A Chicago-based network of clinics for people 65 and older unveiled an aggressive growth plan today as the population ages.
Oak Street Health's "significant nationwide expansion" involves launching centers in two new markets and bulking up in existing service areas, the company said.
The company opened one center Monday in Memphis—it's first in Tennessee—and plans to open another one near that clinic in April, spokeswoman Erica Frank said in an email. Oak Street will expand into Texas this summer with its first Dallas-Fort Worth clinic.
In existing markets, Oak Street is getting ready to open three new centers in Detroit, one in Cleveland and one in Greensboro, N.C. Additional centers are in the works in new and existing markets, Frank said.
Privately held Oak Street was founded in 2012 by three Boston Consulting Group colleagues, including current CEO Mike Pykosz. It's backed by investment firms backed by General Atlantic, Newlight Partners and Harbour Point Capital.
Since opening its first clinic in 2013 on Chicago's North Side, Oak Street—which provides primary care, transportation and insurance education to people on Medicare—has opened more than 50 centers in Illinois, Indiana, Michigan, North Carolina, Ohio, Pennsylvania and Rhode Island.
"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," Chief Growth Officer Tamara Jurgenson said in a statement announcing the planned expansion.
While specialty providers like Oak Street have grown comfortable with the value-based payment models of popular Medicare Advantage plans, such arrangements can be challenging for hospital chains accustomed to traditional fee-for-service payments.
Still, Advocate Aurora Health and others are developing specialized offerings for patients 65 and older, who make up about 16 percent of the U.S. population but account for more than one-third of total health care spending.
Oak Street recently teamed up with Advocate to open a senior-focused primary care center in Elgin. Coming together gives Oak Street access to Advocate specialists and ancillary services. Advocate gets access to Oak Street's expertise in value-based care and a stream of older patients who often need more medical services.
Senior-focused Oak Street rivals like Chicago-based VillageMD and Miami-based ChenMed, which operates five clinics in the Chicago area, have grown at a similar clip—linking up with hospital chains in other markets along the way.
This article was originally published in Crain's Chicago Business.
