How Amazon Is Building A Healthcare Benefits Marketplace

Digital health programs struggle to enroll consumers. Amazon is bringing its consumer marketing expertise and data advantage to build the supply side of its next great marketplace.

While many hailed the Lilly Direct announcement as an innovation in how patients access care, the primary advance was eliminating savings cards for cash-pay patients on Eli Lilly’s blockbuster GLP-1 Tirzepatide (Mounjaro/Zepbound). The much bigger innovation was Amazon's deal with Omada Health as part of its ‘Health Conditions Program’. While the announcement was short on details, Amazon agreed to market Omada’s programs to Amazon members who have existing coverage for them. By leveraging its consumer scale and the existing network contracts of its providers, Amazon is able to begin to build out a contracted provider network, not just owned and operated groups like Amazon Care and OneMedical. 

Omers Ventures healthcare investor Chrissy Farr was spot on explaining how Amazon could solve the marketing/utilization problem for digital health startups. This is the first instance I’ve seen from Amazon that differentiates its healthcare offerings. Amazon has more than 160 million Prime members in the US, more than 3x UHC’s roughly 53 million members. Prime members also interact with the Amazon website regularly, whereas I’m fairly certain nobody chooses to spend time on the UHC website unless they’re trying to accomplish something specific. While UnitedHealth and the other big holding companies have data assets of their own, they lack the diversity of data and the depth of engagement that Amazon has with its members.

While I’ve heard about other partnerships in the works, I haven’t heard of any specific deals that are imminent. Once Amazon gains enough scale on the provider side, it can start to sign deals with health plans and employers. Digital health startups will give preferential pricing to Amazon if it can increase the enrollment numbers.  Amazon can become the unifying platform between employers and digital health providers.

Point Solutions Management Sounds Boring, But It’s Important

Point solutions management platforms for health and wellness benefits are managed, three-sided marketplaces between employers, employees, and health & wellness benefits providers. They deliver specialized, standalone benefits and services designed to cater to specific employee needs. The challenge lies in effectively serving all three constituencies. A 2022 Mercer survey found that 40% of large employers lack the expertise to assess clinical claims. If you run employee benefits for a local school district with 4,000 covered lives, how are you going to evaluate the dozens of different obesity solutions from major healthcare companies like UHC and Cigna to weight loss services like Noom and WeightWatchers. Each category has numerous providers that are hard for employers and consumers to distinguish between.  While evaluating the efficacy of solutions is confusing and frustrating, the complexities of contract negotiations, platform integration, and employee enrollment & engagement creates additional hurdles.

Point solutions management platforms also act as unified hubs for employees to find wellness solutions. While better than employers themselves, these platforms still struggle to reach employees through portals or outbound marketing efforts (primarily phone/email/direct mail). Through its Amazon Pharmacy offering, Amazon has already built a great deal of the administration infrastructure required to deliver a point solutions management solution to employers and its employees embedded within the familiar Amazon eCommerce environment.

Amazon's Strategic Entry

Amazon is solving the supply side of its marketplace by solving for providers’ biggest problem, marketing. As Chrissy mentioned in her post, marketing to enroll eligible employees in healthcare benefits is one of the biggest problems for healthcare startups.  With a dominant 37.8% share in U.S. eCommerce spending, Amazon isn't just a retail giant; it's a data ingestion engine. Its advertising business is a testament to this, boasting nearly $45 billion in revenue in 2023 up from $1 billion in 2014. Amazon’s advertising business is so successful because it is great at harvesting user intent and converting it into a purchase. This success in understanding consumer intent positions Amazon perfectly to venture into marketing healthcare programs.

When Chrissy posed a question about innovation in digital health marketing in Health Tech Nerds, a healthcare themed slack community we are both members of, this was the best response she got:

Amazon’s marketing capabilities are centuries ahead of what is currently considered state of the art, e.g. sticking a marketing flyer in an explanation of benefits (EOB) mailer. They can begin to build a point solutions management offering without signing a single employer. Amazon’s amalgamation of consumer data with pharmacy and insurance information gives it a capability even giants like UnitedHealth can't match. By harnessing this data, Amazon can:

• Recommend healthcare programs for which patients are eligible and covered.

• Target specific patient needs based on their pharmacy data, browsing, and purchasing habits.

• Build marketing partnerships, creating a nationwide provider network.

For instance, an individual purchasing a knee brace while using pain killers could receive targeted advertisements for Hinge Health (PT/MSK provider), while those on antidepressants and buying yoga pillows might see promotions for mental wellness programs like Headspace Health.

Amazon can bundle these programs with its existing offerings like Amazon Pharmacy and One Medical, offering a more comprehensive offering for self insured employers and independent health plans. Tighter integration between medical and pharmacy benefits can allow Amazon to better measure the efficacy of specific point solutions, especially companies like Virta, which offers keto-based diabetes reversal program that market their ability to lower pharmacy utilization. As food-as-medicine and other wellness point solutions begin to proliferate, integration with Amazon and Whole Foods provides a streamlined retail and grocery experience for employers and consumers that only Walmart can match. The biggest remaining gaps would be local provider networks and a PBM offering, most likely in partnership with an independent PBM like Navitus and Capital RX.

Big 3 Offerings

The big 3 point solutions management offerings are primarily sold to existing customers, as it is far simpler for plan sponsors to integrate these point solutions into their existing contracts. All of these platforms administer end-to-end contracting on behalf of their clients. They identify and target members who may benefit from specific solutions and provide clinical outcomes and engagement reporting.

