, from diagnostic tools to medicines and treatments.
While still early, some third-party hardware and software developers have launched Alexa “health & fitness” skills that help customers manage various aspects of their healthcare.
For example, Omron, a maker of home blood pressure monitors, recently announced an Alexa integration. With the Omron skill, customers can use Alexa to do things like set reminders, compare numbers across different dates and times, and flag readings.
As another example, Nimblr last year launched an Alexa skill that helps patients schedule appointments at doctor’s offices. Amazon’s Alexa Fund also recently invested in Aiva, which makes an Alexa skill that helps patients communicate with their healthcare providers more easily.
In April 2019, Amazon announced that Alexa Skills could become HIPAA-eligible, and that several healthcare entities were releasing new skills to serve patients. Currently, the HIPAA-eligible Skill program is invite-only, but we are expecting to see an increasing variety of healthcare applications. This is an interesting area to keep an eye on.
On the whole, we expect there to be many more healthcare-related Alexa integrations coming in the months and years ahead.
While there has been much speculation about the role that Amazon might eventually play in Electronic Medical Records (EMR) systems, the main step Amazon has taken to date is the launch of Amazon Comprehend Medical, an AI tool that helps extract structured meaning from unstructured medical data.
Amazon Comprehend Medical is a version of Amazon Comprehend specific to the needs healthcare customers. Amazon Comprehend is a natural language processing (NLP) service for “language detection, entity categorization, sentiment analysis, and key phrase extraction.”
Image credit: Amazon
Amazon says that Amazon Comprehend Medical adds the following to the standard Comprehend service:
- Support for entity extraction and entity traits on a vast vocabulary of medical terms: anatomy, conditions, procedures, medications, abbreviations, etc.
- An entity extraction API (detect_entities) trained on these categories and their subtypes.
- A Protected Health Information extraction API (detect_phi) able to locate contact details, medical record numbers, etc.
Here’s an example provided by Amazon that shows how Amazon Comprehend Medical works. First, let’s take the following input text to start.
Image credit: Amazon
Here’s how Amazon Comprehend Medical processes the document: “Entities are extracted and highlighted: we see personal information in orange, medication in red, anatomy in purple and medical conditions in green.”
Image credit: Amazon
Furthermore, “Personal Identifiable Information is correctly picked up. This is particularly important for researchers who need to anonymize documents before exchanging or publishing them. Also, ‘rash’ and ‘sleeping trouble’ are correctly detected as medical conditions diagnosed by the doctor (‘Dx’ is shorthand for ‘diagnosis’). Medications are detected as well,” Amazon says.
Amazon goes on to illustrate how AMC can figure out abbreviations specific to physician terminology and is able to correctly understand complex relationships.
Image credit: Amazon
If AWS is able to transform routine unstructured data into detailed structured data on diagnostics, evaluations, and treatments, the quantity and quality of data in EMR systems could increase dramatically. Analyzing that data could then lead to better insights, better outcomes, and lower costs.
Overall, Amazon Comprehend Medical offers healthcare providers and related professionals more reasons to adopt AWS as their cloud service provider. We expect Amazon to continue to invest heavily in AI applications like Amazon Comprehend Medical to help make healthcare professionals more efficient and EMR systems more powerful.
AWS, Amazon’s cloud computing service, serves organizations across industries. However, AWS has put a particular emphasis on creating AWS solutions for healthcare providers. “Organizations across the healthcare, life sciences, and genomics industries are using AWS for everything from high performance computing and machine learning, to clinical information systems,” Amazon says.
In terms of healthcare use cases, Amazon advertises solutions for care coordination, health analytics, patient engagement, clinical information systems, storage & archiving, compliance, and operations & business. AWS also offers a selected group of healthcare partners, white papers, and case studies to illustrate the ways that AWS services can be deployed in healthcare, from providers and insurers, to pharma and biotech, to genomics.
For example, here’s a simple care coordination case that illustrates how various AWS services can be employed in an office visit:
Image credit: Amazon
The role that AWS plays in an increasing number of healthcare businesses and organizations cannot be overstated. Amazon S3, Amazon EC2, AWS Snowball, Amazon Aurora, Amazon Glacier, Amazon RDS, AWS Lambda, Amazon QuickSight, Amazon RedShift, Amazon VPC, and AWS Auto Scaling are all integral products to AWS’s healthcare solutions.
