Q4 2020 Oak Street Health Inc Earnings Call
Okay.
Good morning, and welcome to the Oak Street Health fiscal fourth quarter 2020 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
Please be advised the today's conference is being recorded hosting todays call are Mike.
Mike cycles.
Executive Officer, and Tim Cook, Chief Financial Officer.
The Oak Street press release webcast link and other related materials are available on the Investor Relations section of the Oak Street website.
These statements are made as of March 10th 'twenty, 'twenty, one and reflect management's views and expectations. At this time and are subject to various risks uncertainties and assumptions. This call contains forward looking statements.
That is statements related to future not past events in this context forward looking statements often address our expected future business and financial performance and financial conditions and often contain words, such as anticipate believe contemplate continue could estimate expect intend may.
Plan potential predict project should target will there would or similar expressions.
Looking statements by their nature address matters that are to different degrees uncertain.
For us particular, uncertainties that could cause our actual results to be materially different.
Than those expressed in our forward looking statements include our ability to achieve or maintain profitability.
Our reliance on a limited number of customers for a substantial portion of our revenue our expectations and management of future growth.
Our market opportunity and our ability to estimate the size of our target market the.
<unk> of increased competition as well as innovations by new and existing competitors in our market and our ability to retain our existing customers and to increase our number of customers.
We refer you to our annual report for the year ended December 31, 2020 filed on form 10-K, with the Securities and Exchange Commission, where you will see discussion of factors that could cause the company's actual results to differ materially from these statements.
This call includes non-GAAP financial measures. These non-GAAP financial measures are in addition to and not as substitute for or superior to measures of financial performance prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures for example, other companies may.
Calculate similarly, titled non-GAAP financial measures differently.
The appendix of our earnings release for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures with that I'll turn the call over to Mike <unk> CEO of Oak Street, Mr. Marcos.
Yeah.
Thank you operator, thank you to everyone that is joining us. This morning, joining me today of course, Tim Cook, our Chief Financial Officer.
Before we dive into our fourth quarter results I would like to thank our team at Oak Street for their extraordinary dedication to and support for the patients and communities we serve.
Our teams of data to an excelled in challenging circumstances over the course of the year to continue to provide outstanding care.
When the Covid pandemic hit the U F of the year ago. We knew it is imperative for Oak Street to continue to be there for our patients and our communities.
Over the course of the last 12 months than the standing of telehealth offerings, and providing 90% of is virtually of that spring.
To ensure our patients came back with the primary care and meant leveraging our green bank to deliver shelf definitely off the patient safety and security and outstanding of community testing sites and the bulk of how can we navigate the surgery cases, all while continuing to run Oak Street care model, and providing outstanding care quality and patient experience.
Since the holidays, our team has taken up the additional challenge of Vaccinating patients as well as the older adult and our communities.
I cannot be prouder of how our team has stepped up to lead our communities on the pandemic.
We have transformed the computer rooms in the majority of our centers to be many of activation clinics.
The mobile vaccination team traveling even the facilities as well finance activation data committing the organization.
We are running of weekend mass vaccination center as part of the city of Chicago of efforts, both GAAP and back of the access.
Since we started the center the neighborhood are mass the activation centers have experienced the fastest growth and vaccination rates of any comedians Chicago.
We are currently giving over 11000 vaccine doses per week and if given the 75000 since the beginning of the year and that number is accelerating as we were able to excess supply of an additional phase.
We have the capacity to administer <unk> 80000 doses per week across the Oak Street.
We'll make the Oak Street efforts incredibly impactful of not just the number of doses, we are giving for the targeted way, we're ensuring vaccine access of the patients and communities who need the most.
At a time when excellent equitable vaccine access of the National story Oak Street as leverage our community average team to proactively engage older adults in our communities to help overcome taxi Hasnt C and ensure the challenges using technology are finding limited slot arent barriers to access.
