Amazon on Wednesday completed its $3.9 billion acquisition of primary care provider One Medical, with the Federal Trade Commission (FTC) saying it won't sue to block the deal — but will continue investigating the merger.

Amazon and One Medical close deal

One Medical, which is a membership-based service that offers both in-person and virtual care, operates over 200 medical offices in 26 U.S. markets, and works with more than 8,000 companies to provide health benefits to their employees.

"Customers want and deserve better, and that's what One Medical has been working and innovating on for more than a decade," Amazon CEO Andy Jassy said in a statement. "Together, we believe we can make the healthcare experience easier, faster, more personal, and more convenient for everyone."

"We're on a mission to make it dramatically easier for people to find, choose, afford, and engage with the services, products, and professionals they need to get and stay healthy, and coming together with One Medical is a big step on that journey," said Neil Lindsay, SVP of Amazon Health Services.

FTC announced in September it would investigate the deal, and while the agency declined to block the merger after its five-month review, an agency spokesperson on Wednesday said it intends to continue its investigation.

"The commission will continue to look at possible harms to competition created by this merger as well as possible harms to consumers that may result from Amazon's control and use of sensitive consumer health information held by One Medical," spokesperson Douglas Farrar said.

An FTC source with knowledge of the situation who spoke to Modern Healthcare said the agency will specifically look at how Amazon handles the medical records it acquires from One Medical, and that the company has received a pre-consummation warning letter alerting both parties the transaction is under investigation.

However, Dale Collins, an adjunct professor of law at Georgetown University, said FTC doesn't have a case against Amazon because One Medical is an ancillary business, similar to Amazon's acquisition of Whole Foods.

"The conventional wisdom is a fair number of companies have received these letters, but as far as I'm aware, there has been no further legal actions brought against any of these companies," Collins said.

The potential impact of Amazon and One Medical's deal

According to Advisory Board's Ty Aderhold and John League, Amazon's deal with One Medical is "among the biggest investments ever in care delivery by a non-healthcare entity."

It's possible that, in the future, Amazon could bundle its various offerings, including One Medical, Amazon Prime, PillPack, and its Alexa products, to appeal to payers or self-funded employers, which could create a "potentially powerful, differentiated bundle," Adherold and League said. Amazon could also expand into the Medicare Advantage market, given One Medical's acquisition of Iora in 2022.

And while FTC is continuing to investigate the merger, Advisory Board's Vidal Seegobin argued the agency isn't likely to succeed if it chooses to file a lawsuit against the deal. Earlier this month, FTC filed an injunction against Meta's acquisition of a virtual reality fitness firm, but a judge disagreed with the facts of the case.

Instead, the biggest threat to Amazon's deal with One Medical is Amazon itself, Seegobin said.

"The two years of the pandemic reshuffled the healthcare landscape — now all the actors will have to play their hands. And anyone who operates a healthcare business and tries to connect and scale up assets can tell you that success is made and broken on execution," Seegobin said. "Integration of healthcare assets is not a given. You must work hard to build it (and even harder to maintain it). And given the splashy failures of Amazon Care and Haven, there's little track record for success." (Michaels, Wall Street Journal, 2/21; Morse, Healthcare Finance, 2/22; Turner, Modern Healthcare, 2/22; Palmer, CNBC, 2/22)