Amazon wants to disrupt health care, including DME, report says

BOSTON - DME is one of five possible points of entry for Amazon to enter and dominate the healthcare market, according to a new report from global management consulting firm L.E.K. Consulting.

“Anyone who thinks of Amazon as just a very big digital retailer needs to think again,” says Rob Haslehurst, managing director at L.E.K and report co-author. “They have repeatedly shown that they have the capabilities, the patience and the deep pockets to disrupt industry after industry. Health care is no exception.”

Earlier this year, Amazon announced its entry into the healthcare market through an alliance with JP Morgan Chase and Berkshire Hathaway.

L.E.K. calls DME a “no-brainer” for Amazon, as it already sells general medical supplies and equipment to consumers.

“Amazon's core competencies in logistics and distribution, and its existing B2B e-commerce platform will allow it to easy expand into hospital and provider supply, disrupting the traditional group purchasing organization contract model,” the report states. “Amazon has already obtained licenses to distribute medical supplies to providers in 43 states.”

Other points of entry for Amazon are mail-order and retail pharmacy (it has secured approval as a wholesale distributor from 12 state pharmaceutical boards); pharmacy benefit manager (it could partner with existing PBMs to gain a pharmacy network and claims adjudication capability); telemedicine or in-home health care (it could leverage its Echo smart speaker for virtual house calls and its Alexa personal assistant to book physician visits and more); and AI-powered diagnostics and continuous care (Alexa already delivers first-aid information and voice-driven self-care instructions in an offering introduced by the Mayo Clinic).

There are three reasons to believe Amazon is serious about health care, the report says.

"One, they are one of the largest private employers in the U.S. and would reap huge financial benefits from lowering healthcare costs,” said Joseph Johnson, managing director and report co-author. “Second, the U.S. healthcare system is notoriously inefficient, and Amazon CEO Jeff Bezos loves to attack inefficiencies. And third, health care is the kind of big, complex opportunity that Bezos likes to sink his teeth into."