I have had the opportunity to volunteer at our vaccine centers and is one of the most rewarding experiences I've had and Oak Street.
The excitement at time combined with the apprehension from patients receiving the vaccine coupled with the positivity and sense of purpose from the team as we work our way towards the light at the end of the Covid tunnel is something I will never forget.
I'd like to share of represented the story of two of our patients Mr. Mr. Jay husband, and wife, who we recently of accident.
Mr. Jacob day to get the vaccine is y.
Not so much.
Mr. Jay schedule, a visit to the Doctor at Oak Street for the two of them hopefully the use of truck. Mrs. J ahead for her doctor to get her over the hump to get the vaccine.
While Mrs J with nervous she was able to get her question. The answer by her Oak Street Doctor, who has earned the trust over time and decided to get the vaccine longer the huntsman.
Mr. Jay left grinning ear to ear and even missed the Jay had smile interface. Knowing she has taken the first step and they're leaving the fear of any value of the covenant bra.
In addition to the impact we were able to make on our 50 patient the communities.
We were able to continue to bring our models new communities in 2020 as well.
We successfully opened up 28, new locations in 2020.
This represents more centers than we opened in the first five years of our existence.
Because of our care model focused on keeping our patients healthy and improving the outcomes is completely in line with our financial times. This outstanding performance by our team in 2020 led to our strong full year in the fourth quarter results.
We generated record revenue of $248 7 million in Q4 ex <unk>.
Beating the top end of the guidance range, we communicated to investors.
This represents an increase of 43% from the fourth quarter 2019.
Our full year revenue growth increased 59% in 2020.
We achieved this growth despite essentially turning off our sales and marketing function from much of the spring and summer and even to replace our community Bank based marketing approach with new Central channel.
We finished the year of 79 centers and from August until Thanksgiving, We opened 23, new centers for an average of two centers per week.
We also saw strong level of performance that continues to reinforce our confidence in our ability to scale the organization.
We have previously share of 2015 vintage is an example of kind of all of the Rams.
We have shown the incredibly strong unit level economics of the Novo Oak Street Center.
With less than $5 million total capital invested including Capex operating loss of the sales and marketing and overhead are centers nearest capacity now have the contribution of $9 million annually and growth.
We are pleased to share that our subsequent vintages have continued to improve off of our already strong base with.
With our larger 2018 to 2018 vintages, both having higher percentage of revenue and higher personnel contribution than 2015, but at the same point of this development.
We set a goal for ourselves every year to both improve the central of the ramp from previous messages as well put more new centers up in previous years.
We were clearly successful in both in 2020 and are confident in our ability to continue hitting both growth in 2021 of beyond.
In order to improve center economic brands, we will focus on investing in our care model and patient acquisition approach, while leveraging the new direct contracting program to increase the percentage of our patients receive risk weighted economic zone.
We will continue to invest in our care model and Kennedy, our technology and data platform.
We believe the best patient experience in care quality comes from availability of in center in home and virtual visits from both longitudinal and on demand care.
Having the suite of options from the same organization local access to the preferred and clinically appropriate care of banking along the coordinated care across venues.
Additionally, as we gain scale of Oak Street, we were able to invest in the development of programs from more specific patient conditions.
For example, we will be implementing a new program focused on our patients with end stage renal disease. This year and we're excited to invest to improve health outcomes and lower cost of the small but complex group of patients.
Along the same lines, we will continue to invest in our candidate applications and data science capabilities to drive insights from our growing patient datasets and deliver those insights to our teams in the field with ease of use tool to ultimately drive better patient care.
We're excited to see the results of these investments on our quality of care and financial metrics in 2021 and beyond.
Along with investing to improve our terminal will also to accelerate our average model to treat the patient pace of patient acquisition.
This will include continuing the expansion of our digital and Telesales channel.
While we are proud of the results we have achieved as we ramp the channel in order of magnitude over the second half of 2020.
