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JPM21: Oak Street Health, One Medical CEOs explain how healthcare models can actually scale
You won't catch Oak Street Health putting its centers in a medical office building anytime soon.
That's what CEO Mike Pykosz said as he described the growth model for the tech-enabled, value-based primary care group during the annual J.P. Morgan Healthcare Conference on Monday.
"We break through that rumor that all healthcare is local and not a scalable business. We've been able to overcome that because of our systematic approach to these centers' development," Pykosz said. "It's much more of a retail-like model of growth."
Oak Street is a tech-enabled primary care chain that specifically targets Medicare-eligible patients, particularly those in underserved communities. The Chicago-based company went public in August, raising $328 million, has 79 locations, and began partnering last year with Walmart Health to open clinics in certain Walmart locations in Texas. The group has been picking up the pace on its growth, opening 28 new locations in 2020, from a dozen new locations in 2019.
"We're always going to be in a high-traffic retail location, maybe in a strip mall or on a retail street," Pykosz said. "We have an algorithm to help us pick where we want to be and create a portfolio of centers to really cover the market well. All of our centers look the same. They are all about 10,000 square feet. They all have a 1,000-square-foot community room. That creates a consistent, branded feel to our locations."
RELATED: Oak Street Health opens 13 health centers in Q3 as revenue jumps 57%
It's among the pieces of the equation that officials from Oak Street Health, as well as tech-enabled primary care group One Medical, told investors this week that allows healthcare to effectively scale.
Both utilize location, proprietary technology platforms, and value-based care payment structures to improve outcomes and curb costs, they say. Despite neither reporting profitability, both said their economic models were helping them provide better outcomes while experiencing major growth which would ultimately lead to financial success.
One Medical, which went public in January 2020, raised $245 million through its IPO, had 511,000 members, and 103 medical offices in twelve markets as of Sept. 30.
"It is not trivial to serve 7,000-plus employers, retain 90% of those and the consumer, deliver a 90 NPS (Net Promoter Score) score, show that you can take out cost of care," said One Medical CEO Amir Rubin. "As I like to say: To delight millions of members and take out the cost of care and do that quarter in and quarter out? We believe that’s transformational and I think people are seeing our model—this member-based and technology-powered model—is really quite differentiated. It can execute and it can execute at scale."
Membership is key to both driving revenue and cutting costs for One Medical, he said.
Nearly 20% of One Medical's revenue comes from its membership fees from individuals or enterprise accounts with employers. The cost of a membership fee is $199 a year and it bundles all the on-demand digital health such as video chats, messaging, and prescription renewals. "That really helps us drive a lot of frictionless access," Rubin said.
The remaining 80% of its revenue comes from delivering care, which includes subcontracted relationships with health network partners. That increasingly includes a per-member, per-month payment but also includes fee-for-service payments.
One Medical said it participates with all large health plans in its markets and has a 100% digital-clinical integration to coordinate across primary, specialty, and acute care.
RELATED: One Medical raises $245M in its IPO and stock jumps on first day of trading
"We know who our members are, who the population is and we can proactively reach out to them. We don't have to wait for a member to walk into our door or say 'Hey, I want a telehealth visit.' We can reach out to them digitally, as well as having them come in. We look for gaps in care," Rubin said.
Consistency of operations across locations also is crucial, Pykosz said.
"Each location has the same staffing ratios with standardized training. The development of the team is the same everywhere so, again, we can generate the same results," Pykosz said about Oak Street.
Oak Street takes a de novo approach which allows for consistency in the delivery of care, but it also requires recruitment of its patient base, Pykosz said. "That's where our B-to-C marketing approach comes in," he said.
Prior to the pandemic, teams were in communities meeting with future patients face-to-face, but over the last year, the group has had to ramp up online and telephone recruitment efforts and "really educating older adults on the importance of primary care," Pykosz said. "What we find in many neighborhoods we're in, they are so underserved where they are, people are not going to doctors when they're healthy. They're not getting wellness checks."
RELATED: Oak Street Health opens more clinics with Walmart Health in Texas
Traditionally in Medicare, 3% of dollars are spent on primary care while two-thirds of all Medicare dollars are spent on hospitalizations and acute episodes, he said. "So what we can do is invest upfront and increase the 3% a couple of multiples, and we're reducing hospitalizations by 50%. That savings can both cover our investment in primary care as well as provide our margin. That's how the economics at Oak Street work."
It adds up to a massive market opportunity, Pykosz said.
"We talk about our addressable market being moderate- to low-income adults who live in suburban and urban areas," Pykosz said. "So if you just take that market I described, which is where we've proven to be effective today, there's 27 million Medicare patients today who fit that description. Medicare is growing 7% a year. That represents a $325 billion revenue opportunity for Oak Street Health."
Just saw this, cool:
Chart looks excellent with new base at $.10
Consolidating properly, established new base
New clinic from YouTube
New update, impressive!
In High-End Real Estate, Are Doctors the New Doormen?
For luxury developments, having medical staff on-site is the ultimate amenity.
Read in Town & Country: https://apple.news/A7y3NS0t0RFiGaqVcoVmF2A
A $50M financing is complex, as is $10M or $15M
If there wasn’t a path do you really think anyone would do $100K or $200K? The form of transaction doesn’t matter when you think of the impact of $10M, $15M or $50M on the common stock value
Now 3 sites, if they add 3 per qtr, 15 sites by this time next year - pretty cool!
Peers:
ONEM $38.46 (+2.94%) on Yahoo Finance
https://finance.yahoo.com/quote/ONEM?p=ONEM
OSH $55.66 (-1.17%) on Yahoo Finance
https://finance.yahoo.com/quote/OSH?p=OSH
Long version includes team:
Impressive!
An early Christmas gift, take it while you can get it!!
Proxy should clear by 11/29, then look for news, that’s my guess
PROXY SHOULD GO FINAL THIS WEEK, LOOK FOR 8K NEXT!
No...
I wonder how many common holders would exchange for Pref?
Best option, easiest and cleanest
I would guess a stock buyback given the share composition
There are a number of attributes beyond price
And that price might change
There is no reason to do that filing other than uplist
The formal proxy covering election of officers and ratification of auditors is an uplist qualifier
New 14c, must be uplisting soon
That would be a clear signal it’s coming soon
Impressive 10q, 160 pages - lots in great insight
This is just like MTBC/MTBCP
MTBC $9.27 (-1.07%) on Yahoo Finance
https://finance.yahoo.com/quote/MTBC?p=MTBC
MTBCP $25.59 (-0.31%) on Yahoo Finance
https://finance.yahoo.com/quote/MTBCP?p=MTBCP
I HAVE A HUNCH THIS IS KEY: https://www.nyse.com/publicdocs/nyse/listing/NYSE_American_Initial_Listing_Standards.pdf
Anyone who sells ahead of the 10q is silly!
Company keeps building!
$1.00
Someone is going make a serious profit on this...
Teladoc finalizes blockbuster deal with Livongo in less than 3 months
https://www.fiercehealthcare.com/finance/teladoc-finalizes-blockbuster-deal-livongo-less-than-three-months
You just like hearing yourself talk
Blah blah blah
More hot air from someone who has never run a public company
Biz is timely, progress is daily
Not good enough for you? Then just move on
Blah blah blah
More hot air from someone who has never run a public company
Biz is timely, progress is daily
Not good enough for you? Then just move on
Anyone trashing here is just trying to knock it down to buy cheap at some else’s expense
Just checked webmd - “sour grapes” elixir isn’t a valid RX...