Amazon’s $3.9B acquisition of One Medical moves a step forward

Amazon has cleared a hurdle in acquiring primary care company One Medical by getting approval from the Oregon Health Authority.

On December 28, the Health Care Market Oversight program of the OHA approved the transaction, with conditions. Approval was needed because One Medical operates five clinics in the Portland area.

The OHA made the decision based on its findings that the transaction is unlikely to substantially reduce access to affordable healthcare in Oregon.

In the locations where One Medical operates in Oregon, patients have many other options to access similar types of services, the OHA said. It does not anticipate that this transaction will result in increased prices. Combining with Amazon, with its advanced supply chain and purchasing power, may generate efficiencies and savings for One Medical, though any savings would not necessarily be passed to consumers, the agency said.

The transaction is approved on the condition that Amazon and One Medical report information about the services they provide, the patients they serve, the quality of care and any governance or organizational changes. The reports will be submitted every six months for five years following the transaction.

OHA said it would monitor the impact of the transaction by conducting follow-up analyses one year, two years and five years after the business deal is completed.

Why this matters
Amazon’s $3.9 million acquisition of One Medical still awaits approval from the Federal Trade Commission.

An Amazon’s spokesperson gave this as the only comment, “We continue to work cooperatively with OHA and the FTC in their reviews of this transaction.”

The planned acquisition was first announced in late July.

The FTC began investigating the deal this fall. On September 2, One Medical parent company 1Life Healthcare and Amazon received requests from the FTC for more information, according to a filing with the Securities and Exchange Commission.

Seeking Alpha reported in December that One Medical’s stock ticked down 0.5% amid a report that the FTC was sending out some questions concerning Amazon’s planned takeover. The FTC reportedly sent out subpoenas to current and former customers of One Medical and asked about Amazon Web Services as part of its inquiry.

The larger trend
The deal, if approved, would be another example of a company outside of traditional healthcare provided by hospitals and physician practices making inroads into the primary care market.

One Medical is a membership-based primary care organization that offers virtual care as well as in-person visits.

“We think healthcare is high on the list of experiences that need reinvention,” said Neil Lindsay, SVP of Amazon Health Services, at the time the potential acquisition was announced. “Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy – we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days.”

Hospitals also face competition from pharmacies in the “retailization” of healthcare. Healthcare Finance News