Christopher H. Loo, MD-PhD
The Recent Closing of Amazon Care Shows The Magnitude of The Challenge In Changing Healthcare
by: Christopher H. Loo, MD-PhD
Note: my views. Not investment advice. Article originally published on KevinMD on 9–13–22.
Amazon recently announced plans to shut down Amazon Care, a in-home and virtual health care service.
The reasons cited was attributed to 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 a complete enough offering for large enterprise customers, for which it was targeting.
This is the third healthcare venture that Amazon has ventured into. In 2018, it purchased pharmacy PillPack, as well as partnered with JP Morgan (Jamie Dimon) and Berkshire Hathaway (Warren Buffett) in an attempt to disrupt the healthcare industry. The healthcare venture shuttered its doors after 3 years, with the failure being attributed to healthcare being “too big of a problem”. The implications of recent events are huge, but the bigger question is this:
Are we be doomed to just give up and accept the status quo, and that US healthcare system in its current form will 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 healthcare, 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” — Peter Diamandis, MD.
Recent events shows how healthcare incumbents will do everything they can to maintain the status quo even though it is inherently inefficient and expensive.
This is why over 98% of healthcare startups fail — Healthcare is “too big of a problem, and there are significant hurdles either 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), that started as an online retail bookstore, has gone on to disrupt retail, media, books, cloud, as well as shifted consumer buying behaviors, is having a difficult time in the healthcare space.
In entrepreneurship progress comes from failure. You have to fail so that you can 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% 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, NFT’s, DeFi, metaverse, and countless other examples.
Most recently, Amazon along with United Health, CVS, and Option Care are among the companies making a bid in acquiring 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”.
We’ve seen this scenario play out over and over when innovations such as 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 forwards to the future.
About: Dr. Christopher Loo is a physician who became financially free at the age of 29, and retired early at the age of 38, as a result of making strategic investments after the 2008 financial crisis. A graduate of the MD-PhD program offered jointly through the Baylor College of Medicine and Department of Bioengineering at Rice University, he is the author of “How I Quit My Lucrative Career and Achieved Financial Freedom Using Real Estate”, and is the host of the Financial Freedom for Physicians Podcast. He is a regular contributor to KevinMD and has spoken about the importance of financial literacy for Passive Income MD, the White Coat Investor, Board Vitals, SEAK Non-Clinical Careers, SoMe Docs, Doximity, Medpage Today, FinCon, and other high-profile financial brands geared towards high-income professionals. He is passionate about the role that crypto, fintech, and innovation will play in enabling financial freedom, economic inclusion, access and opportunity for the entire world in the upcoming decades.