While many providers had to close their doors when the COVID-19 virus surged earlier this year, Oak Street Health kept all of its health clinics open to serve patients with the highest clinical needs.
The company was able to quickly ramp up telehealth visits and saw more patient visits in April than in February, CEO Mike Pykosz said during a presentation Monday at the J. P. Morgan Health Care Conference.
Oak Street Health's capitation payment model also helped to lessen the financial impact of the pandemic in 2020, Pykosz said.
"We're not worried about fee-for-service revenue so we were able to pivot quickly. “We were able to have consistent engagement throughout the year, with similar levels in 2019," he said.
As the company operates a standard model across its 79 care locations, it was able to quickly implement standardized infection control protocols to safely reopen centers.
With the virtual care boom, telehealth services will be a part of the Oak Street Health model going forward, Pykosz said, although only about half of the company’s patients felt comfortable using the digital services.
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"It's a great complement to the overall model, much like in-home care, and you want all the different levers, not just one. Telehealth is a nice-to-have, but we're more focused on the experience for patients and the vast majority prefer to come into the centers," he said.
Chicago-based Oak Street Health is a tech-enabled, value-based care primary care start-up that specifically targets Medicare-eligible patients, particularly those in underserved communities. The company opened its first center in 2013 and went public with a $328 million IPO in August.
While the company has yet to be profitable, it is on pace to hit $856 million in revenue for 2020, up 54% from $557 million in 2019. Oak Street opened up 28 new centers in 2020 and is eyeing further national expansion.
There is a massive market opportunity for Oak Street, to the tune of about $325 billion, Pykosz said.
The company's model produces "better patient results, lower hospitalizations, and higher margins," he said.
Pykosz said the company plans to invest in data science and its proprietary Canopy technology platform.
Oak Street's Canopy technology suite collects information from hundreds of data sources—from CMS claims to demographic output—and combines it with information collected specifically by Oak Street. So when a patient visits the center, Canopy walks the provider through evidence-based testing that is specific to the patient on that day. The questions could lead to a screening or follow-up then and there, at the point of care.
"As we get more data on patients, we can identify who is at risk, why they are at risk, and when to intervene," he said.
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The primary care market is attracting a growing list of players, including Forward, One Medical, Iora Health, Crossover Health, VillageMD, and Privia Health, along with telehealth companies offering virtual primary care.
Pykosz said he is not worried about competitors as Oak Street is in a unique position to define primary care for Medicare patients.
"We want to create the standard for what primary care looks like," he said.
He added, "The challenge with our model is, it’s a little slower. We have to open up centers, hire teams, train them up, and onboard new patients one by one. It’s much more methodical and more capital intensive."
While other companies can move faster, they face the daunting challenge of changing how care is delivered to improve patient outcomes and reduce costs, he said.
"That's why we focus on one population and optimize the model for that one population," he said.
The company's de novo approach drives consistently better outcomes, improved patient experience, and cost performance, according to Pykosz.
"As it plays out, it has worked out well for us. It creates a differentiated economic profile and differentiated experience," he said.
Oak Street Health announced in September a collaboration with Walmart to bring its clinics to three Walmart supercenters in the Dallas-Fort Worth area.
Going forward, the company plans to be selective about its partnerships and M&A activity, Pykosz said, with a focus on acquiring smaller practices to add new patients to its model.