As providers and insurers continue their migration to the cloud, we expect the role that AWS will play in healthcare IT infrastructure to only increase.
In 2018, Amazon formed a Boston-based health care “non-profit-seeking” joint venture with Berkshire Hathaway and JP Morgan Chase. In March 2019, CEO Atul Gawande gave the first concrete description of what the mission of the entity will be, while also announcing the entity’s name, Haven.
“Haven’s focus is the 1.2 million employees and families affiliated with Amazon, Berkshire Hathaway, and JPMorgan Chase across the United States and over time it intends to share what it learns to help others.”
Here’s how we got here:
First, the venture hired a CEO: surgeon and public health leader Atul Gawande.
Since taking the helm, Gawande has announced few details on the initiative’s direction or strategy. However, he has said that the goal of the entity is “to incubate new models of health care delivery demonstrated to produce better outcomes, satisfaction, and cost-efficiency for employees and their families. This is an independent, not-for-profit organization, with all proceeds returning to support the mission of the initiative.”
Gawande has also said that he wants the organization to “take some of the middlemen out of the system” and “deliver better outcomes, satisfaction, and cost efficiency in care.”
Since taking the helm, Gawande has hired Jack Stoddard, formerly of Comcast and UnitedHealth, as the entity’s COO. Stoddard was previously the head of digital health at Comcast, and before that helped build Optum, which was then acquired by UnitedHealth. In a court filing related to the hiring of Optum executive David Smith, Stoddard said the joint venture is “currently using data, analytics, and expertise to combine products from third-party vendors.”
Gawande has also hired Dana Gelb Safran to head up its analytics efforts. Hafran comes from Blue Cross Blue Shield of Massachusetts, where she worked on performance measurement. Her new title is said to be “head of measurement.”
He has also hired Serkan Kutan as CTO. Kutan was at Amazon until leaving to be CTO of ZocDoc a few years ago. Kutan says the joint venture “represents, in my opinion, the most promising attempt to improve health care in the U.S.,” and, “The challenging task will require the best technology team in health care.”
Now that it is clear that Haven intends to initially focus on the employees of Amazon, Berkshire, and JP Morgan, we will be keeping an eye on developments as we await what products and services it might offer.
One key theory about the future of Amazon Healthcare is that the consumer healthcare experience will start with home diagnostics and testing. The thinking goes, if Amazon is able to get consumers to start their healthcare experience journey with an Amazon diagnostic product or service, it’s much more likely that they will continue that journey with Amazon through to treatment.
There are two ways Amazon customers might start the diagnostic experience in our view: 1) by simply talking to Alexa, 2) by requesting home testing equipment rapidly via Prime Now.
In 2018, Amazon was issued a patent on an Alexa technology that has the ability to determine certain physical and emotional characteristics of users based on their voice input, and offer help – sometimes in the form of offers for items for sale. While the patent doesn’t mean Amazon plans to launch products with this technology, it does reflect Amazon’s thinking on Alexa’s potential.
The patent, titled “Voice-based determination of physical and emotional characteristics of users,” is number 10,096,319. The patent covers Alexa’s ability to infer certain traits about Alexa users from their voice when determining how to respond:
Traits may include physical characteristics of a user (e.g., gender, age, ethnic origin, etc.), a physical condition or state of a user (e.g., sore throat, sickness, etc.), an emotional condition or state of a user (e.g., happy, sad, tired, sleepy, excited, etc.), and other traits.
Amazon provides an illustration in the application showing what it intends to cover. In the illustration, a woman is shown to be coughing and sniffling and tells Alexa she’s hungry. The Alexa system is able to determine her “abnormal physical or emotional condition,” and asks if she would like a chicken soup recipe, which she declines. At that point, Alexa takes the initiative to offer her another remedy and says, “By the way, would you like to order cough drops with 1 hour delivery?” When the woman accepts Alexa’s offer, Alexa confirms and concludes by saying, “Feel better!”
Digging deeper into the patent reveals some interesting details. Here are some highlights based on our reading of the patent:
1. Amazon has patented technology that can determine demographic characteristics of users from their voice — including gender, age, and ethnic origin:
For example, voice features may include a gender of the user, an age or age range of the user, an ethnic origin or language accent of the user, an emotion of the user, a background noise of the environment in which the user is located, and other voice features. As a result, content presented at a device may be specific to the user that is using the device (e.g., providing a voice input, etc.), as opposed to a user associated with the device, such as an owner of the device.
