Amazon's health care move could be a big win for consumer health start-ups

Key Points
  • Amazon views technology as a key part of its strategy to drive down costs.
  • Telemedicine companies could be the big winners.
  • Here's why.
Don't count insurers out on new Amazon, Berkshire and JP Morgan health-care plan

Amazon, Berkshire Hathaway and J.P. Morgan Chase are teaming up to reduce health care costs for their own employees.

Among the likely big winners: Telemedicine companies like Teladoc and American Well.

Start-ups that offer virtual care as an alternative to sending an employee to a physical doctor's office, will likely play a big role in lowering costs. These companies have spent the past decade pushing for federal and state governments to provide clinicians with a way to bill their patients for consultations conducted via video or over the phone, and have made some major progress.

These apps provide a first-step alternative to visiting a doctor in person, which is a real hardship for many Americans living in rural areas. Because they live so far from doctors, a lot of people in rural areas delay or avoid doctor's visits until they're really sick.

Amazon founder and CEO Jeff Bezos speaks at the new Amazon Spheres opening event at Amazon's Seattle headquarters in Seattle, Washington, U.S., January 29, 2018.
Lindsey Wasson | Reuters

Getting them to take a ten-minute call with a doctor to figure out next steps could drive down costs for employers. The last thing that a company like Amazon wants is an employee to make an unnecessary, and very expensive, trip to the emergency room.

One big problem with these apps: A lot of people don't know they exist. Teaming up with three huge employers could raise awareness.

"Amazon wants to create healthcare coverage for its employees that starts with technology… telemedicine fits that bill to the T," said Roy Schoenberg, chief executive at American Well, a company that offers telemedicine services to employers.

Other companies that will likely benefit from Amazon's moves in health care are consumer-focused tools that help people find available doctors, book appointments, and get advice on paying their medical bills.

Some start-ups that fit the bill include ZocDoc, an Opentable-like service for health care that Bezos' investment fund made an early bet on; Amino Health, a consumer transparency tool; and Accolade, which works with self-insured employers to help their workers navigate their health insurance and deal with other issues.

"The announcement this morning puts it in center stage and turns the lights on," said Schoenberg. "Bravo."

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