Amazon and Apple are getting into medical clinics—here’s why

Sept. 10, 2018

Many companies with large offices are now offering on-site or nearby medical offices for workers to access high-quality care. That’s the case for all the large technology companies, like Facebook and Apple, which have clinics on campus to serve thousands of employees’ medical needs.

But something has changed in the past few years.

Rather than continue to work with third-party companies to operate these clinics, a few technology companies—most notably, Apple and Amazon—are branching out on their own. CNBC reported earlier this month that Amazon is launching a clinic in the coming months for a small number of workers, with a goal of expanding in early 2019. Apple, meanwhile, has been hiring like mad for its employee health clinics, which operate under a separate legal subsidiary called AC Wellness.

So why are these companies getting into primary care? It’s not their core competency, and it’s not exactly a money-maker in the short-term.

CNBC talked to a group of health experts in the space to find out.

Companies that are looking to manage their out-of-control health costs are all coming to the same conclusion. To really make a dent, they need to get involved when it comes to the most important, and most human, part of healthcare. And that’s the relationship between the patient and the primary care practitioner.

A family doc can steer a patient to expensive specialists and to unnecessary tests and procedures, which adds to an employer’s bottom line. Or they can help manage the patients’ lifestyle, steer them to in-network specialists, and discourage them from taking expensive medicines they don’t need. The latter can save an employer a lot of money in the long-run.

“Employers generally have become extremely frustrated about the enormous expense of the healthcare system as well as the inconsistent, at best, quality experienced by their employees,” explains Micah Weinberg, president of the Bay Area Council Economic Institute, a think tank focusing on local policy issues. “So seeing our two ‘trillion dollar’ companies making this investment is not shocking.” (Both Amazon and Apple recently reached the elusive trillion-dollar market cap).

“If you want something done right,” he said, “you have to do it yourself.”

To get to their next trillion dollars, Apple and Amazon are realizing that they can’t ignore opportunities in the health sector. But to get that right, they need to focus on the things they’re good at.

Amazon is focusing on its area of expertise: The supply chain. The company bought PillPack, an internet pharmacy, and it has a grocery delivery business through Whole Foods. It is also working with two other employers, J.P. Morgan and Berkshire Hathaway, on an initiative to reduce healthcare costs.

Apple is taking a different approach in building health-tracking tools for the iPhone and Apple Watch. It has also made a number of small acquisitions in the space, including a medical record technology start-up called Gliimpse to help users access and aggregate their health information.

CNBC has the full story