We believe they're still in their infancy, and we continue to expand and optimize book, allowing us to increase the number of patients brought in through the without increasing the cost of acquisition.
Additionally, we will continue to invest in training for our field based average seat. So we're able to sort of we are prepared to successfully relaunched our community of a channel in the back half of this year.
If we're able to maintain our central marketing performance, while returning our field average key performance of 2018 levels.
Also an increase of patient growth of over 50% per cent from where we're at today.
And our team believes there is ample opportunity to improve performance from there.
Finally, we believe the direct contracting program has the ability to meaningfully improve our center of the room.
We expect to have between 6% and 7000 direct contracting members on April one.
We continue the voluntary remind patients of the program every day and expect that number of increased by two to 3000 per quarter, depending on flow through and MA enrollment leading to a 10000 of 13000 direct contracting patients by October.
We're confident that over the next year. This number of teen increase leading to a significant increase the percentage of our patients that are on risk based contracts.
Because we are already incurring the cost of care frustration of Medicare patient at Oak Street, moving them to a risk based contract will allow the expected.
Patient contribution improved tenants.
Interest rates the Bottomline.
Leading to an improvement in funding level of revenue and proportionally larger improvement in center level of patient contribution over time.
In parallel to improving our central of economics, we will also look to leverage our platform to accelerate the pace of our expansion.
We plan to the team increased the pace of de Novo Center openings.
We are targeting 38 to 42, new centers in 2021 up from target time of our IPO of between 25% 30 day notice.
With a similar level of performance that's assortment switches, we expect our 2021 vintage alone to generate $1 3 billion of revenue $250 million of center contribution in 2026.
We believe we of the infrastructure and talent pipelines in place to support this pace of expansion and more cash.
Assistance, ensuring strong center level performance and ultimately providing the same return on the investment in early <unk> that we've seen in our mature vintages.
With continued strong sales performance, we will look to continue to increase the number of new centers per year next year and beyond.
In summary, we are thankful for the strong contribution from Oak Street team, leading to a strong finish to a challenging year and we are pleased with the results from our fourth quarter.
Looking to 2021, we believe we of the team technology culture and mission to truly transform how care is delivered from the patients who need it most.
In doing so we believe we can create the new standard for primary care for older adults and are excited to take the next steps on our mission to rebuild health care the should be.
I'll now turn it over to Tim Cook, who will walk you through our financial results in more detail Tim.
Thank you Mike and good morning, everyone. We are pleased with our fourth quarter results with our key metrics coming in ahead of the guidance. We communicated in November in terms of our membership total patients grew roughly 23% year over year, while our at risk patient base, which drives our financial performance grew by 34% to 64500 patients.
At the end of 2020, we operated 79 centers and increase of 28 centers compared to the December 31 2019.
Note that our year end 2022 ill now includes our three Walmart locations.
GAAP net revenue of $234 $9 million per the year of grew 39% year over year driven by the growth in our at risk patient base total revenue grew 43% year over year to $248 7 million.
Of note that in the fourth quarter, we recognized <unk> revenue of $3 million from one time events related settlements of health plans and $9 million from Capsulate of revenue that was booked in the fourth quarter, but related to full year performance.
Additionally, we recognized approximately $4 2 million of other revenue from onetime events of which approximately $2 2 million was related to HHS provider of these funds and we recognized $2 4 million of other revenue that was booked in the fourth quarter, but related to full year performance.
Even when even when adjusting for these amounts we still finished Q4 comfortably ahead of the guidance provided in November.
Our medical claims expense for fourth quarter 2020 of $175 5 million.
Representing growth of 39% compared to fourth quarter 2019 fourth quarter of medical claims expense included $6 $5 million of onetime medical claims expenses associated with settlements with health plans and the potential reserve against potential incurred but not reported COVID-19 claims related relating to 2020 days of service.
