Dive Brief:
- Google will not renew its contract with Amazon’s primary care subsidiary One Medical, ending a longstanding agreement that gave Google employees access to discounted medical care, the companies confirmed to Healthcare Dive.
- The contract loss is a major blow for the provider. Google was One Medical’s largest customer, accounting for 10% of its revenue in 2020. That figure dipped slightly in 2021, after which One Medical stopped disclosing its finances publicly.
- The decision is not because One Medical was acquired by Google rival Amazon last year, a Google spokesperson said. The current contract will expire at the end of 2024.
Dive Insight:
Google’s pivot away from One Medical brings a long partnership between the two companies to an end. Along with investing in the primary care provider, Google also inked a services agreement with One Medical in 2017. At the time, One Medical was operating largely as a concierge-style practice with about 70 offices in major cities.
Since then, the company has grown to 208 centers across the U.S., attracting the attention of Amazon as the e-commerce giant was becoming interested in disrupting the healthcare sector. Amazon then acquired One Medical in February 2023 for $3.9 billion.
Previously, Google offered its employees discounted or free memberships to One Medical and hosted some One Medical locations at Google offices. But now, Google is transitioning its on-campus healthcare services to direct-to-employer healthcare company Premise Health, a spokesperson confirmed.
Premise, which was built through a series of M&A, has a larger network than One Medical, with roughly 800 centers, according to its website. The company was acquired by private equity firm OMERS in 2018.
Google elected for Premise over One Medical because of the larger breadth of offerings it provides, like pharmacy, gynecology and coordinated onsite care, Google’s spokesperson said.
Google first notified its employees of the switch last fall and began transitioning its on-campus wellness centers over to Premise this spring. Google is also adding new on-campus centers with Premise, already opening offices in Chicago and Boulder, Colorado, this year and planning to expand in Austin, Texas, later this summer.
Once the agreement with One Medical ends, Google’s almost 180,000 employees will still be able to use One Medical as an in-network provider, though they’ll have to cover the cost of their own membership.
“One Medical is proud of the care we have provided to Google employees at a small number of locations on Google campuses, virtually” and in community centers, a spokesperson for Amazon said in a statement.
One Medical has 10,000 employer clients and continues to see strong growth, according to the spokesperson.
Still, it’s a setback for One Medical, which has found itself the linchpin of Amazon’s strategy in healthcare. The e-retail behemoth has been weaving its other services into the membership-based provider, including offering discounted One Medical memberships for users of its Prime subscription service and folding its telehealth marketplace into the provider. Amazon is also making inroads into the sector in pharmacy delivery.
However, Amazon has been dialing back in a bid to cut costs. In February, the company closed One Medical corporate offices in several geographies and laid off several hundred employees working in healthcare divisions.
Amazon has also shuttered various healthcare ventures in recent years, including a hybrid physical and virtual care business and an initiative to lower medical costs for employers.
News of Google ending the agreement with One Medical was first reported by Business Insider.
Clarification: This story was updated to specify what type of One Medical offices were closed.
