With Amazon making headlines for reducing lots of of jobs throughout One Medical and Amazon Pharmacy, one trade knowledgeable mentioned there may very well be a takeaway that Amazon is getting out of healthcare. However that might be an “overly simplistic” conclusion.
“The corporate did make a sequence of acquisitions, and I’d count on it to some extent as they decide the place there are overlaps amongst the assorted groups employed in or acquired in,” mentioned Christina Farr, an investor at OMERS Ventures, in an electronic mail. “I’d additionally think about that Amazon is investing in software program that might automate some capabilities, leading to some downsizing. The corporate can be making cuts throughout the board, whereas it’s doubling down in different areas. I stay intrigued by Amazon’s potential within the sector.”
Seattle-based Amazon has eradicated “just a few hundred” healthcare jobs, the corporate confirmed Wednesday to MedCity Information. The information was first damaged by Enterprise Insider Tuesday. It comes after a number of healthcare strikes by the retail large over the past couple of years, together with its almost $4 billion acquisition of major care supplier One Medical; its introduction of Amazon Clinic, a direct-to-consumer telemedicine service; and its launch of RxPass, which gives greater than 50 generic medication for $5 a month to Prime members. In November, Amazon linked its Prime membership with One Medical. However the firm has additionally shuttered a number of healthcare companies, together with Amazon Halo, Amazon Care and Haven.
The job cuts are a results of restructuring as the corporate strikes alongside its healthcare efforts, in response to Neil Lindsay, senior vice chairman of Amazon Well being Companies.
“We’re seeing very robust momentum and optimistic buyer suggestions throughout our well being care choices,” Lindsay mentioned in an announcement to MedCity Information. “As we proceed our mission to make well being care easier for patrons, we’re realigning some sources to assist speed up our efforts to ship one of the best expertise for our sufferers, clients, and members. Sadly, these changes will consequence within the elimination of some hundred roles inside Amazon Pharmacy and One Medical.”
In a memo despatched to staff Wednesday and shared with MedCity Information, Lindsay pushed again in opposition to any ideas that this might sign bother for Amazon’s healthcare enterprise.
“As usually occurs with modifications like this, some pundits could speculate that we’re eliminating roles as a result of our well being care enterprise is underperforming—don’t imagine this hypothesis,” he mentioned. “Probably the most profitable companies, people who ship one of the best expertise for his or her clients, usually undergo phases of reorganization or realignment to place vitality the place they want it most. You might have probably seen many wholesome companies each inside and out of doors of Amazon reprioritizing just lately, resulting in function reductions in some areas and additions in others. That’s what that is.”
However in response to one other trade knowledgeable, there have been “some headwinds setting the stage” for these job cuts.
“Amazon has beforehand cited points with supplier recruitment for One Medical and had tempered expectations that clinic progress can be depending on market circumstances,” mentioned Kate Festle, a director in West Monroe’s healthcare M&A gaggle. “Supplier provide constraints may have slowed clinic enlargement and this can be a right-sizing to mirror a flatter progress arc. This additionally follows integration of One Medical into the Prime subscription mannequin they usually may very well be re-calibrating prices to regulate in opposition to their subscription volumes.”
Festle added that this isn’t simply a problem at Amazon. Gamers like Walgreens are additionally “taking a tougher take a look at the unit economics of their major care footprint.” VillageMD, which is backed by Walgreens, is closing a number of clinics.
Amazon is supporting the workers affected by the job cuts with monetary help, profit continuation and profession help, Lindsay said in a Tuesday memo despatched to staff and shared with MedCity Information.
He additionally informed MedCity Information that the corporate will proceed hiring suppliers and investing in know-how and groups.
Photograph: Flickr, Cerillion Skyline
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