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Analysis

How Oak Street Health Retains 97% of Its Patients

By Philip Betbeze  
   October 19, 2017

HealthLeaders Media: How did you get involved with this company?

Pykosz: In consulting, one of my clients was a big Medicare management plan. We thought it would make a good business to find a way to take better care of at-risk older adults.

We spend twice as much on healthcare per capita as most other industrialized countries, but we’re not getting quality for it. This population is the one driving the highest costs and the poorest results. In late 2011 one of my cofounders and I, Chief Operating Officer Geoff Price, decided to do it.

HLM: What’s the business case?

Pykosz: If you have the right components, payment model, and interventions, you can create differentially good outcomes at a lower cost and with better patient experience. Healthcare’s so local and based on payer and provider mix.

The issue is how to create a replicable platform to do it in markets where it didn’t evolve organically. In late 2012, we were able to talk our third cofounder, Griffin Myers, MD, our chief medical officer, into joining us. We raised private capital from a lot of individuals.

HLM: How do you choose your markets?

Pykosz: The first thing we look at is where there are a lot of older adults, and where there are not so many doctors. Our ideal locations are more blue collar and low income. Our first centers were built on the South and West sides of Chicago in neighborhoods that have a lot of challenges, and from demographic and cost data, where there is a lot of chronic disease burden.

We want to go to places where we can provide services that don’t exist and where we can make the most impact. The patient is ours. We’re accountable for their entire care and we’re very data-oriented.

In our financial model, we take full risk and global capitation for Part A and Part B. That’s risky, but for us, our whole model is driven to provide higher-quality care. In 2016, every plan ran a surplus.

Philip Betbeze is the senior leadership editor at HealthLeaders.


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