Amazon Targets COVID-19 Testing in its New Lab-Building Venture

Internet retailer will do COVID-19 testing on its own employees, but it could use these labs to disrupt clinical lab industry

This is an excerpt of a 1,980-word article in the August 3, 2020 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.

CEO SUMMARY: For pathologists and clinical lab directors, Amazon’s nascent COVID-19 testing venture for employees could be a significant concern given that the e-commerce company could disrupt the clinical lab business nationwide. The online retail giant has long had an interest in medical diagnostics and has a reputation for disrupting other industries by acquiring or starting companies in such diverse fields as cloud computing, artificial intelligence, consumer electronics, and retail grocery stores.

ONE UNDER-REPORTED ASPECT OF THE COVID-19 PANDEMIC is the significant number of companies now building new clinical laboratories in response to the skyrocketing demand for SARS-CoV-2 testing.

One of the biggest corporations building clinical laboratory facilities is internet retailer Amazon, which announced in April that it would begin regular clinical laboratory testing of all employees for theCOVID-19 coronavirus, including those showing no symptoms.

Amazon has a history of entering an industry and successfully disrupting it. Thus, its willingness to build lab testing facilities to do its own COVID-19 testing may be the first step in a multi-year strategy to enter the clinical laboratory industry and disrupt it by offering better quality lab testing services at a cheaper price.

One reason why this could be a credible prediction is that Amazon is currently building a network of lab testing facilities with the capacity to do needed COVID-19 testing for its 840,000 employees. Earlier public statements by Amazon support the conclusion that, once the pandemic subsides, the company intends to use this substantial infrastructure—including lab analyzers and skilled lab scientists—for ongoing testing of Amazon employees participating in its health benefits plan.

Amazon’s foray into clinical lab testing was precipitated by the onset of the COVID-19 outbreak that took hold in this country in late January. Since then, Amazon’s challenges with keeping its fullfillment centers staffed and disease-free made national news on multiple occasions.

In April, in a letter to shareholders, Amazon CEO Jeff Bezos disclosed plans to develop COVID-19 testing capabilities. He next stated that this was a first step in a program intended to perform regular checks on its employees globally. Another statement indicates that Amazon is looking at a permanent capability do its own clinical lab testing.

In that shareholder letter, Bezos wrote, “Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running. For this to work, we as a society would need vastly more [COVID-19] testing capacity than is currently available.”

In a later corporate blog post, titled, “Scalable Testing for Coronavirus,” the company reported that it had started building incremental COVID-19 testing capacity.

SARS-CoV-2 Test Services

Early in June, CNBC reported more details on the progress Amazon has made to provide SARS-CoV-2 testing for workers at its fulfillment centers. It is doing so, “after several [Covid-19] outbreaks at its warehouses” in at least five states: Colorado, New Jersey, New York, Pennsylvania, and Oregon, the network added.

After these COVID-19 outbreaks among its 840,000 employees, the employer may be worried about the legal liabilities inherent in having workers in close proximity. “By ramping up COVID-19 testing, it is hoping to stem the spread of the virus before it gets out of control,” CNBC explained.

In addition, CNBC reported that medical diagnostics has long been an area of interest for the e-commerce behemoth, which has earned a reputation for disrupting other industries since it was founded in 1994.

Originally a book seller known as Cadabra, Amazon has since acquired or started companies in cloud computing, artificial intelligence, consumer electronics, and digital distribution. In 2017, Amazon acquired the national grocery store chain Whole Foods.

If Amazon builds clinical laboratories at only some of its 75 warehouse and fulfillment centers in the United States, what is to stop the online retailer from offering clinical laboratory testing to physicians and hospitals in those areas, or to serve healthcare providers nationwide?

Testing for Other Employers?

For that matter, Amazon easily could serve other employers of all sizes, particularly for those companies that share Amazon’s concern about the legal liabilities involved in having workers return to offices and jobsites as state and local officials lift shutdown orders while COVID-19 infection rates decline.

All these actions would be consistent with an ongoing business initiative at Amazon, which is to disrupt the delivery of healthcare and health insurance. In January 2018, Amazon got involved in a joint venture called Haven with Berkshire Hathaway and JP Morgan Chase to cut healthcare costs and improve health services for their workers.

“The giant companies, which together employ more than 1.1 million workers, will launch an independent operation that’s intended to be free from profit-making incentives,” CNBC reported at the time. “The new company’s goal at first will be to target technology solutions to simplify the healthcare system.”

Building a New Clinical Lab

In April, Amazon said on its blog that it has shifted workers from their jobs as program managers, procurement specialists, software engineers, and research scientists to assemble the equipment needed to build the first company-owned and operated clinical laboratory.

The initial intent was to start testing small numbers of front-line employees, the company said. In one of the photos that accompanied that blog post, Amazon showed workers installing a QuantStudio analyzer from Thermo Fisher.

Based on information from three sources familiar with Amazon’s plans to roll out millions of COVID-19 tests this summer, CNBC added important details about this effort.

Amazon’s goal is to test most warehouse workers every two weeks by having employees collect their own specimens via nasal swabs, while a clinical professional supervises and guides the employees’ collection efforts via video, the network reported.

Hiring Diagnostics Scientists

To develop the testing program, Amazon is adding to the team of professionals working on the project. “Amazon’s hardware group Lab126, based in Sunnyvale, Calif., is hiring three additional research scientists in diagnostics to help scale its testing efforts, according to recent job postings,” CNBC reported. “Lab126 is also hiring several lab assistants, engineers, and scientists in Hebron, Ky.”

In addition to clinical lab testing, Amazon is considering using temperature checks and pulse oximetry to screen workers for the COVID-19 illness. Pulse oximetry measures oxygen levels in serum, which some scientists suspect could identify patients who have respiratory symptoms.

Online Medical Consults

Collectively, these developments, and the fact that Amazon is building a clinical laboratory testing infrastructure to do large volumes of COVID-19 testing for more than 800,000 employees, indicates the company has an economic incentive to explore how it could also offer clinical laboratory testing services to physicians, hospitals, nursing homes, and other healthcare providers.