Oak Street Health began operations in the month since CVS Health added a primary care provider to its healthcare business.
CVS Health acquired a coveted primary care property in its portfolio when it completed its $10.6 billion acquisition of Chicago-based Oak Street Health in May. CEO Mike Pykosz told Modern Healthcare that Oak Street already has access to the new parent company’s trove of resources that can advance its long-term strategy.
Oak Street plans to expand its footprint into four new states this year while also increasing its presence in existing markets, the vendor announced Wednesday. At its current pace, Oak Street is on track to operate 300 clinics by 2026, but Pykosz said the company is taking care not to over-expand.
Pykosz spoke with Modern Healthcare on Thursday about Oak Street’s expansion plans and how CVS Health supports its goals. Interview has been edited for length and clarity.
What do you hope to achieve by partnering with CVS Health?
We’re proud of what we’ve accomplished, but we need to bring Oak Street to more people.
No healthcare company in CVS’s ecosystem has the breadth of it—whether that’s the retail footprint, pharmacy, or Aetna health plan business. We’re excited to partner with all of those parts of CVS to accelerate the ability to see more patients, open up more channels to care for those patients, and better coordinate care. patient.
CVS also bought the largest home health risk assessment company, Signify. What we heard when we spoke to Signify was that a significant portion of the people they are about to assess for health risks have chronic diseases and need a doctor. What a great opportunity for us to be their largest care provider.
More than 90% of Oak Street centers are in underserved areas and treat patients with incomes below 300% of the federal poverty level. As your company expands, does it aim to continue serving this population?
The communities we will be in in 2023 are similar to the communities we joined last year and from 2013 when we started. I hope that continues.
We view our target market as middle- to low-income seniors, manual workers, and up to those in some of the most disadvantaged neighborhoods in urban areas. large and medium city. When you look at our address market, that’s 30 million Medicare beneficiaries. To care for those people, we will need 10,000 centers on Oak Street.
What do you know? CVS has 10,000 stores, so it’s possible.
Do you now have a forecast for patient visits and revenue in 2024?
We’re pretty early in the process and we’re still figuring out what will work and what won’t. The first step is to test ideas and insights that work. If every idea works, then you don’t come up with enough ideas.
I would be very disappointed if we didn’t grow faster and deliver higher quality care by 2024 as part of CVS than we do. I am optimistic that we will do that.
What kind of controls are you putting in place to make sure Oak Street doesn’t grow too fast?
It’s all about titration up the number of centers. We have established 50 centers by 2021 and they are doing very well. But we actually reduced the number of hubs in 2022 and 2023 from that 50 because of the financial conditions in the market. We originally planned to set up 70 centers by 2022 and we already had the infrastructure in place, but we ended up expanding those centers over two years.
We’ve also focused on building talent and leadership resources so we can expand. We have the only recognized value-based care scholarship in partnership with the Northwestern University medical school through which doctors complete residency, fellowship at Northwestern medical school, earn an MBA in the department. night and work part-time on Oak Street. Once that was done, they became our medical director. We also have a nurse resident in partnership with the University of Michigan School of Nursing.
How many jobs will Oak Street create as it expands?
An adult center will have about 50 people, including doctors, nurses, nurse practitioners, medical assistants, social workers, receptionists, health coaches and others.
We try to hire as many people as possible from the communities we serve because we want to help these communities. We also think it promotes better care because you can now deliver culturally appropriate medicine.
Are you facing challenges with staffing these new centers?
Hiring doctors and nurses is never easy. That was the case in 2013 when we opened, and that is the case today. That’s why we did all the things around building pipelines.
Then there are the hiring of medical assistants, nurses, receptionists, community health workers and social workers. Each one of those roles has a bit of a micromarket around it and varying degrees of hiring difficulty. It’s certainly not as difficult as it was a few years ago to hire jobs without a degree or without a license.
Are there discussions about expanding to more specialties or types of care beyond primary care?
Yes and no. We have several experts today. We have a very effective behavioral health program that employs psychiatrists and social workers. While we may have access to same-day or next-day MRI in Chicago, it takes three months to see a psychiatrist. You won’t be able to manage your diabetes or other chronic conditions if you have a behavioral health concern that isn’t addressed.
Our approach is not to buy a large multidisciplinary team. In the end, we will never have an Oak Street hospital because there are more hospital beds in this country than we need. Same thing around image centers. That’s not what we’re going to try to do.
I hope we have 10,000 centers, but I doubt we will, so we need others to support and provide value-based care. It could be a huge solution to a lot of our broader social problems.
Caroline Hudson contributed to this story.
