Tuesday, August 26, 2014

What Is Amazon Up To?

Back in April, PwC and HRI issued a report that asked what new entrants might be healthcare's Amazon.com.  Now it appears that it might just be Amazon itself.

Modern Healthcare broke the story first: Amazon has met with the FDA.  MobiHealthNews and Forbes quickly seized on the story and added their own insights.    What we "know" is that unnamed "Amazon leadership" met in late July with Howard Sklamberg, FDA's deputy chief for global regulatory operations and policy, and other unnamed "various FDA leadership."

That's it; everything else is speculation.  Not much of a story perhaps, but, hey, without speculation there would be no point of blogs, and then I'd have to spend my time doing something else.

Still, the speculation is interesting, especially with a company like Amazon that has repeatedly demonstrated its ability to disrupt markets.  It initially seemed a folly when they started to compete against bricks and mortar booksellers, and now most of those are gone.  It seemed like hubris when they expanded into selling a broader range of goods, and now Amazon is the nation's leading e-tailer, with sales of electronics and other products far outpacing books.  They pretty much invented the e-books category, with the Kindle dominating that market.

They already outsource their cloud services (Amazon Web Services, or AWS), their distribution capabilities, and their payment systems, the latter now being expanded to in-store payments, going up against the likes of Visa and Mastercard.  In a smartphone world dominated by Apple, Samsung and other established manufacturers, they fearlessly have introduced their own version, the Fire.  I could go on in various other spheres, but the point is clear -- they're not afraid of anyone.

So now health care?

The various articles noted that Apple and Google have already met with the FDA, each with their own announced or highly rumored entries into health care as well.  The speculation on Amazon's intent has focused mostly around sales of FDA-regulated products, and Amazon's potential interest in wearables.  They might want to have their devices go into areas that the FDA would have a direct interest in, especially since, for example, AWS already works with cloud-based EHR vendors.

All of those would be well and good, but if that's as far as Amazon's interest goes, I'll be disappointed.

Here are three ways that I would love to see if Amazon could add value to health care:

Reviews: OK, all you Amazon shoppers -- and there are a lot of us -- how many of you buy a product (even if not on Amazon) without first checking out the Amazon reviews? Whether it is books, computers, shoes or any of the numerous other categories Amazon has, chances are that someone, and most likely a number of someones, has reviewed the product.

Sure, some of the reviews are angry or off-point, but generally the "wisdom of the crowd" seems to prevail and shoppers can get a pretty good sense of what they might be in for.

Their reviews already cover various medical supplies/devices sold on Amazon, but wouldn't you love it if those reviews applied to, say, physicians or hospitals?  After all, Zagats already broached health care, using their dining guide ratings system in conjunction with Wellpoint to rate in-network providers, and Angie's List also used its prized customer base to establish a reporting mechanism for health care providers.  So it wouldn't be unprecedented if Amazon applied customer reviews to health care providers.

I have to believe that if Amazon wanted to get into this business, they could quickly get to a credible number of reviews, and make life very interesting for providers.
Recommendations: Amazon is noted for their personalized shopping recommendations, based on user's shopping and purchase history on the site and a lot of Big Data collaborative filtering.  Whether it is a recommended item, the "also viewed" products, or the "frequently bought together" combo suggestions, the recommendations are pretty effective in helping boost Amazon's sales.
Imagine if Amazon applied this to health care products, services, and even providers, recommending ones that they believe might best fit you, and possibly helping map out the various steps of a treatment plan (as they are "frequently bought together").
Amazon would have to be careful to not go over the medical advice line, the recommendations might not look like recommendations for other products, and recommendations for services would be a very new step for Amazon, but one would be foolhardy to say Amazon couldn't make their mark.

Medical tourism:  No, I don't mean the out-of-country packages of lower-cost health care services often thought of as medical tourism (although I'm not excluding them).  I mean more broadly making services or packages of something that consumers actively shop for, and breaking the traditional pick-the-closest doctor/hospital mindset that most consumers have gotten used to.

For example, many lab or imaging tests are -- or should be -- commodities, and it is not too hard to picture vendors posting their prices and features.  Many health plans or self-funded employers already have a "centers of excellence" approach for specific major procedures -- open heart surgery or transplants come to mind -- and those kinds of packages of services would also seem to lend themselves to an Amazonian open competition.

I've talked about this kind of approach before (e.g., Exchanges for Everyone! and 20th Century Health Plans in a 21st Century), and in Provider Networks...How Quaint! I also mentioned a medical auction site called MediBid that uses an eBay-type approach to try to get providers to competitively bid on services.  We could use more -- a lot more -- of this kind of open competition, whether it is an eBay or an Amazon model.

It's fun to speculate what Amazon might do, but the real benefit of them coming into health care in a bigger way would be that they might do something truly unexpected and unique, without health care industry blinders limiting their creativity. 

They haven't asked for my advice -- and please feel free to get word to them that they should -- but what I'd urge Amazon is:
  •  Keep it retail: Amazon made its reputation as a retail company, and yet health care has stubbornly resisted being truly retail -- even though almost nothing is more personal than your health, nor are many things done to you that are more "personal' than what commonly happens in health care.  If I see Amazon doing a deal with a big health plan or health system, I'll have a pretty good idea that they're simply going for their share rather than reshaping the market (as I talked about in Getting Our Piece of the Pie).  Remember your roots!
  • Make people mad: I don't know enough about the current Amazon-Hachette fight over e-books to have an opinion.  I do know that Hachette, their authors, and many readers are pretty mad at Amazon, and I say -- I hope whatever Amazon does in health care makes lots of people mad too.  I hope the AMA, AHA, and the state medical boards are furious, that individual health systems and health care professionals are scared to death, and there generally is a lot of arm-waving and teeth gnashing.   If everyone is applauding, Amazon didn't go far enough.

If all Amazon wants to do in health care is to make it easier for us to buy even more of the things we already buy too much of, and pay too much for, I wouldn't be surprised, but I will be disappointed.  We have plenty of companies who can help us tinker around the edges of the status quo, but all too few companies who could perhaps disrupt that status quo.

I hope they will take Daniel Burnham's famous advice: "Make no little plans; they have no magic to stir men's blood...Make big plans, aim high in hope and work."

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