Is AMZN Disrupting Healthcare Digitization?

According to RBC Capital, the total healthcare digitization market is worth around $300B. This is just a slice of the massive $3.2 trillion healthcare market.

Luckily for Amazon the consumer health IT market is almost nonexistent right now. It is largely a derivative of the managed care market, with beneficiary technologies often sold to payers.

Aside from Cerner and Epic, major competitors highlighted by the firm include UnitedHealth’s Optum unit, Medidata, Veeva and IQVIA in clinical research.

That said, can Amazon be a successful leader in this market?

“Success may be hard to define, given that this market underwent ~6-7 year investment cycle propelled by large government stimulus. As such, we are seeing the end market flatten and providers are looking to spend capital in other places” the RBC report states.

Plus the provider-facing IT space often has been a cautionary tale for multi industry technology vendors. For example, none of Microsoft, Google, or Oracle have seen the market success of healthcare-only focused vendors.

Mahaney’s Take

“The introduction of this new software demonstrates Amazon’s focus and investment in machine learning technology across verticals” writes Mahaney.

Clearly, Amazon has a growing interest in the $3.2T healthcare market, given its ~$1B PillPack Inc. acquisition, its attempts to penetrate the medical supplies market, and this recent announcement of Amazon Comprehend Medical.

However what remains unclear still is how much of a disruptor will Amazon be in each of these three healthcare categories.

“We wonder if the big tech companies are better positioned to disrupt the healthcare industry vs. the traditional healthcare companies” writes Mahaney. He believes that Amazon’s customer obsession will likely create material impact on consumers/patients within healthcare.

Net-net, Mahaney believes that, while Amazon could be a major disruptor in healthcare, it will likely be more successful with one part of healthcare over another. This explains its current strategy of covering different parts of this category.

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