Amazon's One Medical is closing corporate offices

Photo: Matt Mawson/Getty Images

Amazon-owned One Medical has confirmed that it is closing several of its offices in a move intended to cut costs, with offices in New York, New York, Minneapolis, Minnesota and St. Petersburg, Florida set to shutter their doors by the end of February.

Business Insider, which obtained an internal email from One Medical, confirmed in a report that the company will also be downsizing its San Francisco office space, whittling it down to one floor in a bid to reallocate internal resources.

The move comes less than a week after parent company Amazon said it would be cutting more than 100 jobs at One Medical and Amazon Pharmacy. Roughly 115 positions may be eliminated within the healthcare division in a bid to decrease One Medical operating losses. Seeking Alpha reported that the job cuts could amount to several hundred as part of a company-wide effort to save $100 million this year.

One Medical aims to cut its fixed operating costs from 41% to 20% of total revenue by 2028, the Insider report said, adding that the company also plans to reduce the cost of each patient's visit to $322 in 2024, from $372 in 2023.

WHAT'S THE IMPACT?

In addition to the layoffs and office closures, One Medical will also shift to a more regional operating model, expanding core operating regions from four to seven.

Many One Medical corporate employees currently work remotely, so Amazon is reducing its investment in corporate office space.

To facilitate that shift, Amazon will create a new role to lead operations, and will reassign Chief Financial Officer Bjorn Thaler to a new position focused on growth initiatives, according to Business Insider.

Amazon acquired One Medical last year, and offered the announcement of the acquisition in July 2022. The deal was valued at $3.9 billion. Amazon had agreed to acquire One Medical in July 2022.

One Medical is a membership-based primary care organization that offers virtual care, as well as in-person visits. 

The deal was another example of a company outside of traditional healthcare provided by hospitals and physician practices making inroads into the primary care market.

THE LARGER TREND

The job cuts to the healthcare division are just the latest to impact Amazon's business units, according to the Seeking Alpha report. Last year the company cut jobs at Audible, Prime Video, Twitch and Buy with Prime divisions.

Amazon recently announced better-than-expected fourth quarter results and set upbeat guidance for Q1 2024.

While the retailization of healthcare is seen as a competitive threat to traditional hospital and physician services, these deals have not always run smoothly. Experts have said there is a learning curve to healthcare and its low operating margins.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.