Amazon’s next move could disrupt healthcare industry

Bloomberg

Amazon.com Inc.’s foray into health care won’t be the first time it has disrupted an entire industry by starting with an effort inside the company.
Amazon Chief Executive Officer Jeff Bezos is teaming up with fellow billionaires Warren Buffett and Jamie Dimon to revamp health care for the 2.4 million workers and dependents of the companies they run. The move fostered widespread speculation the trio will eventually make their approach to medical care available to companies far and wide.
Bezos has a long, increasingly successful, record of starting new businesses on a small scale, often for the benefit of his company, then spreading them to the masses— creating a world of pain for incumbents. Consider the ways Amazon is changing industries as varied as product fulfillment, cloud computing and even the sale of cereals, fruits and vegetables.
Amazon created a network of warehouses around the country to make possible quick delivery of online orders, saving customers a trip to the store. But the access wasn’t limited to consumers. Amazon opened its warehouses to brands and merchants in 2006 with its Fulfillment By Amazon programme. Merchants pay Amazon to store, pack and ship their products to customers, part of the $7.9 billion in revenue from third-party seller services the company racked up in the third quarter. The service lets the Seattle-based e-commerce giant provide a big inventory for shoppers and take a commission on each sale—a more profitable business than buying the merchandise directly.
Amazon’s cloud-computing business began as an internal data management system and has grown to an $18 billion-a-year business that is redefining corporate IT departments. Rather than buying their own servers and maintaining on-site data centers, companies pay Amazon Web Services for data storage and computing functions that they access via the internet. Microsoft Corp. and Alphabet Inc. have followed suit, but Amazon remains the dominant player in the industry. AWS is the company’s fastest-growing and most-profitable business, accounting for more than 10 percent of total sales in the third quarter. Without profit from the unit, Amazon may still be losing money because of its investments overseas.
Amazon Go, a new convenience store in Seattle that lets shoppers check in with smartphones and leave without paying a cashier, is one of the company’s latest attempts to redefine an industry. It spent more than a year testing the concept with employees before opening the store to the public earlier this month. The technology could be sold to other retailers, giving Amazon a greater presence in brick-and-mortar retail without opening additional stores.
That history helps explain the out-sized market reaction to Tuesday’s announcement that Amazon, Berkshire Hathaway Inc. and JPMorgan Chase & Co. are exploring ways to make health care more affordable and effective for employees. The employees and dependents of the three companies represent just 1.5 percent of Americans with employer-sponsored health insurance.
Amazon’s e-commerce operation could be used to send medication direct to patient’s homes, saving them trips to a pharmacy. Its cloud-computing division can store patient health-care records so they can be accessed by doctors anywhere. Its payments system could be used to automate payments with health-care providers.