Amazon to Offer Telehealth Service to Other U.S. Firms This Summer

Amazon. AMZN 1.42% com Inc. is expanding its telehealth service nationwide and opening it to other companies, the latest signal of the e-commerce giant’s continued ambitions in healthcare.

Amazon said it has started to offer its Amazon Care program to employees and other companies throughout Washington state and plans to make the program available throughout the U.S. this summer. Launched in 2019 at its Seattle headquarters, Amazon Care started by offering virtual primary-care services to Amazon employees in the city. The service also has an at-home care option, where medical professionals are dispatched to perform medical services such as blood draws or listening to a patient’s lungs.

Amazon Care operates on an app that facilitates video or chat appointments with medical professionals, as well as prescription delivery. Amazon said it intends to expand the in-person-care component to Baltimore, Washington, D.C., and other cities in the coming months.

The coronavirus pandemic has spurred growth in telehealth services. Companies such as Teladoc Health Inc. and Doctor on Demand Inc. raced to add doctors and bandwidth early last year. Shares of Teladoc fell 4.4% on Wednesday. The stock is up 61% in the last 12 months.

Amazon has tried to gain a foothold in healthcare through different ventures and has boosted its services since the start of the pandemic. The company launched an online pharmacy service in November that ships insulin, asthma inhalers and other common generic or branded medications. The retailer bought online pharmacy PillPack Inc. about two years earlier.

Amazon also spent billions of dollars to set up testing sites at its warehouses to screen workers for Covid-19, and it recently joined with a Seattle medical center to administer vaccines at pop-up sites. In January, the company offered the Biden administration help in administering coronavirus vaccines.

Tech giants such as Amazon and Apple are expanding their businesses to include electronic health records, which contain data on diagnoses, prescriptions and other medical information. That’s creating both opportunities and spurring privacy concerns. Here’s what to know. Photo Composite: Heather Seidel/ The Wall Street Journal

Telehealth took off a year ago when the pandemic shut down some medical offices and made many patients fearful of seeking in-person care. Emergency regulatory changes last year also stoked its usage, broadening the services patients could use to connect with doctors and allowing healthcare providers to be reimbursed for virtual visits at the same rate for in-person appointments.

At the same time, worker health became an acute concern for companies whose staff had to continue to report in-person for work at grocery stores, dollar marts, logistical facilities and food plants. Sick employees led to shift disruptions and lost productivity as consumer demand for food and household goods soared.

Dollar General Corp, for example, allowed employees not enrolled in the company’s medical plans an opportunity to enroll in a telehealth program. Telehealth boosters say it offers a way for patients to conveniently seek care and health screenings, which could catch serious conditions earlier and lead to lower long-term care costs.

Telehealth providers increasingly are expanding the range of services they offer beyond acute and primary care, with some pushing deeper into behavioral health, chronic condition management and specialties like dermatology. Many health practitioners say they expect patients to demand a mix of virtual and in-person care for years after the pandemic because of the convenience of remote care.

Amazon faces challenges in making a significant dent in healthcare. Its advance into the pharmacy business, for example, will test its ability to crack a market in which national chains and big insurance companies often control how drugs are dispensed.

The e-commerce giant is entering a crowded field with its expansion, analysts say. Telehealth providers Teladoc, American Well Corp. and MDLive—which Cigna Corp. has agreed to acquire—have access to more than 200 million people in the U.S. combined, according to the companies. Amazon has missed a window to scoop up telemedicine customers, said George Hill, a healthcare-technology analyst at Deutsche Bank Securities Inc.

“We do not believe that they entered at the right time,” Mr. Hill said. “While Amazon is a big name in the space, I suspect that some large employers will be hesitant to work with Amazon, given the nature of the businesses that Amazon already competes in.”

The success of Amazon’s telehealth foray is likely to depend on its sales approach, remote-care industry executives said. The telehealth service is a way to offer another product to companies already using or considering adopting its cloud Amazon Web Services, deepening its business ties, they said, though some companies may be wary of expanding their relationship with the technology giant.

If Amazon offers telehealth services free or at discounted prices to companies and those firm’s leaders believe that remote care can significantly reduce workforce healthcare costs, it might gain traction, the executives said. And if the technology giant decides to sell the service directly to consumers at an affordable price, it could jump ahead of some established telehealth providers’ long-term strategies.

An Amazon spokeswoman said companies can purchase Amazon Care as an add-on service to their healthcare plans. Amazon declined to provide the cost of their service. The company is working with Care Medical, an independent medical practice, to expand throughout the U.S., the spokeswoman said. Companies also will have access to the in-person part of the service depending on location.

Amazon’s expansion of its Care unit comes after healthcare venture Haven, which Amazon, Berkshire Hathaway Inc. BRK.B 0.20% and JPMorgan Chase JPM 1.03% & Co. set up three years ago, ended operations last month. While Amazon helped start the venture, it continued to pursue its own projects that at times directly competed with Haven. JPMorgan Chief Executive Officer Jamie Dimon, who had come up with the idea for the venture, was the only CEO out of the three companies to actively participate in meetings and help push forward pilot projects.

Employees at Haven found themselves working on projects similar to ones the individual partners also were developing, particularly with Amazon. Workers on a Haven project for a virtual primary-care service were caught off-guard in autumn 2019 when Amazon publicly launched Amazon Care for its Seattle employees, The Wall Street Journal reported in January. Amazon has said the two projects were separate.

While Amazon is opening its telehealth service to other companies, its own workforce will provide a sizable expansion. Amazon employs about 1.3 million people, mostly at its hundreds of warehouses.

Amazon has shown an on-again-off-again interest in healthcare. In 1999, it bought a 40% stake in Drugstore.com Inc. Drugstore.com eventually was bought by Walgreens Boots Alliance Inc., WBA -1.11% which said in 2016 it was shutting down the site to focus on its own digital efforts.

Write to Sebastian Herrera at Sebastian.Herrera@wsj.com, Dave Sebastian at dave.sebastian@wsj.com and Sarah Krouse at sarah.krouse+1@wsj.com

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