Amazon Clinic is Streamlining Price Transparency; CFOs Must Adapt and Compete

Amazon Clinic is giving patients the transparency they want; and it’s something they're not getting enough of from traditional providers.

Retail giant Amazon is disrupting healthcare in several ways, but one of the areas Amazon Clinic is taking aim at is somewhere providers are especially vulnerable: price transparency.

As we know, healthcare costs can be incredibly cloudy, so Amazon Clinic's commitment to price transparency could force hospitals to become more competitive in their pricing structures—which could also lead to a possible downward pressure on healthcare prices.

But, while Amazon Clinic represents a major market disruptor for CFOs, organizations can adapt and compete by leveraging existing strengths, embracing price transparency technology, and prioritizing the patient experience.

Amazon’s delivery

Amazon Clinic contracts with four startups to offer virtual messaging and video appointments for around 30 medical conditions in an effort to create a retail experience for patients. After launching the initiative in November 2022, Amazon recently announced it was expanding to all 50 states, including asynchronous care in 34 states and nationwide telehealth services.

The convenience it affords patients is obvious, but Amazon Clinic also offers the kind of upfront pricing that providers have either struggled to share or so far been unwilling to. As detailed in a report by Forbes, Amazon Clinic can charge $35 for messaging with a physician who will respond within an hour and 45 minutes, or $40 to get a response in 30 minutes, while a video visit with a wait time of around 90 minutes can cost $74.

Essentially, Amazon is giving patients tiered pricing based on quality and quickness—and all that information is provided before the patient has to choose a service.

Aside from its current limitations in how many conditions it can offer services for, Amazon Clinic also doesn't accept insurance yet. So, while it may not be revolutionizing healthcare, it's still offering patients a unique alternative at a time when many traditional providers are struggling just to keep their doors open.

Transparent, not invisible

What can providers do when a disruptor like Amazon Clinic encroaches their lane? Building greater trust with patients by making their lives easier is a good place to start.

"Healthcare, I believe, is still a relationship business and will be at least for a while longer," Kris Kurtz, chief financial officer for the University of Michigan Health-West, recently told HealthLeaders. "We have patient relationships today for the most part, so it's our business to loosen access, and the ease of use is probably the best strategy we can deploy. As an industry, we make it far too difficult for patients to enter and navigate the system. In some instances, we may need to partner with the disruptors rather than compete with them. [Likely it's] probably a combination of both."

When it comes to price transparency, providers need to get their house in order first. Depending on the source, compliance rates are varying wildly. The latest report by Patient Rights Advocate found that of 2,000 hospitals reviewed, only 36% were complying with the price transparency rule. The American Hospital Association fired back at the report, saying it "blatantly misconstrues" hospitals' compliance and pointed to a recent report by CMS that found that as of 2022, 70% of hospitals had complied with both federal requirements and 80% had complied with at least one.

Regardless, that still leaves many hospitals who are failing to comply and CMS itself has proposed changes to regulations to crack down on compliance in 2024. But compliance isn't the only issue with price transparency.

Handing prices over to patients and letting them decipher it is not enough. The complexity and size of the data creates a usability issue that is further worsened by lack of standardization for organization and reporting. That is where a service like Amazon Clinic shines by giving patients pared-down pricing without the need to seek it out.

It will likely take some time before there is a widescale adoption of that type of pricing feature by providers, but hospitals shouldn't skip steps in the meantime by not doing their part to be as transparent as possible to patients.

"The higher percentage of completeness regarding the publication of machine-readable files and accurate patient estimate tools, the closer we are to empowering patients to gain confidence in knowing how much their healthcare services will cost," Chris Severn, CEO of Turquoise Health, told HealthLeaders. "Adherence from both hospitals and payers also eliminates a significant burden of negotiating new rates because all rate data will be publicly available, meaning fair rate calculation becomes simpler and accessible."

"Overall, these lead to lowering the cost of healthcare."

Wake-up call

What Amazon Clinic is attempting to do with their transparent, tiered pricing isn't unheard of and its aforementioned limitations make it more supplemental than a true replacement of care services, but providers should be getting the message loud and clear that innovation is necessary for them to survive in the future.

Providers still have the homefield advantage as the more trusted source for care and they still have a leg-up by allowing patients to pay with their insurance.

The technology side is where healthcare has to close the gap on retailers, but it will require a willingness to serve patients in a different way than has traditionally been the case.

"Most of us in the healthcare industry are trying to work on access," Kurtz said. "We tend to be one of the last industries to innovate. [Retail's presence in healthcare] will certainly accelerate that and force us to innovate. I don't know why healthcare has always lagged behind when it comes to digital innovation. But I think these retailers will definitely speed up our transition."