On Feb. 22, Amazon officially announced the closing of its July agreement to acquire One Medical for $3.9 billion. After shuttering its Amazon Care business providing virtual and limited in-person primary care services to employers, the retail giant is taking a new path into healthcare. The strategy is to leverage One Medical’s network of boutique primary care and telehealth physician practices to build out and bolster Amazon Clinic, a secure portal offering patients personalized treatments and prescriptions for more than 20 different medical conditions ranging from headaches to hair loss provided by doctors and nurse practitioners (NPs) in 32 different states. (“Amazon Makes Third Attempt to Disrupt Healthcare Business,” Laboratory Industry Report, December 1, 2022).
Using One Medical’s platform to create a direct-to-consumer service more closely resembles the model that Amazon used to disrupt the retail market. Simply stated, Amazon excels at making it easy, inexpensive, and convenient for customers to get what they want from the marketplace. So, the Amazon Clinic approach seems to make more sense than trying to construct a provider network a la the Amazon Care venture.
But there may be a fly in the ointment: the US Federal Trade Commission (FTC). The agency has expressed antitrust concerns about the One Medical acquisition and Amazon’s general business practices. It has been widely reported from sources including the Wall Street Journal, Bloomberg, and Seeking Alpha, that the FTC was considering an antitrust lawsuit to block the One Medical deal as early as this spring. While the closing takes the immediate risk of an injunction off the table, the FTC may yet intervene in the matter.
The Biden administration has gone out of its way to express concerns about unchecked consolidation in the healthcare market. On July 9, 2021, the president issued an Executive Order calling on the FTC, Department of Justice, and other federal agencies to vigorously enforce the antitrust laws, especially in the healthcare markets, noting that the 10 largest healthcare systems now control a quarter of the market.
The FTC has also been investigating Amazon for several years. The new probe reportedly focuses on the e-commerce behemoth’s wider and supposedly anti-competitive business practices, including the recent acquisitions of not only One Medical but also Roomba vacuum manufacturer iRobot Corp., which Amazon announced it was purchasing for $1.7 billion last August. Although it’s now too late to get an injunction barring the deal from closing, the FTC could still seek damages and even take steps to force Amazon to unwind the deal.
See the full version of this article and M&A Report in our March 2023 Laboratory Industry Report.