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Amazon made another bold move into healthcare that went relatively unnoticed

Online retail giant's reach into the Medicaid market to take on Walmart among lower income customers could bring disruption soon.

Susan Morse, Senior Editor

Amazon expanded into the Medicaid market by announcing that it will offer beneficiaries a Prime membership of $5.99 a month, a discount of 54 percent. And while that revelation last week may not have raised quite as many eyebrows as the company's blockbuster partnership with Berkshire Hathaway and JPMorgan Chase it holds the potential to have a major impact sooner. 

"What Amazon is doing, they are trying to position themselves for a different market," said Lyndean Brick, CEO of The Advis Group. "They are disrupting healthcare at all levels. They're trying to be competitive with Walmart."

[Also: What the Amazon, Berkshire Hathaway, JPMorgan deal means for payers]

Amazon has the scale, and is the master of taking cost out of the supply chain, according to Trish Birch, senior vice president and Global Healthcare and Life Sciences Consulting practice leader at Cognizant.

The Medicaid population isn't courted by providers because the lower reimbursement rates threaten their bottom lines. Insurers right now appear more interested in the Medicare Advantage market, though specialized government payers such as Centene are making the Medicaid segment work.

[Also: Amazon eyes another healthcare shake-up: Getting into supply chain]

Birch said it's smart for Amazon to undertake strategic combat with Walmart. Brick added that at the most basic level the pursuit is about marketshare, rather than strict profits on selling medications. 

"Amazon can sell Kleenex, a baby monitor and Vicks VapoRub, and may make a tiny margin on the prescription," Brick said. 

[Also: Amazon, Berkshire Hathaway, JPMorgan Chase partner to build healthcare company with focus on reducing costs]

Amazon has been studying the healthcare market for at least a year, Birch said, and began a competitive focus on Walmart last year with the start of Amazon Cash, which is a way to add money to an account to make quick ordering easier -- even for people who may not have a bank account, credit or debit cards. 

Taking that a step forward, Birch said she envisions Medicaid consumers talking to a physician via their smartphone for a $5, or even free, telehealth visit.

"You can talk to a doctor with one click on Amazon Prime, who can tell you whether you need the emergency room," Birch said.

This helps keep beneficiaries from going to the emergency room for care, but may also cut into PCP services.

"Primary care will be free or nominal," Birch suggested. "They'll be able to make primary care cash-based. JPMorgan can provide the tools, all running on an Amazon platform." 

Brick agreed that Amazon could also be considering a move into primary care.

"Perhaps they'll get into retail clinics or owning providers," Brick said. "This was a very significant move -- we don't know how it's all going to end up yet."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

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