Our cost of care, excluding depreciation and amortization was $61 million from the fourth quarter, an increase of 36% versus the prior year due to the growth in the number of centers, we operated as well as growth in our patient panel.
Sales and marketing expense was $26 $8 million during the fourth quarter, representing the increase of 88% year over year, we saw the benefit of the greater investment in sales and marketing in 2020 the of greater at risk patients at year end and greater expectations for Q1, 2020 membership, which I'll discuss at the moment.
Corporate general and administrative expense was $72 9 million in the fourth quarter, an increase of 143% year over year. The majority of this year over year increase is it related to an increase in stock based compensation expense, which was $41 7 million in the fourth quarter 2020, compared to $1 9 million in the fourth.
2019, this growth and stock based compensation expense was driven by an accounting change related to awards issued prior to our IPO in August 2020, and is not a function of cycle of words issues as our IPO.
Excluding stock based compensation corporate general and administrative expense was $29 9 million in the fourth quarter 2020, an increase of 7% during the fourth quarter 2019, driven by increases in head count to support our organizational growth.
I will now discuss three non-GAAP financial metrics that we find useful in evaluating our financial performance.
Patient contribution, which we define the catheter weighted revenue less the medical claims expense grew 41% year over year of the fourth quarter to $59 $4 million faster than KFC had revenue growth of 39% from the period.
We expect at risk per patient economics to improve the longer that our patients are part of the of street platform.
Platform contribution, which we defined as total revenue less of some of the medical claims expense and cost of care, excluding depreciation and amortization was $12 1 million an increase of 397% year over year as the individuals that are matures, we would expect flow platform contribution dollars and margins to expand as we leverage the fixed cost base of associate with our centers.
As well as improving our patient economics over time.
Adjusted EBITDA, which we calculated by adding depreciation and amortization transaction and offering related costs and stock based compensation. Excluding other income the net loss was the loss of $43 $5 million in the fourth quarter of 2020 compared to a loss of $36 2 million in the fourth quarter of 2019.
We finished the fourth quarter with $409 $3 million unrestricted cash cash used by operating activities totaled $77 $2 million in 2020, and our capital expenditures totaled $21 million.
I wanted to talk for a moment about direct contracting expand on my figures. We received the final from CMS last week that identified approximately 13500, Medicare beneficiaries aligned to Oak Street via our direct contracting entity. However, this file did not include exceptions, which account for the Delta between this figure and Mike's range of $6 in the 7000 patients.
These exceptions include patients had a sense of enrolled in Medicare advantage patients that are aligned to other government programs such as the Acs and patients that are disqualified due to prior and the enrollment.
Of our lack of part a and B Medicare coverage or other reasons.
For those patients currently enrolled in Medicare advantage, we are indifferent as those patients are helping to drive our MAA at risk patient base, which is growing more quickly than we originally anticipated.
For patients aligned to other programs those patients remain with that program regardless of their of voluntary alignment preferences for the first year of the direct contracting program given the direct margin contracting program is starting mid year in April we are hopeful that as we move the performance of your two in January of 2022, CMS will give priority to the voluntary alignment preferences of those patients.
The result of them moving to the Oak Street direct contracting entity for the disqualified patients. We will continue to work with these patients expected to be added to our direct contracting piece the patient base in future periods.
In summary, there are significant buckets of patients not included in our 6000. The 7000 estimate that we believe will flow through in future periods and those patients are incremental to the 2000. The 3000 patients we expect to add per quarter that Mike mentioned.
I'll now turn to our 2021 financial outlook.
As of December 31, 2021, we expect to have 105 to 110000 total at risk patients, including direct contracting patients for the full year 2021.
We are establishing in the expected revenue range of $1 75 to 132 5 billion.
And an adjusted EBITDA loss of between $215 million from $165 million.
We anticipate having 117 to 121 Standalone centers opened by December 31, 2021.
Including our Walmart centers.
Our 2021 EBITDA guidance includes the impact of simple factors. The first factor is related to our accelerated growth rate as discussed.
