Amazon Buying One Medical Marks Bigger Healthcare Push Transcript

Zoe Thomas: (00:02) This is your Tech News Briefing for Friday, July 22nd. I'm Zoe Thomas for The Wall Street Journal. On Thursday, Amazon announced plans to buy 1Life Healthcare, which operates a primary care practice under the name One Medical in major cities across the U.S. This is not Amazon's first foray into the medical space. In 2019, it launched Amazon Care. Originally, it was a service for Amazon employees in Washington State, and Amazon Care's telemedicine and urgent care health offering has slowly been expanding to employees of other companies, but this turn to medicine has been slow going for Amazon with regulatory and other hurdles hobbling its typically speedy entrance into a sector. Zoe Thomas: (00:51) Why is the E-commerce giant so focused on entering the medical space? How will this purchase help? Joining us to discuss this is our Amazon reporter Sebastian Herrera. Hey, Sebastian. Thanks for joining us. Sebastian Herrera: (01:05) Hey, thanks for having me. Zoe Thomas: (01:06) Amazon already has Amazon Care. Now, it's going to be buying 1Life Healthcare, which has One Medical. Why is it interested in buying 1Life Healthcare? How does it fit into the medical offerings that Amazon already has? Sebastian Herrera: (01:20) Yeah, so Amazon Care really has only existed as a telehealth sort of urgent care service. It's really imagined as you can chat with someone online and they can send out a doctor, a healthcare provider to your home and also any medicine. That's sort of been the limits of the service, and so with this purchase in getting One Medical, primarily it gives into physical spaces because One Medical has more than 180 medical officers in the U.S. Sebastian Herrera: (01:51) That is already a big deal getting those physical locations. It also potentially helps them expand into something more than just sort of urgent care services, something that looks more like a primary care/long-terms services, which is I think what any medical provider wants to get into. They don't just want those one-off visits, but those sort of long-term established relationships with patients. This could potentially like really, really boost that effort and also just get them more customers that they obviously need to expand. It's sort of those different things that come into play by purchasing One Medical. Zoe Thomas: (02:30) I mean, that's what it means for Amazon. What about for patients? Will this change how patients get care maybe immediately if they're a One Medical user? Or overall, do we think there'll be kind of a big sea change in how we get offerings once Amazon decides to really get into the medical section? Sebastian Herrera: (02:48) I think at least initially it won't change much. The One Medical CEO is still going to be there, and it's more like the Whole Foods relationship where it is going to be under Amazon, but it's supposed to be working sort of independently in a way. I think they're still figuring some of that stuff out, but it's not like Amazon's just totally taking over and rebranding the service and all of that. I think for patients initially not much to change, Of course, that could evolve over time. Zoe Thomas: (03:19) Okay. Maybe we can dive in a little bit more to the reasoning behind it. Obviously, they're hoping this deal works out for them, but why does Amazon, who everybody thinks of as kind of this E-commerce provider, maybe as a cloud provider, or if you're a prime subscriber, a video provider, why do they want to be a medical provider as well? Sebastian Herrera: (03:38) I think it has to deal with how big that industry is, and some people... I've referred to it as like almost like a recession-proof sort of industry as well, and so Amazon, it's sort of looking for its next hit. It has AWS. Advertising really seems to be sort of like that potential next hit as well, if not already becoming a hit. I think what Amazon has shown is that it's comfortable diving into different spaces, seeing how it goes. It's not afraid to take chances, and if it becomes a big deal for them, then great. Sebastian Herrera: (04:10) Then, they just sort of like expand their horizon, are more, you know, built for if there's a recession or if one business isn't doing it as good, there's other businesses doing great. Healthcare, obviously, is a potential to make a lot of money and just be the great connector to different services it already provides. Zoe Thomas: (04:31) Providing healthcare has kind of its own unique hurdles dealing with regulatory issues and privacy concerns. How does Amazon plan to deal with those challenges? Sebastian Herrera: (04:41) Yeah. I think those are like the big questions out there right now because with this purchase, they are potentially going to get a trove of data from One Medical and their customers and providers. There's already some buzz out there of regulatory concerns and how Amazon uses data. I think people get scared with any big company that sort of has a lot of debt on its hand. I think Amazon would tell you right now there's still like a really small and new player in this space that's really big, old, hard to figure out, and success is by no means guaranteed. Sebastian Herrera: (05:16) I think there's definitely questions out there of how Amazon will use the data that it has. It being such a big company, Amazon is really good at gathering data and using it to its benefit and using it to expand and even using it in dealmaking and as leverage for other businesses. Zoe Thomas: (05:35) I assume the argument that they are still a new and smaller player in the medical space is also going to be their argument if regulators raise any antitrust concerns. "We're a big player, but we're not that big in this industry." Sebastian Herrera: (05:49) Exactly, and that's an argument they've made in the past like with retail, every time that it's brought in front of them that they're this dominant player in E-commerce and retail, they sort of cite figures that, "Oh, but if you compare us to global overall retail including physical locations, we're actually like really small." That's sort of their argument, but yeah, that's certainly a position that you could see them taking if they're not already taking right now. Zoe Thomas: (06:14) All right. That's our reporter, Sebastian Herrera. Thanks so much for joining us, Sebastian- Sebastian Herrera: (06:18) Thank you. Zoe Thomas: (06:20) ... and that's it for Tech News Briefing this week. Our producer is Julie Chang. We had editorial support from Scott Saloway. We had production assistance from Ariana Aspuru. Our Supervising Producer is Chris Zinsli. Our Executive Producer is Kateri Jochum, and I'm your host, Zoe Thomas. Thanks for listening and have a great weekend.