Oak Street Health, Inc. (OSH): Business Model Canvas [10-2024 Updated]

In an era where healthcare is evolving rapidly, Oak Street Health, Inc. (OSH) stands out with its innovative approach to delivering primary care, particularly for Medicare beneficiaries. By leveraging a unique business model canvas, OSH effectively aligns its operations with the needs of its patients and healthcare payors. This model emphasizes key partnerships, value propositions, and revenue streams that not only enhance patient care but also ensure financial sustainability. Dive deeper to explore how each component of their business model contributes to their mission of providing accessible, high-quality healthcare.

Oak Street Health, Inc. (OSH) - Business Model: Key Partnerships

Contracts with Medicare Advantage plans

As of March 31, 2023, Oak Street Health reported a total capitated revenue of $743.2 million, reflecting a 47% increase from $506.1 million in the same period of 2022. This growth was driven by a 43% increase in total patients under capitated arrangements, which amounted to 231,000 patients in Q1 2023 compared to 175,000 in Q1 2022.

Relationships with healthcare payors

Oak Street Health has established contracts with various healthcare payors, which are critical for managing the cost of care for its patients. The medical claims expense for Q1 2023 was $523.5 million, representing 70% of total revenues. This marks a 38% increase from $379.4 million in Q1 2022. The company manages these costs effectively by leveraging its primary care model to minimize expensive downstream healthcare expenses.

Collaborations with community organizations

Collaborations with community organizations are essential for Oak Street Health to enhance its service offerings and reach more patients. The company has focused on integrating care coordination and management services, which generated $2.5 million in revenue for Q1 2023, up from $1.7 million in Q1 2022.

Partnerships for technology and analytics

Oak Street Health has invested in technology and analytics partnerships to improve patient outcomes and operational efficiency. The company reported $10.5 million in depreciation and amortization expenses in Q1 2023, reflecting investments in technology to support its growth strategy. The increase from $7.8 million in Q1 2022 indicates a commitment to enhancing technical capabilities.

Partnership Type	Key Metrics (Q1 2023)	Comparison (Q1 2022)
Medicare Advantage Contracts	Capitated Revenue: $743.2 million	Capitated Revenue: $506.1 million
Healthcare Payors	Medical Claims Expense: $523.5 million	Medical Claims Expense: $379.4 million
Community Organizations	Care Coordination Revenue: $2.5 million	Care Coordination Revenue: $1.7 million
Technology Partnerships	Depreciation & Amortization: $10.5 million	Depreciation & Amortization: $7.8 million

Oak Street Health, Inc. (OSH) - Business Model: Key Activities

Providing comprehensive primary care services

Oak Street Health focuses on delivering comprehensive primary care services to its patient population. As of March 31, 2023, the company operated 172 centers, serving a total of approximately 231,000 patients. The growth in patient numbers reflects a 43% increase in total patients under capitated arrangements compared to the prior year.

Managing patient care coordination

Effective patient care coordination is essential to Oak Street Health's business model. The company manages care for 177,000 at-risk patients, ensuring they receive necessary services while minimizing unnecessary healthcare costs. Medical claims expenses were reported at $523.5 million for the three months ended March 31, 2023, representing 70% of total revenues.

Marketing to acquire new patients

Marketing efforts are crucial for patient acquisition, with sales and marketing expenses amounting to $42.3 million in Q1 2023, a 26% increase from the same period in 2022. This includes a significant increase in advertising spend of $5.3 million to attract new patients to their clinics.

Operating and expanding care centers

Oak Street Health is continually expanding its network of care centers, which are vital for delivering its services. The company has increased its operational footprint, adding new locations to accommodate its growing patient base. In 2023, the total operating expenses reached $795.4 million, an increase of 31% compared to Q1 2022, primarily driven by costs associated with expanding operations.

Metrics	Q1 2023	Q1 2022	Change (%)
Total Centers	172	140	22.9%
Total Patients	231,000	175,000	32.0%
At-risk Patients	177,000	124,000	42.7%
Capitated Revenue	$743.2 million	$506.1 million	46.3%
Medical Claims Expense	$523.5 million	$379.4 million	38.0%
Sales and Marketing Expenses	$42.3 million	$33.8 million	25.0%

Oak Street Health, Inc. (OSH) - Business Model: Key Resources

Network of primary care centers

As of March 31, 2023, Oak Street Health operated 172 primary care centers, an increase from 140 centers a year earlier. This expansion supports their strategy to provide accessible healthcare services to their growing patient base, which totaled 231,000 patients, up from 175,000 in the prior year.

