Oregon health agency approves Amazon, One Medical acquisition, moving $3.9B deal one step forward

Oregon’s health agency approved Amazon’s proposed deal to buy One Medical, moving the tech giant one step closer to sealing the $3.9 billion acquisition.

Amazon has now cleared one potential regulatory hurdle in its billion-dollar bid to grow its reach in healthcare. The acquisition is still subject to regulatory approval. The Federal Trade Commission is investigating the proposed deal.

The online retail giant announced plans in July to buy One Medical, a deal that will add 188 medical clinics in 29 markets. One Medical markets itself as membership-based, tech-integrated, consumer-focused primary care platform. The company currently has 815,000 members and works with at least 8,000 employers.

The Oregon Health Authority's Health Care Market Oversight program reviews business deals and mergers and acquisitions to examine potential impacts on cost, quality of care, equity and access to services. One Medical operates five primary care clinics in Oregon, which places the deal under the state's purview.

After conducting a 30-day preliminary review, the Oregon Health Authority approved the deal, with certain conditions, according to a report issued on December 28. The Seattle Times first reported the agency's approval.

The preliminary review found that Amazon's acquisition of One Medical was not likely to substantially reduce access to affordable health care in Oregon. The companies have said that they plan to expand One Medical’s network of clinics, which may provide additional access to services, OHA wrote in its report.

The state's health agency also does not anticipate that the transaction will result in increased prices. The transaction will not meaningfully change Amazon and One Medical’s market share for primary care services in Oregon as commercial insurance payment rates for One Medical are negotiated through the partnership with Providence, the agency wrote in the report. "OHA has no reason to believe that One Medical will be able to negotiate higher rates because of this transaction," officials wrote.

Combining with Amazon, with its advanced supply chain and purchasing power, may generate efficiencies and savings for One Medical, according to the agency, but OHA acknowledged that any savings would not necessarily be passed on to consumers.

A comprehensive review of the deal is not warranted given the size effects of the transaction and One Medical’s patients represent a "small number of primary care patients in the Portland Metro region," the agency wrote.

However, the health agency identified potential equity concerns if One Medical siphons off commercially insured patients with higher payment rates from clinics that serve more Medicaid and Medicare-covered patients, the agency wrote.

"Those concerns are somewhat mitigated by the fact that One Medical has a small footprint in Oregon and operates in urban areas with many other primary care provider options," officials wrote.

The agency's approval of the deal is based on the condition that Amazon and One Medical report information about the services they provide, the patients they serve, quality of care and any governance or organizational changes. The companies will have to submit these reports every six months for five years.

OHA also said it would conduct its own follow-up analysis one year, two years and five years after the deal is completed to evaluate the impact on quality of care, access to care, affordability and health equity. The agency also will assess whether the companies "have kept to the commitments stated in the notice of transaction regarding cost, access and quality of care."

The agency held a 14-day public comment period, with most public comments opposing the deal and citing concerns about for-profit healthcare companies prioritizing profits over patients, OHA officials wrote in the report.

One hospital and healthcare workers union urged the state's health agency to scrutinize the labor and patient care track records of both companies before approving the merger. 

In its public comments, the Service Employees International Union (SEIU) Local 49, which represents 15,000 members in Oregon and Southwest Washington, many of whom work in hospitals and healthcare clinics, listed multiple examples of "Amazon’s well-documented history of worker exploitation in the company’s pursuit of profit." The union also alleged that One Medical has a track record of "prioritizing profit over the quality of patient care––especially after the company went public in 2020."

SEIU 49 wrote that it is “deeply concerned this trend may worsen and ultimately impact the care received by the residents of our state”. If, after scrutiny of both companies’ historical labor and patient care practice, the Oregon Health Authority approves the merger, SEIU 49 believes the authority “should explore imposing strict conditions to safeguard Oregon workers and patients."

Amazon made several big healthcare moves in 2022. In August, the company took the industry by surprise when it announced it would shutter its hybrid health service Amazon Care at the end of the year. Amazon then rolled out a new virtual medical clinic called Amazon Clinic that aims to treat common conditions like allergies, hair loss and skin conditions.