Amazon recently announced plans to shut down Amazon Care, an in-home and virtual health care service.
The reasons cited were attributed to a significant overlap of services with the One Medical chain of clinics, which Amazon purchased in July of this year for 3.9 billion, as well as Amazon Care not being a complete enough offering for large enterprise customers for which it was targeting.
This is the third health care venture that Amazon has ventured into. In 2018, it purchased pharmacy PillPack and partnered with JP Morgan (Jamie Dimon) and Berkshire Hathaway (Warren Buffett) to disrupt the health care industry. The health care venture shuttered its doors after three years, with the failure being attributed to health care being “too big of a problem.”
The implications of recent events are huge, but the bigger question is this:
Are we doomed to just give up and accept the status quo, and will the U.S. health care system in its current form never change?
I think that this is only the beginning rather than the end. Either Amazon or other challenger(s) will rise to upend existing incumbents.
Anytime you are attempting the impossible or trying to change large existing industries such as health care, there are sure to be huge challenges and obstacles on multiple fronts.
“Impossible” goals are referred to as “moonshots.”
Prominent examples of moonshots include sending a man to the moon, taking a company public, or finding a cure for cancer.
One of my favorite quotes is, “The fastest way to becoming a billionaire is to find a solution to a problem that helps a billion people,” by Peter Diamandis, MD.
Recent events show how health care incumbents will do everything they can to maintain the status quo even though it is inherently inefficient and expensive.
This is why over 98 percent of health care startups fail : Health care is “too big of a problem, and there are significant hurdles due to lack of funding, experience, or excessive regulation, bureaucracy, and politics.
A behemoth such as Amazon (with over 1.3 trillion dollars in market cap as of this writing), which started as an online retail bookstore, has gone on to disrupt retail, media, books, and cloud, as well as shifted consumer buying behaviors is having a difficult time in the health care space.
In entrepreneurship, progress comes from failure. You have to fail to increase your iteration (learning) rate. The higher your iteration rate, the greater your chances of success. Therefore, it is important to fail on a small scale, fail early, and fail often, in contrast to conventional thinking, which is tied to playing it safe, not taking risks, and viewing failure as “risky.”
This is why I believe Amazon will eventually win out. It is increasing its iteration rate, learning from each failure, and chipping away at the status quo with each new venture. It has the capital, talent, experience, management, and leadership. Eventually, each new venture will bring the company to a “tipping point” that results in progress and advancement on multiple fronts.
This process is known as the cycle of innovation. Examples include Uber-Lyft, Airbnb, Coinbase, and countless other examples.
In Silicon Valley, companies such as Google, Meta, and Apple allow employees to devote 10 percent of their time to work on “moonshot” projects, with the majority of these mini-projects “failing.”
However, what emerges from these failures becomes the seed for future innovations such as Gmail, search, social media, digital currencies, NFTs, DeFi, metaverse, and countless other examples.
Most recently, Amazon, along with United Health, CVS, and Option Care, are among the companies making a bid to acquire Signify Health, which is a company that uses analytics and provider networks to assess value-based payment programs. Signify is the largest home health risk assessment provider in the United States. The move to acquire Signify suggests that in-home health services is the next niche to be competing in.
One of my mentors once said to me, “The greatest rewards come from taking bigger and bigger risks. However, those risks have to be calculated and strategic.”
Similar trends were seen when the internet, search, streaming video, mobile, cloud, social media, blockchain, and digital assets came onto the scene. It will only be a matter of time, and I am preparing and looking forward to the future.
Christopher H. Loo is a retired physician and founder, Financial Freedom for Physicians.
Image credit: Shutterstock.com