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When it opened its first center in Chicago in 2013, Oak Street Health wanted to show that its model of providing value-based primary care to seniors could work.

It’s doing just that, as the network of primary care centers announced today that it will open clinics in two more states this year—Texas and Tennessee.

“Our mission is to rebuild healthcare as it should be,” Oak Street’s CEO Mike Pykosz told FierceHealthcare. It’s a job the company has done by bringing primary care to seniors in underserved areas, improving patients’ health and their healthcare experience.

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“We can generate phenomenal results. The challenge for us and our team is to do that in a lot of places, for a lot more patients and really transform healthcare,” said Pykosz, one of Oak Street’s founders.

Mike Pykosz
(Oak Street Health)

The health organization will now operate in nine states with more than 50 centers that serve about 70,000 Medicare patients.

It’s entry into two southern markets—it will open two locations in Memphis within the Frayser and Audubon Park neighborhoods this winter followed by a center in the Dallas-Fort Worth area this summer—caps a year of growth for the healthcare startup.

It also plans to expand in states where it already has clinics. It plans a fourth center in Cleveland, three new centers in Detroit and a second location in the Greensboro-High Point metro area of North Carolina—all expected to open in late spring.

In Rhode Island, a second center in South Providence celebrated its grand opening in a partnership with Blue Cross Blue Shield earlier this month.

It also has clinics in Illinois, Indiana and Pennsylvania, with plans to continue its geographic expansion in 2020.

That growth will significantly increase access to Oak Street Health’s innovative approach to primary care for older adults across the country, the company said.

Getting going

The first several years of operation at Oak Street were about proving its primary care model and approach would work, Pykosz said. “We had some pretty big ideas,” he said. That included opening up primary care centers in underserved areas, investing to keep patients healthy, creating a much more consumer-centric model and paying for those investments by taking full risk. By driving improved health outcomes, Oak Street believed it could become a national model for healthcare.

The next phase is to expand and bring that model to a lot more people. “We’re not moving the needle yet on healthcare,” he said about the problems of low quality and high cost that plague the healthcare system. “This is just the beginning.”

Oak Street Health measures its success in two key ways: by showing improved health outcomes of its patients and by improving the patient experience. “Are patients healthier?” Pykosz said.

Oak Street has seen patient hospitalizations reduced by 41%, compared to standard Medicare benchmark, and measured a 49% percent reduction in emergency room visits. Oak Street has an 89% Net Promoter Score used to guage the loyalty of its patients and their satisfaction with care.

Oak Street has funded its expansion by raising capital from a variety of different individual and institutional investors, he said. Securities and Exchange Commission filings show they’ve raised at least $200 million over six funding rounds. It’s investors include General Atlantic and Harbour Point Capital.

As the country tries to shift to value-based care, Oak Street has made national headlines as it offers a change from traditional fee-for-service healthcare.

“Our centers don’t look like doctor’s offices,” he said. They are not located in medical office buildings, but are in retail areas, all with a 1,000-square-foot community center in the front.

Patients who visit an Oak Street Health center will have a healthcare experience they may not have encountered before, the company says. Patients can expect extended time with their clinicians and individualized treatment plans. There’s community-centered support for social wellness, a 24/7 patient support line and access to transportation to and from the center for eligible patients. To create a one-stop shop for healthcare, Oak Health also offers supplementary services, such as behavioral health support and Medicare education classes.

Two-thirds of every dollar the government spends on Medicare goes toward paying for acute care episodes, Pykosz said. Only 3% of those dollars go to primary, preventive care or preventing bad things from happening to patients. “We feel like that is backward,” he said. “That is what we are trying to change.”

“We are at a place at Oak Street, where the model works. The quality of care and the patient experience are significantly better than what patients can find in other places. Not only does it work in our home market of Chicago, it’s worked in all the other major cities like Philadelphia, Detroit, Indianapolis,” he said.