For the better part of a decade, One Medical has been my primary care provider. It’s convenient, with locations all over the Bay Area, and I love being able to make an actual same-day appointment or get a quick referral to a specialist.
One Medical knows a lot about me. In addition to many years of clinic visits and virtual chats, I use a mobile app to record my blood pressure and resting heart rate, check my lab results and renew prescriptions as needed. Therefore, I pay a membership fee of $199 annually.
But I didn’t take into account the possibility that Amazon would one day own One Medical.
The same company that sends me countless boxes every week, feeds my Kindle with book recommendations and my Smart TV with movie suggestions, tells my kids the weather forecast when they call Alexa, and offers major discounts when I shop at Whole Foods about to offer my services I own the portals that contain my most sensitive information.
I’m not the only one who thought about this with deep concern Thursday after waking up to the news that Amazon had agreed to buy One Medical for $3.9 billion. At $18 a share, Amazon is paying a premium of 77% to where the primary care company was valued the day before.
As one member wrote on Twitter, “After an extensively positive experience with One Medical, I canceled my membership today. I don’t trust Amazon acting in good faith with my health data.”
Law and Customer Trust
Founded in 2007 and headquartered in San Francisco, One Medical provides clinical services in 16 US markets, with three more soon to come, according to its website. At the end of last year, the company had 736,000 members.
Amazon did little to assuage my fears by announcing the acquisition. The company said nothing to provide One Medical customers with any convenience, and there was no conference call to discuss the acquisition, as is the norm in many large transactions. Closing the deal will require regulatory approvals.
In response to a query for this story, Amazon offered a minimum level of guarantee that it would comply with government regulations, under the Health Insurance Portability and Accountability Act (HIPAA), which limit how the company can use Protected Health Information, or PHI. This includes all personally identifiable information as well as medical history, lab test results, and other health data.
“As required by law, Amazon will never share personal health information of One Medical customers outside of One Medical for the purposes of advertising or marketing other Amazon products and services without the express permission of the customer,” an Amazon spokesperson said in an email. “In the event of a transaction closing, One Medical’s HIPAA-protected health information will be treated separately from all other Amazon companies, as required by law.”
In other words, everything One Medical knows about me is supposed to stay in that protected silo. Whatever profile Amazon has built on me and my family, from shopping habits and travel preferences to the shows we watch together on the weekends, it won’t mingle with my health data.
Despite the laws, Amazon will have to work hard to convince consumers — and likely politicians — that its intentions are pure and that its main goal is to help “drastically improve the healthcare experience over the next several years,” Amazon Health Services lead Neil Lindsey said in the statement. The journalist announced the deal.
After all, along with its giant retail and cloud divisions, Amazon created a highly profitable advertising business that generated more than $31 billion in revenue last year and grew 58%. Most of that money comes from brands that pay big bucks to promote their products on Amazon properties, as the competition for eyeballs gets higher.
Amazon controls nearly 13% of the online ad market in the United States, trailing only Google and Facebook, according to Insider Intelligence.
“I don’t think there’s anything Amazon can do to get people to trust the company with their healthcare information,” said Caitlin Seely George, campaign manager at Fight for the Future, an advocacy group focused on technology and digital rights.
Seely George said in an email that the issue of health privacy is of particular importance after the Supreme Court overturned Roe v. Wade, which ended the constitutional right to abortion. Some decisions about reproductive health that until very recently were protected by law can be considered illegal.
Amazon has already restricted sales of emergency contraceptive pills after a surge in demand in the wake of the Supreme Court ruling. Google said it will quickly delete the location history of people who go to abortion sites.
“Moving forward with healthcare raises some serious red flags, especially in a post-Road reality where people’s data can be used to criminalize their own reproductive healthcare decisions,” said Seely George.
Seely George also questions whether, outside of HIPAA regulations, Amazon could roll out a fertility or mental health tracking app and collect information that “can be used to make assumptions about an individual that can be used against them.”
Amazon already has a health tracker called Halo that collects information like body fat percentage, activity levels, and sleep.
Not the first rodeo
Technical optimists are likely to scoff at such sarcasm. The status quo in healthcare is miserable. Systems are outdated and don’t talk to each other, bills are notorious for being murky and complicated, and medical care is ridiculously expensive.
Amazon has been rushing into the health field for years, realizing the many flaws and inefficiencies in the system and trying to better take care of its huge employee base, which jumped to 1.6 million last year from 1.3 million in 2020.
Amazon bought Internet pharmacy PillPack in 2018 for $750 million and launched Amazon Pharmacy two years later. The company is investing in a telehealth service called Amazon Care, which launched as a beta program for some employees in 2019 and is now available for other employers to offer as a service to their employees.
Dina Shaker, a partner at investment firm Lux Capital and an investor in several health tech startups, noted that for Amazon, this “isn’t the first healthcare rodeo.”
“Amazon is very aware of how to approach HIPAA considerations and has experience across multiple products with this,” Shaker wrote in an email. This type of deal, she wrote, “should encourage additional partnership between major companies and major players in the health technology space.”
Shaker Corporation is an investor in Carbon Health, which provides primary and urgent care facilities in 16 states. The company serves about 1.1 million patients and, compared to One Medical, typically targets a less affluent demographic.
Analysts say Amazon is preparing to disrupt the $934.8 billion global pharmaceutical industry.
Erin Bali, CEO of Carbon Health, agrees with Shakir that Amazon is severely restricted in how it uses data. As for other big tech companies like Facebook and Google, he says Amazon gets a fair amount of trust from consumers.
But Bali understands why there is concern. Medicare companies have vast amounts of personal data, including Social Security numbers, driver’s license numbers, insurance card numbers as well as all of the health information in their systems. Patients are more willing to hand over personal information to doctors and nurses than other types of providers.
And while there are strict regulations for how this data is used, consumers can reasonably ask what happens if a company like Amazon will break the rules.
“Unfortunately there are no robust technical solutions to enforce data access, which is a major weakness,” Bali said in an interview. He said whether patients should worry about it is a “personal decision.”
Bali is generally optimistic about Amazon’s leap into space. Bali said that when Amazon makes a flashy announcement that it has reached an outdated market with existing majors, existing players find themselves forced to take action to avoid being wiped out.
He cited the purchase of Amazon Bellpack as an example. As Amazon struggles to gain traction in the pharmaceutical field, Bali said entering the market has prompted companies like Walgreens and Walmart to enhance their digital offerings in ways that are beneficial to consumers. The One Medical deal could similarly improve products and services in the world of primary care.
“Big companies don’t usually feel threatened by small startups,” Bali said. “But they are really threatened by Amazon.”
CNBC’s Annie Palmer contributed to this report.
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