Metric	Value (March 31, 2023)
Number of Centers	172
Total Patients	231,000
At-Risk Patients	177,000
Fee-for-Service Patients	54,000

Skilled healthcare professionals

Oak Street Health employs a diverse team of healthcare professionals, including physicians, nurse practitioners, and support staff. This skilled workforce is essential for delivering high-quality primary care services. As of March 31, 2023, the company reported a significant increase in staffing to support its growing number of patients and centers.

Proprietary healthcare management technology

The company utilizes proprietary healthcare management technology designed to streamline operations and patient care. This technology includes electronic health records (EHR) and data analytics tools that enable better patient management and care coordination. Such systems are integral to maintaining efficiency and improving patient outcomes across their network of centers.

Financial resources from capitated agreements

Oak Street Health's financial performance is heavily influenced by its capitated payment model. For the three-months ended March 31, 2023, the company reported capitated revenue of $743.2 million, representing a 47% increase from $506.1 million in the same period of the previous year. This growth is attributed to a 43% increase in the total number of patients under capitated arrangements.

Financial Metric	Value (Q1 2023)	Value (Q1 2022)	Change (%)
Capitated Revenue	$743.2 million	$506.1 million	47%
Other Revenue	$8.8 million	$7.7 million	14%
Total Revenues	$752.0 million	$513.8 million	46%

Financial resources are also supported by agreements with various payors, ensuring a steady revenue stream that is critical for sustaining operations and funding future growth initiatives.

Oak Street Health, Inc. (OSH) - Business Model: Value Propositions

Focused care for Medicare beneficiaries

Oak Street Health, Inc. (OSH) specializes in providing focused care tailored specifically for Medicare beneficiaries. As of March 31, 2023, the company had a total of 231,000 patients, with 177,000 classified as at-risk patients under capitated arrangements. The capitated revenue generated during the first quarter of 2023 was $743.2 million, reflecting a 47% increase from $506.1 million in the same period of 2022. This growth is attributed to a 43% rise in total patients under capitated arrangements, demonstrating OSH's commitment to serving this demographic effectively.

Improved health outcomes through preventive care

OSH emphasizes preventive care as a core component of its service delivery model, which aims to enhance health outcomes for its patient population. The company's focus on preventive measures has been linked to a reduction in hospital admissions and emergency room visits, essential for managing healthcare costs effectively. For Q1 2023, medical claims expenses were $523.5 million, accounting for 70% of total revenues. The company’s management of these costs is crucial, as it reflects their ability to deliver care that prioritizes preventive strategies while maintaining financial sustainability.

Personalized patient experiences

Personalization is a key feature of Oak Street Health’s approach, with services designed to enhance the patient experience. The model includes tailored healthcare plans that address individual patient needs, thus fostering better engagement and satisfaction. The company operates 172 centers as of March 31, 2023, up from 140 centers the previous year. This expansion facilitates personalized care delivery, allowing OSH to cater to a growing patient base with unique health profiles.

Cost-effective healthcare solutions for payors

Oak Street Health provides cost-effective healthcare solutions that benefit both patients and payors. By utilizing a capitated payment model, OSH aligns its financial incentives with patient outcomes, encouraging the efficient use of healthcare resources. The total operating expenses for Q1 2023 were $795.4 million, leading to a loss from operations of $43.4 million, a 52% improvement compared to a loss of $91.1 million in Q1 2022. This improved performance indicates the effectiveness of OSH’s cost management strategies as it scales its operations.

Metric	Q1 2023	Q1 2022	Change (%)
Total Patients	231,000	175,000	32%
At-risk Patients	177,000	124,000	43%
Capitated Revenue ($ millions)	743.2	506.1	47%
Medical Claims Expense ($ millions)	523.5	379.4	38%
Total Operating Expenses ($ millions)	795.4	604.9	31%
Loss from Operations ($ millions)	(43.4)	(91.1)	52% improvement

Oak Street Health, Inc. (OSH) - Business Model: Customer Relationships

Ongoing patient engagement initiatives

As of March 31, 2023, Oak Street Health operated 172 centers, serving a total of 231,000 patients, representing a significant increase from 175,000 patients in the previous year. The company focuses on ongoing patient engagement through various initiatives, including proactive outreach and wellness programs designed to foster continuous interaction and support for patients. These initiatives aim to enhance patient experience and satisfaction, thereby improving retention rates.

