CEO SUMMARY: For pathologists and clinical lab directors, Amazon’s nascent lab-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. (See sidebar, “Concern about COVID Infections Among Workers Causes Employers to Take Steps to Limit Liability,” below.)
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.
In addition to having workers collect their own biological samples, the company plans to open stand-alone diagnostic laboratories in several locations, CNBC added. The first of these labs would be in Sunnyvale, Calif., and Kentucky, sources told the network.
“These labs would analyze some of the samples to see if they’re positive or negative,” CNBC said.
Spend $1 Billion on Testing
Earlier, the company said it would spend $1 billion on testing this year, and that it planned to spend its second-quarter profit of $4 billion on its response to COVID-19. In addition to testing, the company has taken other steps to keep workers safe, CNBC reported.
According to CNBC, an Amazon spokesperson said the company has started a pilot testing program at some of the fulfillment centers, but declined to name those facilities.
“We don’t yet know exactly how it’s going to shape up, but we continue to believe it’s worth trying,” the spokesperson added, CNBC 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.
Any Amazon workers who test positive for the COVID-19 coronavirus, or who have flu-like symptoms, would be referred to Grand Rounds, a company that provides online medical consultations for workers at its employer clients, CNBC reported.
“During those consultations, a medical professional walks the worker through the risks and tells them to stay home or seek follow-up care,” CNBC explained. “Those who test negative don’t typically hear from a Grand Rounds representative, but the company has told fulfillment center workers that its service is available to answer questions about the virus.”
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 tests 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.
Because of its track record of successfully disrupting several other industries, clinical laboratory leaders and pathologists may want to keep close watch on how Amazon uses its clinical laboratories as the COVID-19 pandemic recedes.
Concern about COVID Infections Among Workers Causes Employers to Take Steps to Limit Liability
MANY EMPLOYERS HAVE EXPRESSED CONCERNS about the legal liability risks involved with having workers return to work as stay-at-home orders end and states allow businesses to reopen.
“As U.S. stores, restaurants, and offices reopen in some parts of the country following coronavirus shutdowns, many businesses are worried they’ll see an uptick in lawsuits from sick workers and customers,” according to a report on Friday, June 19, from CNBC.
Business owners and managers fear that if employees or customers are not careful about how to prevent the spread of the highly-contagious SARS-CoV-2 coronavirus, an employee could contract the disease and later allege in a lawsuit that his or her employer did not do enough to keep workers safe from the virus.
Members of the U.S. Congress have heard about concerns among employers, who are asking lawmakers to pass another COVID-19 stimulus package that could include liability protections for businesses.
Senate Majority Leader Mitch McConnell (R-Kentucky) has said he would seek to include such liability protections for businesses in new legislation, CNBC added.
“The litigation epidemic has already begun,” McConnell said, according to the network.
“The move has garnered broad support from Republicans in Congress, who argue businesses need greater protection from lawsuits by customers or workers who catch the virus and then claim the business was the source of the infection,” CNBC noted. “Without these protections, they say businesses will be hampered by lawsuits, which could slow down their efforts to reopen.”
Business groups that support such liability protections include the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM).
Several states, including Arizona, Massachusetts, New Jersey, and New York have passed laws that offer immunity from coronavirus-related lawsuits for certain healthcare facilities, CNBC noted.
Laws in Iowa, North Carolina, and Utah protect a broad range of businesses. Also, at least six states have passed bills that allow businesses to require that customers sign waivers, saying they won’t sue if they catch the coronavirus.
Others Think Amazon May Enter Lab Business
OTHER MARKET-WATCHERS SHARE THE DARK REPORT’S VIEW that Amazon could use the new COVID-19 laboratories it is building for in-house testing as a springboard to disrupt the clinical laboratory industry. That includes one observer at the Motley Fool.
On July 4, Motley Fool contributor Jeremy Bowman wrote the following:
Amazon has not provided an update on the [COVID-19] testing project since April and has declared no intentions to offer tests to non-employees, but the company has a history of developing new projects in-house, like Amazon Web Services and logistics, before deploying them to the general public.
If the company can reach the scale necessary to make enough [clinical lab] tests, offering them to the public would be a logical next step. Amazon already has a burgeoning healthcare business and a clear appetite for the industry based on the launch of pilot program Amazon Care, its acquisition of online pharmacy Pillpack, and its Haven joint venture with JPMorgan Chase and Berkshire Hathaway.
If the company can reach the scale necessary to test non-employees, doing so would help burnish its reputation as an innovation powerhouse and establish it as a force in healthcare, serving as a launchpad to a growing business in that industry. Additionally, it would engender goodwill among the general public at a time when antitrust regulators have been eyeing it closely.