Dive Brief:
- Oak Street Health, a chain of primary care centers for Medicare enrollees that has enjoyed considerable success in the Midwest and North Carolina since its founding in 2012, has announced the next phase of an ongoing national expansion.
- Oak Street will be entering both the Texas and Tennessee markets, opening new centers in the Dallas and Memphis areas. It also will expand its existing footprints in Cleveland, Detroit and Greensboro, N.C.
- The company has raised more than $105 million from a variety of private equity firms, according to Crunchbase.
Dive Insight:
In catering exclusively to Medicare enrollees, the primary clinics operated by Chicago-based Oak Street Health have tended to offer a more personalized experience, with its primary care physicians spending more time with patients and offerings that include expanded mental health services and a focus on "whole body health."
Transportation to the centers and a 24/7 call line for support are also provided. Oak Street claims its regular clients are 41% less likely to require hospitalization compared to the average Medicare enrollee, and 49% less likely to visit a hospital emergency room. The company's unofficial motto is "look forward to going to the doctor. Every single time."
The concept — fueled in part by continuing growth in the Medicare rolls — appears to be paying off. The chain currently operates more than 50 centers in Illinois, Michigan, Indiana, Pennsylvania, Ohio, Rhode Island and North Carolina. Last year it entered into a partnership with Advocate Aurora Health to open a primary care center in the western Chicago suburb of Elgin, Illinois.
Oak Street is now expanding into new markets in the Midwest and elsewhere. It will open two locations in Memphis before the end of this winter, and a new center in an unspecified part of Dallas-Fort Worth this summer. The additional Greensboro locations are expected to open in the spring.
Other companies have pursued opening clinics focused on that growing Medicare population. Last week, Humana said it is launching a joint venture with a private equity firm to double the number of its senior-focused primary care centers. They will be payer-agnostic, but Humana executives told investors during a quarterly earnings call primary care is a focus going forward and the company wants to double membership in the clinics.
The centers take time to become profitable, he warned, but said they will be "valuable form a shareholder point of view," Humana CFO Brian Kane said.
And in November, UnitedHealthcare said it would be opening 14 Medicare service centers in Walgreen stores starting this year.
Oak Street touts its consumer friendliness and goal of providing a better user experience than is typically found in traditional settings. That's a similar approach to primary care chain One Medical, which saw its stock rise on the heels of going public at the end of last month.
"We are deeply committed to providing integrated, preventive care that helps seniors live their best lives, and our planned growth for early 2020 reflects this commitment," Tamara Jurgenson, Oak Street's chief growth officer, said in a press release. "Our community-based approach makes a meaningful difference in our patients' health outcomes, and we strive to reach as many people as we can."