We are increasing the pace of new center expansion and the startup expenses tied to these the nobles will weigh upon near term profitability.
As Mike discussed we expect to continue making these investments provided we continue to see recent cohorts operating at levels that further validate the unit level economics of our operating model, which they currently are when you consider the impact of center contribution in sales and marketing and G&A dollars assisting with accelerated growth, we will invest approximately $50 million in these new centers above what we would've expected.
<unk> some of our IPO in August 2020, given the 73 of 98 centers. We initially estimated we would the operating as of year end 2020, and 2021, respectively.
The second factor is related to investments in our care model programs in 2021 as we believe these programs can drive improvements in patient outcomes and medical claims expenses in future periods. As we continue to grow our patient base, we are reaching the scale, where it is economical to invest in certain programs that we believe will improve our patient's wellbeing.
And result in lower per patient medical costs in the future.
We expect these.
Investments in these programs to be approximately $20 million and we expect that we will recoup these investments in future periods through improved MLR, we have not assumed any benefit in 2021.
The third and final factor of pertains, the patient contribution and the impacts both per patient revenue and per patient medical costs.
We estimate our per patient revenue will be lower than we would ordinarily expect due to lower risk scores.
Consistent with recent commentary we have heard from Medicare advantage payers, we expect the low utilization experienced in 2020 due to Covid will result in lower risk scores for new at risk patients, who joined Oak Street in 2021, creating a headwind as we grow this year.
On the medical cost impact 2021 is a challenging year to estimate our medical costs and the typical year, we would evaluate the prior years' experience and make an estimate of trend based upon a number of input factors.
Given the impact of COVID-19 in 2020 medical cost the base on its harder to establish.
Furthermore, it is unclear what impact if any COVID-19 will have in 2021 medical costs as we did see an increase in COVID-19 cases in Q4, 2020, and new variance of the buyers represent a risk to the efficacy of the current of vaccines, making it difficult to predict what Q2 2021 and beyond will look like from the medical cost standpoint.
Additionally, the consolidated Appropriations Act passed in December 2020 included an increase the Medicare physician fee schedule for 2021 and suspended the sequestration per Medicare payments for the first quarter of 2021.
We expect the net combination of these two factors will resulted in increase in per patient medical costs related to specialist care provided to our patients.
Slightly offsetting these headwinds and the impact of direct contracting.
I mean that all of these factors patient contributions can be approximately $40 million of lower than we would've otherwise expected it.
It is important to note that we are based on the assumptions on very preliminary data and we believe this impact to be a function of COVID-19, and limited only to 2021 results.
For the first quarter of 2021, we are forecasting revenue in a range of $280 million to $285 million.
We are forecasting an adjusted EBITDA loss of $25 million to $20 million.
We anticipate having 85% to 85 centers in at risk patient count of 74 to 75000 by March 31.
I'll make one final point regarding growth in the seasonality of our business 2020 was an unusual year net in that at risk patient panel grew by 9000 patients or 17% from the end of Q1 2020 to year end 2020.
At the point of comparison for the same periods in 2019, we grew our at risk patients by approximately 15000 or 42%.
This was driven by the decision of lower sales and marketing during the spring and summer of 2021 as we learn to operate during the pandemic and something we do not plan to repeat we expect our growth in 2021 to be more consistent with pre 2020 periods with at risk patient is growing 47% from the end of Q1 2021 to year end 2021 based upon our guidance I just provided.
As we add of new patients over the course of the year, we expected our aggregate per at risk patient economics to decline as our newer patients are less profitable than our tenured patients.
And with that we will now take any questions. You may have I'll turn it back of the operator.
At this time, if you'd like to ask a question. Please press star one on your telephone keypad, Robert Jones with Goldman Sachs. Your line is open.
