Amazon (AMZN) has built a vast empire, from e-commerce and streaming to groceries and electronics, off of its network of Prime shoppers. It's betting that its next big push, healthcare, will cement the company's place as an integral part of consumers' lives.
On Wednesday, the tech giant unveiled a new Prime benefit — a discounted One Medical membership. It's the latest move in offering more health services to Prime members as it looks to further its position in the entrenched industry.
Prime members will have access to One Medical's on-demand virtual care and in-person primary care appointments for $9 a month, or $99 annually, and will be able to add family members for $66 each annually. The family rate represents a 67% discount from the current rate.
People enter an Amazon-owned One Medical office on July 21, 2022, in Oakland, California. (Justin Sullivan/Getty Images) ·Justin Sullivan via Getty Images
Right now, for non-Prime members, a One Medical membership is priced at $199 a year, and there is no family add-on option.
Prime's worldwide head, Jamil Ghani, told Yahoo Finance in an exclusive interview that the launch of the highly anticipated One Medical benefit is coming at a time when many Americans find it hard to visit or locate a primary care provider.
In fact, 40% of Americans don't have a primary physician, Ghani said, and the massive pricing reduction for this One Medical benefit is something Prime is deeply committed to.
"This is not an introductory pricing offer," he said. "We did run a promotion earlier in the year that was a time-limited, temporary discount on the core One Medical membership, and it had a finite duration. This, however, is a benefit," he said.
One Medical's unlimited 24/7 virtual care and appointments within hours at physical locations "solves one of the critical challenges that folks have today, [which] is that they find it hard to engage with their care because they don't have a hub," Ghani said.
And, he added, the electronic health record for each patient is handled securely and appropriately.
Ghani said that One Medical has been staffing up in the event that the Prime membership discount rate, and the appeal of around-the-clock access to a doctor, results in a surge in utilization.
The healthcare services Amazon is building create an integrated hub between non-acute doctor visits and prescription pickup and emphasize Amazon's focus on a robust healthcare play.
In February, Amazon closed its deal to acquire One Medical for $3.9 billion. The acquisition was announced in 2022 and, though there was buzz about the Federal Trade Commission (FTC) challenging the deal, the agency ultimately let the deadline to do so pass.
Since then, the FTC has brought a case against Amazon that focuses on the company's well-loved Prime subscription, alleging that Amazon has tricked consumers into signing up for Prime while making it difficult to cancel the service. Amazon disputes these claims.
In 2019, it launched Amazon Care, a telehealth and in-person visit platform for its employees, though it ultimately shut down in 2022. That same year it launched Amazon Clinic, a telehealth platform to care for 35 common illnesses. The platform is open to all patients, with no insurance requirements or subscriptions needed.
In 2018 it acquired mail-order pharmacy PillPack for $750 million, which turned into Amazon Pharmacy, and earlier this year, the company closed on the deal for One Medical.
Close-up of logo for Pill Pack by Amazon Pharmacy on white paper, San Ramon, California, December 15, 2019. (Photo by Smith Collection/Gado/Getty Images) ·Smith Collection/Gado via Getty Images
It's now becoming clearer on how Amazon wants to tie Prime into its health services.
Prime is an area that Amazon has been investing in substantially in recent years, and the subscription is viewed as a vital part of Amazon's vaunted "flywheel" and the e-retailer's long-term strategy.
"We like to say that we'll launch a new country with Prime — or a new benefit for that matter — as slow as necessary but as fast as possible," said Ghani. "I want to get the value out to members as quickly as possible. We're not going to do it before we know that we can hit that bar with enough staff and integrated systems."
Health services is the next piece of the puzzle. It can create value in its own right and as a prized part of a bigger offering. Prime already offers a vast array of benefits for members, from credit cards to other Amazon-related subscriptions like Kindle and Audible. Members also have access to "Buy With Prime," a service that allows customers to shop with Prime at third-party online stores.
Though Amazon and Prime view One Medical’s offering as “broadly appealing” according to Ghani, patients will respond to One Medical's tech-centric approach in different ways.
“For example, [if] I can correspond through instant messaging with my doctor, and I get a personal follow-up, that works for me," said Ghani, while people with chronic health issues may have needs beyond primary care.
"It doesn't mean that [One Medical] is less valuable. It just fits differently into your overall health needs," he said.
Earlier this year, Amazon rolled out a Prime benefit for Amazon Pharmacy, RxPass, which provides a range of generic medication for a flat fee of $5 per month. Prime members also enjoy a free prescriptions savings plan that knocks off up to 80% of the price of generics and 40% of the cost of brand-name drugs when buying without insurance.
Ghani said in recent months the utilization of drug benefits has increased, and Amazon Pharmacy has doubled its active customers in the past year, but declined to share further details.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. Follow Anjalee on all social media platforms @AnjKhem.