2. Amazon has patented technology that can determine physical characteristics of users from their voice — including certain health conditions:
In another example, a second voice processing or signal processing algorithm may be used to process or analyze the voice data to determine a health condition or status of the user. Detectable or determinable health conditions may include, among others, default or normal, sore throat, cold, thyroid issues, sleepiness, and other health conditions. Example algorithms may analyze breath sounds of the user based at least in part on the voice data and may use a cepstral feature set using SVMs and/or neural networks.
3. Amazon has patented the technology that can determine emotional status of users from their voice — including joy, fear, and stress:
The first voice processing algorithm may be used to determine an emotional state of the user. Detectable or determinable emotions may include, among others, default or normal, happiness, joy, anger, sorrow, sadness, fear, disgust, boredom, stress, and other emotional states. Emotional states or conditions may be determined based at least in part on an analysis of pitch, pulse, voicing, jittering, and/or harmonicity of a user’s voice, as determined from processing of the voice data…
If it is determined that the user has an abnormal emotional state, the device or a connected computer may select a real-time emotional state of the user. The real-time emotional state of the user may be, for example, at least one of the happiness, joy, anger, sorrow, sadness, fear, disgust, boredom, stress, or other emotional states.
4. Amazon has patented the technology that can target ads to users based on what it determines is their current physical and/or emotional condition:
A current physical and/or emotional condition of the user may facilitate the ability to provide highly targeted audio content, such as audio advertisements or promotions, to the user… For example, certain content, such as content related to cough drops or flu medicine, may be targeted towards users who have sore throats… In the example of FIG. 1, the cough drops manufacturer may have targeted users with sore throats for the promotional offer that was presented to the user 130. The targeting criteria for the promotional offer, or the offer generally, may include users with sore throats or users likely to have sore throats…
Audio content targeted to sleepy and bored users may be determined based at least in part on a data tag that identifies the voice data as a sleepy and bored user. For example, a musician may want to target an audio ad for his new album to users with “boredom” and “sleepy” conditions. Audio content for presentation may be selected from the candidate content and presented to the user. For example, the voice interaction device may audibly present “here’s a joke [ . . . ] By the way, this singer just released his new album for just $1.99. Do you want to preview it?” The user may respond affirmatively or negatively as desired.
Technology companies file patents often and do not end up launching products with the patented technology. However, the fact that Amazon filed this patent reflects the potential use cases Amazon sees in Alexa’s future.
For instance, if Alexa detects a voice input that indicates a likelihood that the customer has a particular illness, that could be a first step to initiating a telemedicine experience (more on that later). This is also an area that Alexa skill developers could make important contributions.
Aside: In our view, this technology raises some important ethical and philosophical questions that Amazon will likely need to take a clear stance on if it intends to launch products including these features. For example, what bounds should be placed on advertising based on these factors? In which scenarios is taking these factors into account at all unethical? Would Amazon ever make such data available to Skill developers through Alexa APIs? What are the privacy implications of these systems knowing what a user’s home life and emotional state is like?
Another way Amazon customers might start the diagnostic experience is by ordering home health testing equipment.
If Alexa detects a likely illness, Alexa could then prompt the customer to order a home health test to be delivered within 1 hour via Prime Now via an interaction sequence like the one depicted in the patent above. Or, a customer could just order a test directly via the Amazon site or app without interacting with Alexa first.
The output of that test could then be used in an evaluation or selecting treatment options.
CNBC reported that Amazon was in talks to acquire Confer Health, a venture-backed maker of home health diagnostic equipment, in 2018, but that talks broke down. In our view, just as Amazon is currently building Alexa-enabled smart home hardware and software (such as its Ring and Echo products), we can also foresee a world in which Amazon is building Alexa-enabled diagnostic tools to assist in the first steps of a healthcare experience.
Were Amazon to become a provider of home health testing equipment, that could reduce customer needs to go to a doctor’s office in cases of needing simple tests. It would also pit Amazon in competition with local health testing centers as well as large testing companies like LabCorp and Quest.
Finally, like other potential Amazon healthcare initiatives, it is our understanding that this is an area with substantial regulatory requirements that Amazon would likely need to meet before being able to proceed.
Amazon does not yet offer telemedicine products or services. However, were Amazon to launch such a service, that would close the diagnostics > evaluation > treatment loop. Amazon is in a position to potentially aggregate providers effectively, so watch this space.