Great Good morning, Mike and Tim I guess, just to go to the the headwinds and a lot of detailed out the very helpful. I guess, the sizing of the Covid headwind to your MLR is in the 8-K was really helpful. And can you just touched on some of this again, but I was wondering if you could breakdown.
Give us any sense of the size of the impact specifically to the treatment testing treatment of testing related to Covid and then just as we think about the rollout of the vaccine.
How variable is that is that estimate to the overall headwind that youre sizing to EBITDA in 2021.
So on the first one as far as the.
The increase has been third party of Metaphosphate of Covid.
It is.
The testing et cetera is pretty minimal as in the big scheme of things from a cost perspective.
The majority of the largest cost of any process of acute hospitalizations and obviously to the extent that are of patient population is.
Cash in Covid.
They are obviously at a much much higher likelihood to go the onslaught of covenants, so where COVID-19 impact us financially is really on the.
The hospitalizations, so we saw that to some extent in Q4 the data the preliminary but.
As the resurgent across most of the country until the most of the markets. We're in we didn't see that play out.
And our financials and our third party net cost.
I think that's where you see the biggest impact from from.
From Covid.
The cost of vaccinations more of the cost of the Covid type of thing is.
It is de Minimis when it comes to the third party met costs.
So we are hopeful while we are optimistic that the combination of of lower tax rates.
Our efforts of activate our patients and our communities that we won't see the shortage of observations that we're obviously watching the new very closely like every one of the country is in.
We.
There's a lot of unknowns and we haven't.
We haven't we haven't come down from a 100 year pandemic of 100 years. So there's a lot of a lot of error bars around there. So I think to your last question around kind of.
How much we know and how certainly army of the answers we're not on the on the third party net cost run so.
If everything goes well and we don't see another surge of Covid and we don't see the observations.
We can certainly.
Perform better than than you probably been our estimates but.
This is COVID-19 proof of anything it's unpredictable. So we want to make sure we are the being thoughtful as well.
Got it so on the so on the treatment side clearly taking more of a conservative approach in the initial guidance it sounds.
We hope so but again.
I hopefully hopefully we were talking to you guys.
A couple of quarters and life in the back to normal and you can you can remind us of it.
We can help I guess just one second question on the accelerated center rollout any sense you can give us on the split between existing versus new geographies and then just given the decision to accelerate the rollout any motivation motivating factors. There was it was it related to just opportunity increased competition just curious what sparked the decision too.
To accelerate the rollout of the centers.
Yes, I don't know I don't have the breakdown of numerous existing at my fingertips.
It's going to be roughly roughly proportional between the two depending how you find the new market similar markets like New York City are technically existing markets in 2021, because you were there in 2020, but obviously, we're just we're just at the start of of building them out versus the places like Chicago and we will also continue to grow.
In 2021.
There for a while so.
Some of the accommodation of and obviously, we've announced multiple new markets as well, but I think we will continue to announce more on top of that we've announced over the next month or two.
As far as the decision honestly.
It has nothing to do with competitors and has everything to do with we see HSA, absolutely massive market opportunity a very open market.
<unk> of what competitors are doing.
And really strong performance historically that really leads us to feel like it's the efficient to invest I share that little bit in my my my earlier remarks, but if you look at the unit level ramp of Oak Street entered is absolutely phenomenal.
Credibly of your need for capital and incredibly strong return and so the question we ask ourselves is.
Do we feel like we have the kind of internal capacity to put more centers up and what has happened historically to the ramps over time.
I think we opened up two vendors per week.
During the surgeon to pandemic not too long ago, I think we feel very good about our capacity to put more centers up in full year of 2021, along the same lines.
The performance isn't eroding the actually the opposite mute performance over time of improving so when youre seeing those factors value Steve is the huge open market.
We need to we need to grow more frankly, right now the limiting factor to our growth is not market opportunity we can put.
Out of an order of magnitude more centers in 2021 installed piece.
The scratching the surface of the overall market opportunity.
Comes down to having the appropriate level of confidence in our ability to execute and I think.