Personalized care management

Oak Street Health employs a personalized care management approach that emphasizes tailored healthcare solutions for its patients. The company manages a population of approximately 177,000 at-risk patients as of March 31, 2023. This model allows for individualized healthcare plans that cater to the specific needs and conditions of each patient, which is reflected in the growth of capitated revenue, which reached $743.2 million, a 47% increase compared to the previous year.

Support services for patients and families

The company provides comprehensive support services that extend to both patients and their families. This includes education on health conditions, assistance with navigating the healthcare system, and resources for managing chronic diseases. Such services are critical in ensuring that patients and their families feel supported and informed throughout their healthcare journey.

Feedback mechanisms for service improvement

Feedback mechanisms are integral to Oak Street Health's strategy for continuous improvement. The company actively seeks input from patients through surveys and direct communication channels. This feedback is utilized to enhance service delivery and patient satisfaction. The company recorded a patient contribution of $219.7 million for the first quarter of 2023, up from $126.7 million in the same period the previous year, indicating a positive response to their engagement strategies.

Metric	Q1 2023	Q1 2022	Change (%)
Total Patients	231,000	175,000	32%
Capitated Revenue	$743.2 million	$506.1 million	47%
Patient Contribution	$219.7 million	$126.7 million	73%
At-Risk Patients	177,000	124,000	43%

Oak Street Health, Inc. (OSH) - Business Model: Channels

Direct patient outreach and marketing

Oak Street Health, Inc. employs a robust direct marketing strategy, focusing on outreach to potential patients through various channels. In the first quarter of 2023, the company reported a sales and marketing expense of $42.3 million, which constituted approximately 6% of total revenues of $752 million. This marks a 26% increase from $33.8 million in the same period of 2022. The increase is attributed to enhanced advertising efforts aimed at driving new patient enrollment at their clinics.

Partnerships with Medicare Advantage plans

As of March 31, 2023, Oak Street Health had a total of 231,000 patients, with 177,000 classified as at-risk patients under capitated arrangements. The company has established partnerships with various Medicare Advantage plans, which are critical for its business model. Capitated revenue for the three months ended March 31, 2023, was $743.2 million, reflecting a 47% increase compared to $506.1 million in the same period the previous year. These partnerships enable Oak Street Health to deliver value-based care while managing healthcare costs effectively.

Digital platforms for patient engagement

Oak Street Health utilizes digital platforms to enhance patient engagement. The company focuses on leveraging technology to improve patient experiences and streamline care coordination. During the first quarter of 2023, the company recorded other revenue of $8.8 million, which includes fees from care coordination and management services. The digital strategy is aimed at increasing patient satisfaction and retention while ensuring that patients can access their health information seamlessly.

Community health events and workshops

Community health events and workshops are integral to Oak Street Health's outreach efforts. These initiatives aim to educate the community about health resources and encourage preventive care. The company has been active in organizing events that align with its mission to provide accessible healthcare to underserved populations. Such community engagement efforts are essential for building trust and enhancing the visibility of Oak Street Health within the neighborhoods it serves.

Channel	Details	Financial Impact (Q1 2023)
Direct Marketing	Sales and marketing strategy focused on outreach	$42.3 million (6% of total revenues)
Medicare Partnerships	Capitated revenue from Medicare Advantage plans	$743.2 million (47% increase YoY)
Digital Platforms	Enhancing patient engagement through technology	$8.8 million (other revenue)
Community Events	Workshops and health events for community engagement	Impact on patient acquisition and retention

Oak Street Health, Inc. (OSH) - Business Model: Customer Segments

Medicare beneficiaries seeking primary care

Oak Street Health primarily targets Medicare beneficiaries, a significant portion of its patient base. As of March 31, 2023, OSH served approximately 231,000 total patients, with a substantial percentage being Medicare recipients. The company focuses on providing accessible and high-quality primary care tailored to the needs of older adults, aligning its services with Medicare regulations and reimbursement structures.

Patients with chronic conditions

Patients with chronic conditions represent a critical customer segment for Oak Street Health. The company's care model is designed to manage chronic diseases effectively, which often require continuous and comprehensive medical attention. As of Q1 2023, about 177,000 patients were classified as at-risk, indicating that OSH is financially responsible for their healthcare costs, a model that is particularly beneficial for managing chronic conditions.

Medicare Advantage plan participants

Medicare Advantage plans are another key segment for Oak Street Health. The company has seen a dramatic increase in capitated revenue, which reached $743.2 million in Q1 2023, up 47% from the previous year. This growth is largely driven by the increase in patients enrolled in these plans. Patients under these plans benefit from OSH's integrated care approach, which aims to enhance health outcomes while controlling costs.

