Amazon has announced it is shelving its plans to sell pharmaceuticals to hospitals. Amazon faced several major hurdles with the initiative, including how the healthcare industry is resistant to innovation. The other large takeaway is that Amazon has not completely abandoned the healthcare industry or the concept of being in the pharmaceutical business.
When it came to proposing a new drug distribution model, Amazon faced loyalty and buying factors of the hospital system that made it resistant. This is not the first time Amazon failed in its first attempt to disrupt a distribution model. The very origin of Amazon is founded in disrupting traditional distribution. The healthcare industry will be tougher to disrupt since it does not operate in a purely open-market model. The forces that allowed consumers to make their choices and vote with their wallets aren’t present in the healthcare industry, as picking the highest value provider when riding in an ambulance is not an open-market dynamic.
Additionally, Amazon still has efforts underway in the healthcare industry. Their alliance with JP Morgan and Berkshire Hathaway continues, as does the secretive Grand Challenge team sometimes known as “1492”.
The point is to treat the news as a development or a chapter in the story, rather than the end. Earlier this week, news came out about the disruptive impact Amazon is having on banking and the other industries it will set in its sights, including the property/casualty industry. For property/casualty, the latest withdrawal of Amazon is not a time to relax. Rather, it is a reprise with a need to keep one eye on this major industry disruptor and its possible impact on workers’ comp and liability medical delivery models.
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