We will stick by what I talked about titrate up the number of centers every year to.
To make sure that everything is going smoothly and we are continuing to see the same kind of trajectory of improvement of our vintages with longer scene that will put more centers of the next year and repeat but we're really really excited about about the future opportunity of putting up more centers was a pretty a pretty easy decision because the market could support 10000 Oak Street pattern. So.
We are a long way from making intensity of that market and we feel of huge need.
To put up more benefits. We also feel like the quality of care. We are providing is differentially better and so we wanted to range more people.
All makes sense thanks, Mike.
Sean Wieland with Piper Sandler Your line is open.
Hi, Thank you good morning.
You called out the two.
The million dollar investment to manage medical claims expense can.
Can you give us a little bit more specifics on what this entails exactly and and also.
Just describe how managing medical claims expense in the direct contracting program is different than that then that of the MMA program.
Yes. The first question there is a number of programs embedded in that in that number.
Part of it you want to call it out of it.
Generally we will implement a series of new.
The med cost per mile programs every year and.
For anytime you are developing a new program. There is the cost to develop the program. There is the cost of the pilot. The program. There is the cost to build out the kind of technology and training.
To roll it out more broadly there is the implementation cost of running out of more broadly and then obviously we wouldn't be developing one program. We didn't have a strong conviction of that program and ultimately to <unk>.
<unk> health outcomes for our patients and therefore, lower medical costs overall, and obviously of a strong ROI on that program.
But there is a period of time, where youre rolling out the program Youre not getting that return number one number two when we think about budgeting and guidance.
<unk> taken a lot of the benefit right away, we do make them all of the cost.
And so in this case.
The programs under that number of the biggest one of our program focused on our end stage renal disease patients.
We're not offering dialysis, obviously will work with partners on that but actually the majority of cost for a patient with the FDA does not dialysis is actually all of the other kind of acute episodes that occurred.
Go onto dialysis for the most part of your head.
A number of chronic conditions.
Cause you to have.
And so we started the huge opportunity to really improve the quality of care for these complex patients.
Right in line with what we've proven with other parts of our care model and now that we are getting bigger and we have a critical mass of those patients. We can really make that investment and so that's the biggest one of the couple of other ones underneath there come more from more care in the home components and transition of components and things. So we really believe strongly these programs that will pay off over time and that kind of latter part of this year and really more in the two.
One of 22, we'll see a pretty big benefit from the programs, but you have that upfront investment in this year at the kind of.
The unique year, because I think we'll have more of those investments in the otherwise without because a lot of the things we're going to roll out in 2020. It didn't happen right at the same teams that would have rolled those out we are focused on infection control protocols and testing and.
The Covid care programs now vaccinations et cetera. So.
Yes, that's kind of.
What's the note within those numbers and we hope we're bringing in.
We are confident that there'll be a return on those investments not too long from now.
Okay.
Okay, and then just more broadly whats.
Whats different about managing medical claims expense in the direct contracting program versus okay.
Members enrolled into Ma.
I think it is actually one of the reasons why <unk> is very well situated for the direct contracting program. You think about the program. Overall, you don't have the kind of traditional managed care the levers and direct contract right. So you don't have you don't have networks.
Yes, its open access like attrition of Medicare you don't have prior authorizations and your kind of the gatekeeper model. So I think some of the more traditional kind of call them kind of NSO type models I think are the harder to.
To implement indirect contracts, but definitely not wood Oak Street.
And so from our perspective, the focus of our care model and our approach is really provide a phenomenal experience for our patients so they come to voluntarily.
Really focusing on how do we ensure we understand all of our patient conditions really well and we're leveraging data and technology in our model to get ahead of any potential acute episodes of acute patients healthier out of the hospital. We do we will generate a lot of savings.
So nothing that will change with the indirect contracts, where we are already taking care of these patients.