Families of elderly patients

Families of elderly patients also constitute an important customer segment for Oak Street Health. The company provides services that not only cater to the health needs of elderly patients but also support their families in managing care. This is critical given the emotional and logistical challenges families face when caring for aging relatives. The engagement of families in the care process is integral to OSH's holistic approach to healthcare delivery.

Customer Segment	Key Statistics	Financial Impact
Medicare Beneficiaries	Approx. 231,000 total patients	Total revenues of $752.0 million in Q1 2023
Chronic Condition Patients	177,000 at-risk patients	Capitated revenue growth of 47% year-over-year
Medicare Advantage Participants	Majority of patients under capitated agreements	Capitated revenue of $743.2 million in Q1 2023
Families of Elderly Patients	High engagement in care management	Increased patient satisfaction and retention rates

Oak Street Health, Inc. (OSH) - Business Model: Cost Structure

Operating expenses for care centers

The operating expenses for Oak Street Health's care centers totaled $129.2 million for the three-month period ended March 31, 2023, representing 17% of total revenues. This amount reflects an increase of $34.0 million, or 36%, compared to the same period in 2022, where expenses were $95.2 million, accounting for 19% of total revenues. The rise in operating expenses was primarily driven by:

• Salaries and benefits: $23.4 million
• Occupancy costs: $5.3 million
• Medical supplies and patient transportation costs: $3.5 million

Medical claims and care costs

For the three-month period ended March 31, 2023, Oak Street Health incurred a medical claims expense of $523.5 million, which constituted 70% of total revenues. This reflects an increase of $144.1 million, or 38%, from the $379.4 million reported in the same period in 2022. The increase in medical claims is attributable to:

• A 43% increase in total patients under capitated arrangements
• A reduction in medical claims expense of $8.3 million related to prior periods

Marketing and patient acquisition costs

The sales and marketing expenses for Oak Street Health amounted to $42.3 million for the three-months ended March 31, 2023, which is 6% of total revenues. This reflects an increase of $8.5 million, or 26%, compared to $33.8 million, or 7% of total revenues, for the same period in 2022. The increase was largely due to:

• Higher advertising spend: $5.3 million
• Increased net headcount growth: $2.9 million

Administrative and technology expenses

Corporate, general, and administrative expenses totaled $89.9 million for the three-months ended March 31, 2023, representing 12% of total revenues. This is an increase of $1.2 million, or 1%, from $88.7 million in the same period in 2022. Key factors contributing to this increase include:

• Increases in salaries and benefits (excluding stock compensation): $6.7 million
• Technology costs: $2.3 million
• Legal and professional fees: $7.1 million due to the negotiation and execution of the Merger Agreement

Expense Category	Q1 2023 ($ million)	Q1 2022 ($ million)	% Change
Medical Claims Expense	523.5	379.4	38%
Cost of Care (excl. Depreciation)	129.2	95.2	36%
Sales and Marketing	42.3	33.8	26%
Corporate, General and Administrative	89.9	88.7	1%
Depreciation and Amortization	10.5	7.8	35%
Total Operating Expenses	795.4	604.9	31%

Oak Street Health, Inc. (OSH) - Business Model: Revenue Streams

Capitated payments from payors

For the three months ended March 31, 2023, capitated revenue was reported at $743.2 million, reflecting a significant increase of 47% compared to $506.1 million during the same period in 2022. This growth was primarily driven by a 43% increase in the total number of patients under capitated arrangements and a 3% increase in capitated revenue rates.

Fee-for-service reimbursements

During the same period, fee-for-service revenue amounted to $3.7 million, up from $2.9 million in the previous year, marking a 27.6% increase. The company continues to submit claims to the federal government and Medicare Advantage plans for direct reimbursements under this model.

Ancillary service fees

Other revenue types, including ancillary services, contributed $8.8 million in total revenue for the first quarter of 2023, compared to $7.7 million in 2022. The breakdown of this revenue includes:

Service Type	Revenue (Q1 2023)	Revenue (Q1 2022)
Care coordination and management services	$2.5 million	$1.7 million
License subscription and other fees	$2.6 million	$3.1 million
Fee-for-service	$3.7 million	$2.9 million

Subscription fees for technology platforms

Oak Street Health also generates revenue through subscription fees related to its technology platforms, particularly the eConsult platform. The revenue from these subscription licenses is recognized over time as the performance obligation is met. The exact contribution from subscription fees was not explicitly detailed in the latest financial reports but forms a part of the overall revenue growth strategy.