Amazon is doing to healthcare access what Booking did to travel. Here is how it ends.
Amazon's June 2024 consolidation of Amazon Clinic into the One Medical platform, with virtual-care visits priced at $29 for the simplest visit-types and $49 for the broader scope, plus the integration of Amazon Pharmacy fulfillment and the Prime-member discounting, is the Booking-Holdings-to-travel pattern applied to U.S. healthcare access. The pattern is recognizable from a decade of travel-industry consolidation. Reduce friction in the consumer-facing layer. Aggregate enough volume to negotiate the supply side toward the platform's terms. Make the higher-margin incumbents unable to justify their margin against the consumer-experience the platform provides. The travel category lived this from roughly 2010 to 2020. The healthcare-access category is living it now.
This essay walks the Booking pattern, the Amazon moves so far, what the endgame looks like for the healthcare-access incumbents, and what the operator-class read on the next 24-36 months should be.
The Booking pattern, briefly
The Booking-Holdings pattern in travel ran roughly as follows. Aggregate consumer demand into a single platform with substantially better consumer experience than the supply-side incumbents (the chains' direct-booking sites, the travel agencies, the legacy GDS-mediated channels) were providing. Use the aggregated demand to negotiate take rates with the supply side that the supply side could not refuse without losing access to the consumer. Continue investing in consumer-experience improvements to compound the demand-aggregation advantage. Watch the supply side either accept the platform's terms or watch its share of the market migrate to the platform anyway.
The travel-industry result by 2020 was a consolidated demand-side with two major poles, take rates that compressed the supply-side margin, and a consumer experience that was substantially better than the pre-platform alternative. The supply-side incumbents that had been operating with high margins on the difficulty of the consumer-facing booking experience could no longer justify those margins. Some adapted. Some did not. The consumer benefited and the structural shape of the industry changed.
The Amazon moves so far in healthcare access
Amazon's healthcare-access strategy through 2018-2024 has been consistent with the Booking pattern. The acquisition of PillPack in 2018 to enter the pharmacy fulfillment layer. The launch of Amazon Pharmacy in 2020. The acquisition of One Medical in 2022-2023. The launch of Amazon Clinic in 2023. The June 2024 consolidation of Clinic into One Medical with the $29/$49 pricing structure and the Prime-member integration.
The pattern is the same as Booking's. Aggregate consumer demand around a substantially improved consumer-facing experience (the One Medical brand, the Prime-member integration, the simple price points, the Amazon-grade UX). Drive the price point down to the level where the consumer's choice is obvious against the alternative incumbents (the urgent-care clinic, the in-person primary-care visit, the existing telehealth options). Use the resulting demand aggregation to negotiate the supply side toward the platform's terms.
The early signals through 2024 are that the demand-aggregation is working. One Medical's enrollment trajectory has been accelerating since the Prime integration. The $29/$49 price points are well below the typical out-of-pocket cost the consumer faces at urgent-care or in-person primary care. The consumer-experience improvements (the integrated app, the same-day virtual access, the prescription-fulfillment integration) are real and compounding.
The healthcare-access incumbents have not yet seen the structural pressure the travel-industry incumbents saw in the early 2010s, but the trajectory is consistent with what produced the structural pressure later in that cycle.
How the pattern ends in healthcare access
If the Booking-pattern analogy holds, the healthcare-access endgame over the next 5-10 years runs along several lines.
The first line is incumbent margin compression. The urgent-care category, the standalone-telehealth category (Teladoc, MDLive, the various employer-platform offerings), and the in-person primary-care category will face progressively harder consumer-acquisition pressure as Amazon's aggregated platform offers a substantially cheaper and substantially better-integrated alternative. The incumbents will respond with some combination of price reductions, service-quality improvements, and integration with the Amazon platform on the platform's terms.
The second line is supplier-side consolidation in the platform's wake. Just as the travel-supply-side consolidated under Booking's gravitational pressure (the smaller OTAs absorbed, the regional chains negotiating with Booking's take rates, the long-tail of independents accepting the terms), the healthcare-access-supply-side will consolidate as the smaller players exit and the larger players negotiate against Amazon's terms. The endgame includes some health systems and provider groups partnering deeply with Amazon and others either competing on Amazon's terms or losing share.
The third line is the regulatory engagement. Healthcare is more regulated than travel was, and the regulatory engagement with Amazon's healthcare-access strategy is going to be more substantive than the travel-industry's regulatory environment was. The state-level licensing requirements for telehealth, the federal-level Medicare-and-Medicaid integration questions, the pharmacy regulations, the privacy-and-data regulations, all add complexity that the travel-industry trajectory did not face. The regulatory engagement could slow or shape the trajectory but is unlikely to fully block it, because the consumer-benefit story is real and the regulators have been generally accommodating to the consumer-benefit framing.
The fourth line is the longer-cycle clinical-quality question. Travel had no equivalent of clinical-quality concerns when supply-side margin compression happened. Healthcare does. The compression of provider-tier compensation that Amazon-style platform pressure produces has clinical-quality implications that the travel pattern did not have to address. The endgame will include either a regulatory or market-class mechanism for managing the clinical-quality question, with the form of the mechanism not yet visible in 2024-2025.
What the operator class should take from this
For founders building in the healthcare-access category in 2024-2026, the practical advice is to build either with Amazon as the platform partner or in the specialty-vertical positions that Amazon's horizontal platform cannot serve. Building horizontal-consumer-facing healthcare-access against Amazon's aggregation is structurally difficult and was difficult in the travel category against Booking. The startups that survive this cycle will be the ones in the integration tier, the specialty vertical, or the partner ecosystem.
For health-system and provider-group operators, the read is that the next 5-10 years will see the consumer-facing access layer consolidate around Amazon and a small number of other platform-tier vendors, and the operating margins on the consumer-facing access category will compress. Operators planning against the historical margin structure will be disappointed. Operators planning against the platform-terms structure will be better positioned, with the flexibility to adapt to the platform partner most aligned with their operating model.
For investors evaluating the healthcare-access category, the read suggests that the platform-tier consolidation is likely to capture the consumer-margin-compression upside, and the supply-side investments should be priced against the compressed-margin scenario rather than the current-margin scenario.
The Booking-to-travel pattern took roughly a decade to fully play out. The Amazon-to-healthcare-access pattern will probably take a similar timeline. The early years (2024-2027) will look like the early-2010s travel pattern: visible aggregation, modest margin pressure on incumbents, some adaptation. The later years (2028-2034) will look like the late-2010s travel pattern: structural margin compression, supply-side consolidation, the consumer benefit being the visible story while the operator-side margin shifts. Operators reading the pattern correctly will position for the later years, not the early ones. The trajectory is set. The endgame is recognizable from the travel template. The healthcare-access incumbents who have not yet started planning against it should start now.
—TJ