Amazon announced that it’s acquiring 1LifeHealthcare Inc., the parent company of primary-care network One Medical, for $3.9B. The health practice has 180 offices and offers benefits to employees at more than 8,000 companies.

Why should we care?
This is Amazon’s first major acquisition since Andy Jassy became the company’s CEO, offering signs for how Jassy hopes to keep the e-commerce giant growing and increasingly profitable. Key to One Medical’s potential success as an Amazon subsidiary is its subscription-based business model. One Medical often waives its fee in tie-ups with corporate health plans, but an annual membership typically costs around $200 per year per patient—in addition to co-pays and other expenses. Echoing Amazon’s existing subscription-driven success through Prime, in addition to windfalls through AWS, it seems Amazon is gunning for a Healthcare-as-a-Service (HaaS) strategy through One Medical. Amazon hopes to start most patient journeys through in-app chats and virtual visits, and in-person consultations thereafter as needed. If this strategy takes off, then we may expect more established healthcare providers to follow suit—driving demand for healthcare payments partnerships as well as innovations in the insurance space, which would drive fintechs to tap further into the $4 trillion healthcare economy. However, both Amazon and One Medical have been the subject of scrutiny. “Amazon’s takeover of One Medical is the latest shot in a terrifying new stage in the business model of the world’s largest corporations," said Barry Lynn Executive Director of Open Markets Institute, an advocate for antitrust regulation. "The deal will expand Amazon’s ability to collect the most intimate and personal of information about individuals, in order to track, target, manipulate, and exploit people in ever more intrusive ways.” And Congressional investigators said One Medical abused access to Covid-19 vaccines to push people looking for vaccines into paying for One Medical memberships. If this poor reputation scales along with the company, then the HaaS model may struggle as it looks to succeed.