Amazon is coming! What the healthcare industry can learn from its new competition.


Anup Raina, SVP PLM & Innovation

The healthcare system is reaching its breaking point. The World Health Organization estimates that there is a worldwide shortage of around 4.3 million physicians, nurses, and allied health workers. And care is often unavailable where it is most needed.

Worse, with civilizational diseases like diabetes and obesity on the rise, healthcare costs are expected to grow even faster. American health spending will reach nearly $5 trillion, or 20 percent of gross domestic product by 2021. The current practice of medicine is simply unsustainable.

Disruptive technologies will transform the current healthcare system, but to get there, we need to digitize the delivery of care. Amazon, along with Berkshire Hathaway and JP Morgan Chase are starting the revolution with a new digital healthcare solution for their employees. So, I asked myself, what can I learn from Amazon about disrupting an industry?

Doing it the Amazon Way: 1. Figure out what your customers crave. The key to successfully disrupting any business sector is to understand what customers value. That typically includes weeding through a lot of information, tacit knowledge, assumptions, and wrong conclusions. However, the single best way to understand what customers value is to launch products and services, in order to learn how people actually use them. Even a failed product can help move you toward a successful business model.

Amazon’s initial work with book sales helped it recognize that people cared quite a bit about getting goods as quickly as possible. This realization helped Amazon as it began to offer different products. It recognized that the delivery logistics involved were just as important as the quality of the goods it offered. As healthcare evolves to contain costs and improve the quality of patient outcomes, figure out what truly matters to your customer base, and adjust your business model to address those needs. 2. Create unexpected value. Far too many companies focus on solving existing problems. True disruption involves creating value where it didn’t exist before (or where it wasn’t expected). The iPhone didn’t solve any clear problems — there were already plenty of cellphones on the market — but most people would be hard-pressed to go a few days without their beloved smartphones now that we have become so reliant on all of the value it provides. Once Amazon solidified its logistics based on one product category, it began to implement its model to other verticals. Books were relatively easy to disrupt because the buying process in that industry was so abysmal. Now that Amazon has set an industry standard in terms of logistics, it’s able to break into different markets by applying its perfected process. Healthcare is not far behind, one of the areas where Amazon can use its existing skills are around medication and refills management. With Alexa and Fire devices, they are now in homes with a full-fledged communication infrastructure for Video, Voice and Messaging. Why not apply it for Telehealth?

As you think about your customers and as healthcare becomes more digital, it’s imperative to think outside of current silos and business models — to add value to customers throughout their health ecosystem.

3. Satisfy every customer and use data to improve your services. Amazon’s most brilliant move was applying a basic principle of human nature to the business world. Amazon doesn’t provide fast delivery just for speed’s sake; it’s able to increase customer satisfaction about the product being delivered by reducing wait times. Amazon can apply its concepts of marketplace and behavioral economics to help decrease cost and increase transparency of healthcare services. The lesson here is that if your company can meet a basic human need (and do it better than anyone else), you’re in solid shape to carve out a substantial customer base. Healthcare is ripe for this as high deductible plans and consumerism is pushing forward to give choice and a voice to patients around their care options. Entrepreneurs can stick to their static business models and wait for innovators to eventually put them out of business, or they can learn from Amazon’s seemingly unstoppable rise to global domination. Personally, I’m following Amazon’s lead. See more on Amazon’s Healthcare announcement.

Anup Raina is BANYAN’s senior vice president of innovation and product lifecycle management.

He is responsible for setting the innovation vision for Banyan and leading cutting edge product development for the future of healthcare.