Amazon is expected to cut over 100 jobs at One Medical and Amazon Pharmacy, according to a letter to employees from Amazon Healthcare Services (AHS) executive Neil Lindsay, indicating a strategic shift aimed at mitigating operating losses within One Medical.

Why it's Notable: 

• The anticipated layoffs potentially numbering in the hundreds, form part of a broader organisational initiative to trim $100 million in expenses this year. Amazon's ambitious targets include slashing One Medical's fixed operating costs from 41% to 20% of total revenue by 2028, coupled with a drive to decrease the cost per patient visit from $372 in 2023 to $322 by 2024.

• Despite the impending workforce changes, Amazon asserts robust momentum in its healthcare offerings. The company frames these cuts as a necessary realignment of resources to bolster the healthcare experience for customers. Notably, Amazon plans to integrate One Medical's Finance, Legal, and Tech teams into AHS. Employees affected by the layoffs will receive comprehensive support throughout the transition, including financial assistance, benefits continuation, and career guidance, alongside opportunities to explore new roles within the organisation.

Point of View: Spray, slash & dash: lean ops power Amazon’s diversified healthcare play

• These developments follow Amazon's substantial investment in One Medical, sealed in a $3.9 billion deal in July 2022. While major retailers increasingly pivot toward healthcare, the transition is not without its challenges. Experts cite a learning curve inherent in healthcare operations, compounded by narrow profit margins.

• The impending job cuts echo a broader trend within Amazon, with over 27,000 positions slashed across its subsidiaries since the onset of 2023. Despite this, the tech giant reported better-than-expected fourth-quarter results, signalling optimism for 2024. Against this backdrop, strategic manoeuvres such as Amazon Health's collaboration with Omada underscore a multifaceted approach to healthcare innovation.

• In light of these cost-saving measures, the industry awaits insights into Amazon's continued expansion in healthcare. According to Amazon Health Services Senior Vice President, this realignment of resources is poised to accelerate the company's mission to streamline healthcare delivery and make it more accessible.