Of note, Amazon itself has been hiring doctors internally, such as renowned cardiologist Maulik Majmudar, who came from Massachusetts General Hospital and MIT last summer. While Majmudar’s role and group have not been revealed, he said he was joining Amazon to take on an “exciting & challenging role.”
Earlier last year, Amazon also hired Martin Levine, who had previously run a network of health clinics in Seattle, as well as former FDA chief health informatics officer Taha Kass-Hout. Amazon’s Babak Parviz has also reportedly been doing midwestern bus tours to learn about the needs of seniors.
There is some speculation that Amazon will dogfood potential new health benefits initiatives with its own employees, or perhaps collectively with its employees and those of Berkshire Hathaway and JP Morgan Chase via a new offering by their unnamed joint venture. We will be keeping a close eye on developments in this area.
Once an evaluation takes place (again, either by the customer’s non-Amazon physician or via some future Amazon telemedicine service), Amazon already has the infrastructure in place to handle fulfillment of many types of medicines and treatments that may be ordered.
For pharmaceutical products, the customer could request that the prescription be filled by PillPack. For other types of health care products, the customer could order the needed supplies via Amazon. Either way, if Amazon had built sufficient pharmacy and logistics infrastructure in a customer’s location, Amazon could deliver the items quickly via Prime Now.
Big picture, we expect Amazon to invest in new and expanded facilities to accelerate growth in PillPack’s pharmacy capacity. In conjunction with expanded licenses, which we would expand PillPack to continue to seek on an ongoing basis, this should allow Amazon to increase its geographical reach and shorten delivery times for its pharmaceutical services.
In addition to increasingly rapid delivery via its Prime Now last mile logistics network, there’s also the question of whether or how much Amazon might be able to integrate pharmacies or other types of healthcare services into its physical retail environments.
Amazon currently operates its network of 480+ Whole Foods Markets grocery stores. Whole Foods is currently the largest retail format Amazon owns. In addition, Amazon is doing a number of small-format retail experiments in urban and suburban locations, including Amazon Go, Amazon 4-star, and Amazon Books. Amazon also has a network of pop-ups and its roving Treasure Trucks in select US cities.
Unlike many other large physical grocery store chains, Whole Foods Markets stores don’t currently have in-store pharmacies. Amazon already uses Whole Foods stores somewhat like mini distribution centers for Prime Now grocery deliveries. Would Amazon similarly put pharmacies into Whole Foods locations, and use them as mini pharmaceutical distribution centers for PillPack? Would Amazon ever integrate limited physical pharmacies into its network of Amazon Go stores?
One logical service that Amazon could offer in the future is insurance. While Amazon does not offer insurance directly as of now, it has consumer data that theoretically could help it to assess risk and lower fraud rates.
For instance, Alexa-enabled devices are already in many rooms of many homes, and could be used to gather data points that might be indicative of healthcare needs, such as the frequency of issues detectable in customer’s voices, or other more explicit signals (like data from Alexa-enabled monitoring devices).
Third party medical device makers could choose to integrate with Alexa and somehow share that data back to the insurance provider. For example, Omron, a maker of home blood pressure monitors, recently announced an Alexa integration. Such data from medical devices monitoring a customer’s physical state could be very helpful to a policy underwriter.
We’re already seeing insurers like John Hancock stop selling traditional life insurance and only selling interactive life insurance to customers who agree to use wearable devices. Given enough data and reinsurance (say, from Berkshire Hathaway), Amazon might be able to offer similar types of insurance products in the not too distant future.
In fact, Amazon has already reportedly begun the process of applying to sell health and life insurance in India. It is also rumored to be exploring various insurance markets in the US, UK, and other countries as well.
Big picture, we think insurance fits into the overall future Amazon Healthcare equation.
As Amazon looks for future growth opportunities, health care represents about 20% of the US economy. It’s also a highly complex market, with many layers of rules, regulations, consumer protections, and incentives. Given that the cost of health care has been spiraling upward in recent years, it’s also a market ripe for disruption.
Amazon has shown that it is more patient than most other companies. It can wait for investments to pay off a long time down the road. Whether it be AWS, medical supplies, pharmaceuticals, diagnostics, or telemedicine, Amazon could play a large role in the future of healthcare throughout the human life cycle.
Jeff Bezos took a “build the primitives” approach to architecting AWS’s fundamental product strategy. Perhaps he will do the same in health care.