With the sweeping wave of the Internet, the original business models of many industries such as retail, logistics, finance, and catering have been reconstructed. After the new crown epidemic, the medical and health industry is becoming the next outlet for changes in Internet technology.
Whether domestic or foreign, the giants always want to take a piece of the pie. But compared with most industries, the medical industry seems to be more difficult to disrupt, and even the mighty ones like Walmart and Amazon are constantly oscillating between self-build and acquisition.
Walmart has gone a step further with its healthcare business. On Wednesday, local time, Walmart and UnitedHealth Group announced a 10-year partnership agreement to provide value-based affordable care in the United States. The partnership will begin in 2023, starting at 15 Walmart Health stores in Florida and Georgia, and expanding to new locations over time.
The Optum business, part of UnitedHealth Group
The Optum business, part of UnitedHealth Group, will provide Walmart Health with analytics and decision support tools to enhance its customer experience. It is understood that this collaboration will bring together the expertise of both companies to provide millions of people with high-quality, affordable healthcare services, and greatly improve the patient experience.
As one of the largest retail service providers in the United States, Walmart is interested in the medical and health service market, hoping to create a service model of “retail + medical care”. Last year, Walmart Health acquired telehealth provider MeMD.
Walmart also opened its clinics offline.
At the same time, Walmart also opened its clinics offline. In January, a clinic opened near a large, newly remodeled Walmart Supercenter in Calhoun, Georgia. This is the second independent clinic that Walmart opened after a 4-month trial operation after Walmart’s first independent health clinic in Dallas in September 2019.
If the operation is successful, Walmart could roll out across the country, potentially upending the way millions of Americans receive health care. Walmart CEO Doug McMillon said: “We are transforming health care so more people can get the right care at the right time and at the right cost.”
At present, Internet medical development is gaining momentum. Deng Zhidong, general manager of Hainan Boao Medical Technology Co., Ltd., said that with the acceleration of the aging process of the global population, the demand for family medical care and elderly care has exploded. People urgently need a convenient model that can meet both medical care and elderly care. and live.
”This new pension model, using Internet technologies such as the Internet of Things, cloud computing, big data, and artificial intelligence, can efficiently allocate medical service resources, optimize the allocation of pension service resources, and realize online and offline complementary advantages and resource sharing, which is efficient and convenient.” Deng Zhidong said.
On the other side of Walmart, the old rival Amazon has already begun its layout in the medical industry. Previously, in 2018, the two sides also had a “dispute” over the acquisition of online pharmacy PillPack, and Amazon won in the end.
But just last month, Amazon announced that it would shut down Amazon Care, its online healthcare service, by the end of 2022. According to public information, Amazon Care was established after Amazon acquired the medical technology start-up Health Navigator in 2019. In the same year, Amazon launched an online medical service in a pilot form at its Seattle headquarters, aiming to provide employee and family-centered health care services anytime, anywhere.
In fact, Amazon’s road to medical care has not been smooth. In 2018, he first formed a corporate self-insurance body Haven with Berkshire Hathaway and JP Morgan to try to make a breakthrough on the payment side, but the attempt ended in failure three years later.
In the same year, Amazon acquired PillPack for less than $1 billion to boost drug retailing by joining forces with PBM, but the business has remained tepid. Then, during the epidemic, it began to promote the online medical service – Amazon Care, intending to compete with the companies represented by Teladoc in the online consultation market, and has now had to choose to close it.
Amazon’s strategic adjustment in the medical field
Regarding Amazon’s strategic adjustment in the medical field, Zhao Heng, founder of the medical strategy consulting company Latitude Health, said that since Amazon announced its entry into medical care in 2017, all of its moves have been regarded by the market as possible explorations that are about to subvert the stubborn diseases of the U.S. medical market.
But even with the relatively high degree of commercialization of the US market, it is still very challenging to break through the business model in the medical field. This is not only because the medical market has stricter policy controls than other industries, but also because of the particularity of the medical system itself.
Zhao Heng further analyzed that for an e-commerce company, the fastest way to enter medical care is to sell drugs, but drugs themselves are relatively special commodities, and their main market share is concentrated in prescription drugs.
drugs are mainly controlled by PBM
In the United States, prescription drugs are mainly controlled by PBM (Pharmaceutical Benefit Management Company), which makes prescription drug sales a purely B-end model, and Amazon must acquire the giants in order to enter prescription drug retail. However, these three companies have all merged with insurance companies, the largest customer, which makes it very difficult for Amazon to enter prescription drug retailing, and Amazon’s C-end coverage capabilities are useless here.
Regarding the closure of the medical business and future plans, a reporter from Beijing Business Daily contacted Amazon but did not receive a response as of press time. However, Amazon previously stated that this was a decision made after evaluating its own capabilities and development prospects in the online medical market, and acknowledged that the company’s online medical market lacks competitiveness.
Is it better to buy?
Amazon’s experience has made many people sigh that even one of the richest companies in the world is difficult for an independent startup to successfully establish a foothold in the health care industry.
In Zhao Heng’s view, the challenge facing Amazon is also the dilemma for all large Internet companies to enter the medical field. Whether it is in the capital market or business services, these companies have always been ignorant of the B-side attributes of medical services, thinking that as long as they have enough C-side traffic, they can achieve great development in the medical field.
This has caused Internet companies to encounter obstacles after entering the medical field, and have to repeatedly adjust their strategies, constantly swinging between self-build and acquisition. This is also well reflected in Amazon.
Medical care is a payer-dominated B-end market
Medical care is a payer-dominated B-end market, and there are huge differences in channels and operations from the Internet, which is dominated by the C-end. Moreover, medical expenses seem to have grown tremendously, but since the market is not controlled at the C-end, even external large-scale C-side traffic cannot be leveraged at will.
If you enter the medical field according to the B-side rules, the advantages of Internet companies will not exist, and the possibility of rapid scale may be completely lost.” Zhao Heng believes.
However, closing the self-operated business does not mean that Amazon has given up the medical cake, and industry consolidation seems to be the only way. In July this year, Amazon announced the acquisition of One Medical, a chain of clinics in the United States, for $3.9 billion, and began to enter the offline medical field. In addition, Amazon is also bidding for Signify Health, a home health service provider, seeking to develop home medical diagnostics.
From Amazon’s point of view, it acquires companies with better services to more precisely meet customer needs. For example, One Medical already has more than 8,000 client companies and its network covers more than 125 locations across the United States.
For the future development of the Internet medical industry, Yuan Shuai, an expert in the field of informatization and digitalization, believes that it is necessary to strengthen the development of vertical fields and extend the product service system.
Yuan Shuai said that Internet medical care will return to rational growth from an explosive growth situation after being favored by capital and the industry in recent years, and the industry will gradually become standardized, and the chain effect brought about by it will inevitably make the industry reshuffle.
The intervention of the Internet can improve the pain points of difficult customer acquisition and high costs in many vertical health service industries.