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Two stories are developing in the healthcare space. The first is with respect to Amazon’s purchase of a large primary care physician practice. The second is how installment lenders are entering the healthcare space with their “buy now, pay later” (BNPL) model. On the surface, neither directly affects employer plans. Still, both situations have the potential to influence how employer plans pay or not for healthcare access.

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Amazon recently announced its purchase of a large primary care practice, One Medical. On its website One Medical states that it provides primary practice services in several cities around the US. According to the Wall Street Journal article, it is part of a long-term strategy to offer end-to-end healthcare services to patients, from telephone consultations to in-person visits to prescribing and ultimately delivering any needed medication from Amazon’s prescription drug services.

Sounds like a great option for employer plans. Amazon’s efficiency is unmatched in the retail space. Will that prowess translate to medical services?

AMazon model

Many of us remember a time before Amazon or when Amazon was about books. It has long since become the preeminent retailer in the country. If not the largest retailer overall, it is the largest online. When they have focused on an area, they seem to dominate. Its AWS, for instance, started out as an adjunct of their business and quickly became the dominant cloud computing business in the world. Their mantra of “get big fast” seems hard to beat. Since almost going bust in the early years, they have been profitable consistently, with a couple of blips.

Amazon uses its position in retail to branch into other areas and its Prime membership to help drive growth. Nevertheless, it has not been universally successful, although it seems that way, and its prior excursions into healthcare have not seen the same level of success as some of its other ventures.

Regardless of Amazon’s success in the past we suspect it will have to keep looking at this market. Amazon is enormous, and the healthcare market is one of the few places it can look to keep growing in a meaningful way.

impact on employer medical plans

The Wall Street Journal notes that the healthcare market has large and entrenched players – the insurance carriers, the retailers like Walgreens and CVS, the pharmaceutical industry, and the large hospital systems. These players have been in an arms race over the last several years of buying each other, buying physician practices, and getting as large as they can. The increasing consolidation has not just been about gaining market strength in a single line of business, but it is increasingly across lines of business that had historically been competitors.

The consolidation results in less competition generally, and employers are seeing that play out in their plans with higher costs, fewer ways to address costs and the health and wellbeing of their employees.

Perhaps another prominent player from outside the industry will stand a chance to make inroads by offering a more practical option to employers. Of course, many have a more jaundiced view of Amazon and its long-term intentions but for now, an outside competitor may provide some relief.

"buy now, Pay later" installment lending and healthcare

The Wall Street Journal published an article indicating that the slowing economy has the “buy now, pay later” (BNPL) industry looking to expand beyond their traditional retail markets into healthcare. Using the same logic as Amazon and Willie Sutton (about robbing banks), BNPLs are looking for growth where the money is. The article discusses using the payment plans to cover cosmetic surgeries such as the Brazilian butt lift, an apparently popular service, dentistry such as orthodontics, in-vitro fertilization, and respiratory tech services. The lenders prefer to lend based on long-term treatments where the patient is incentivized to maintain the payments, to continue receiving treatments, thus, reducing the risk to the lender.Untitled design (2)-Aug-30-2022-01-36-44-05-PM

impact on employer medical plans

Just like the Amazon announcement, the potential expansion of this class of lender into the healthcare space would not have a direct effect on employer plans. Generally, cosmetic surgery is elective and would not be covered by employer plans. Of course, that is not universal. Cosmetic procedures after an injury and breast reconstruction after a mastectomy for breast cancer survivors are typically covered. Orthodontia can be covered but it is typically limited even in those dental plans. In-vitro fertilization is gaining ground, even if not medically necessary, and many respiratory services would be covered by the plans’ general terms.

Presumably, the employees seeking the installment option would be in high deductible plans and would need the installments to get access to services or procedures that might be optional. And, since they are only responsible for the deductible and maybe a co-pay or co-insurance, the employer plan will have to absorb the remainder of the cost. Therefore, assuming the availability of more credit for procedures that might be covered by an employer health plan results in more demand for those services, the employer plans’ costs would go up, if this trend continues as the BNPL industry hopes.


Where will healthcare costs go? Likely up. The real issue is at what pace. These two developments, assuming they play out as their proponents’ hope, are likely offsets to each other regarding their effect on employer plans. Their commonality is that they are coming from areas the employers cannot control. That means that employers must do whatever is in their control to keep their health plans competitive. Employers should demand that their advisors bring them the tools to address the cost issues.


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