UnitedHealthcare (UHC Hub): The UHC Hub provides a curated network of vendors aimed at simplifying the selection and purchase of vendor programs for employers. UHC has been rumored to receive equity stakes in companies on its platform in return for pushing sales volume. 

Vendors Include:

•  2nd.MD for virtual consultations

• Cleo for family benefits

• Hinge Health and Kaia Health for chronic musculoskeletal conditions

• Jasper Health for cancer support

• LetsGetChecked offers home diagnostics

• Livongo for chronic condition management 

• Maven’s women's and family health virtual clinic

CVS Aetna (CVS Aetna Point Solutions Management): CVS Health's offering is designed to complement core health benefits with targeted health and wellness solutions. The offering is streamlined to include 11 vendors and no CVS Health owned offerings.

Vendors Include: 

• Carrum Health's value-based Center of Excellence platform that helps reduce plan sponsors’ surgical and cancer spend.

• Daylight for anxiety reduction

• Hello Heart's heart health app

• Progeny’s fertility solutions

• Wondr Health and Weight Watchers for chronic disease management

Cigna (Evernorth Digital Formulary): The Evernorth Digital’s Formulary includes a variety of owned platforms offering specialized digital health solutions. One of these is the Weight Management Care Value program, which provides members with access to new therapies like Wegovy and Zepbound. Additional virtual care options are provided by Cigna’s MDLive. Another owned platform is FamilyPath, an integrated solution designed to help users navigate their fertility journey. This platform leverages the capabilities of Express Scripts and specialty pharmacy Accredo, both part of Evernorth, to address gaps and challenges in understanding and navigating fertility treatment.

Vendors Include: 

• Omada (preferred vendor) and Livongo provide digital cardiovascular, diabetes and diabetes prevention programs 

• Propeller Health provides COPD care

• Big Health provides Sleepio for insomnia and Daylight for anxiety

• Quit Genius offers tools for managing alcohol and opioid use disorders

• Hinge Health offers multiple musculoskeletal disorder solutions

Independent Point Solutions Management Offerings

Accolade Health : Accolade provides services for employers centralizing resource for managing healthcare benefits for employees and their families. This includes medical opinion and decision support, as well as administrative services for virtual primary care. Recently, Accolade expanded its offerings by teaming up with Blue Shield of California to launch the Virtual Blue plan, a virtual-first health initiative. Additionally, Accolade has acquired 2nd.MD, enhancing its capabilities in offering expert medical opinions and consultations, and further diversifying its comprehensive healthcare navigation experience. In addition to owned and operated services Accolade leverages outside partners on its platform. Headspace Health offers digital mental health and wellness resources, while Brightside provides online mental health support. Carrot delivers fertility benefits solutions, and Carrum Health connects employers and providers for bundled payment healthcare services. 

Transcarent: Transcarent is a healthcare startup founded by Glen Tullman, the Co-Founder & CEO of Livongo. Transcarent’s employer benefits platform operates on a premium-free model, offering a range of services to self-funded employers and health systems. Its primary offerings include on-demand care, information, and support for everyday needs, medication information, pricing, prescription transfers, and access to clinically integrated live pharmacy care and guidance 24/7. It also offers rapid access to quality therapists and other behavioral health specialists, at-home physical therapy, surgery from top doctors, and concierge support. Additionally, it provides comprehensive case reviews, treatment, and whole-family support for cancer care. Transcarent has established several strategic partnerships to enhance its service offerings. It has partnered with Prescryptive Health to develop a pharmacy program, providing more cost-effective pharmacy benefits. To expand access to medical specialists, Transcarent has teamed up with The Clinic by Cleveland Clinic, a joint venture with telehealth company Amwell.It has also signed partnerships with Walmart Health as well as elite health systems like Intermountain and Mount Sinai.  Transcarent also acquired the provider group of virtual health company 98point6 to expand its in-house care delivery capabilities.

Amazon's Long Road Ahead

Even for a company as big as Amazon, building its healthcare benefits business will take a long time and a lot of resources (i.e. people and $$$). Early forays like point solutions distribution reflect Amazon's merchant DNA. While the big three and independent competitors focus on a contracting advantage within the existing healthcare framework, Amazon's approach leverages its dominant consumer platform to convert its users into patients. Amazon can build relationships with providers on the strength of its marketing capabilities, rather than its contracts with employers. It can organically build these relationships but scaling these programs will still take time.

Building through acquisition is more fraught. Existing platforms like Accolade / Transcarent or PBMs like CapitalRx offer a turnkey solution for building out Amazon’s offering but would likely result in antitrust considerations that could result in regulators blocking a deal. While Amazon avoids potential conflicts from most point solutions partnerships, with M&A it must tread carefully. 

Local and regional health systems present another challenge as Amazon scales its network. Even large payors struggle to negotiate hospital rate concessions. While startups readily accept Amazon’s overtures, established non-profit and PE backed systems will be skeptical. Without offering a big carrot upfront, Amazon may face substantial initial resistance from specialty practices and prominent health systems.

While the Omada partnership represents a modest foray into health benefit marketing, it lays the groundwork for Amazon to challenge incumbent payers across broader areas of healthcare. Amazon is amongst the only insurgents with both the scale to compete on thin margins and the strategic patience to invest in long term growth. While provider marketing may seem like an insignificant offering, it will fuel Amazon’s provider acquisition engine. If Amazon can move beyond digital health companies like Omada and provider networks across geographies and specialties, it can stop nibbling at the edges and begin to seriously threaten the big three.