Strongly we're already lowering the admissions and keeping these patients healthier improving the outcomes and so really what it becomes a zone.
Finally, our financial mechanism, where we'll be paying differently and I think that allow us to capture the savings we're generating so I don't I don't look at it for Oak Street is very different although I think that depends on what is your model and your approach.
That factors in a lot of how different the approach will be flow efficiency.
Alright, Thanks can I slip in one quick one of the 38 to 42 day Novo's. This year, how many of those are going to be under Walmart.
None.
Oh I thought you said that your forecast includes Walmart.
Sorry, I was saying the 117 to 121 I mentioned would include included those three Walmart centers, we opened in 2020.
Sure.
Walmart is going well, thus far it's still obviously very early to be making any final terminations. We continue to have the Walmart, but how we can.
We're together beyond those three centers, but at this point as we think about 2021 in the 30% to 42 centers that were opened none of those would be more of our so sorry, sorry, if that wasn't clear, but that's okay.
Is it really simple alright. Thanks, thanks for the clarification, yes. Thanks John.
Ricky GUL Walter with Morgan Stanley Your line is open.
Yes, hi, good morning.
Great question on patient acquisition. The the casino rollout are you starting to see traditional patient acquisition channels already returning.
And what are the kind of like curious dictation to when you will be able to host these events of community events and started the gain and how should we think about the.
The cadence of those costs throughout the year.
So from a start from the back of the question from a cost perspective, we are bearing the cost right now of our commodity marketing team.
It's really.
The FTE focused we have the teams they are all at the centers.
Now they are doing the best net doing a nice job all things considered of.
Engaging in people they met the community Telefonica, <unk> and working with different community groups and doing what they can do but obviously, it's more of limited without kind of the more traditional event based in person activity that type of kind of built the team for but we haven't made a decision to keep the team in place to keep investing of the team because we are confident of that that will pay off.
Relatively soon.
We are not despite the.
I think early success, we've had of getting our patients and our fees vaccinated. One we're still early in doing that number.
Number two.
He hasn't changed even.
The guidance.
Recently, so I think we're not in the place now where it makes in.
Our markets and what we're promoting that.
The group of 15 to 20 older adults are doing of zumba classes into indoor community Center right.
And.
And so we really haven't turned those channels back on yet.
I'm hopeful I'm hopeful optimistic maybe in the summertime, we'll see that again, it's going to be.
When you start seeing society of returning more of a normal then I think that will kind of kind of come along with it right. It both from a safety perspective like Blackstone you want to do is rushed of things.
Cause.
Infection spread an at risk population the number two if people if you're willing to do it as well.
The only thing I'll say to that is the one thing we kind of thing at the.
Not a proxy for that but it's been pretty exciting as we backed in the people in our communities. Yes in some ways. We've kind of had the first the closing two of community that we've had in over a year because we are having a lot of people that arent Oak Street patients coming to our community centers to get their vaccines and theyre seeing over to you for the first time all of them and I think of all of them had been please feel that we've got has been very.
<unk> by the centers the team.
The operations of how smooth go on especially in the <unk>.
The story of other places of weights and confusion and so.
So we're really excited about the number of people, we're able to make a really strong impression on.
Historically that was one of our biggest growth of our commodity marketing model to get people to come to our center of <unk> see it because we knew that they would be very likely the schedule. Afterwards, there were hopeful this will kind of be the beginning of that obviously, that's not the goal of the vacuum <unk> campaigns, but hope it would be a nice side benefit of just getting more people introduce wolfgang.
And my second question is on the cost.
You went through some of the list off the incremental cost of we're seeing in 2021 day.
To clarify.
What do you expect to revert in 2022, as we think ahead versus what part of this cost.
Now more kind of structural to the modeling.
We should the conference of update our 2022 and beyond.
Models to adjust for that.
Sure. So the $50 million that we will invest in new centers between new set of ramps as well as sales and marketing the sports the centers of G&A I would say that's all consistent with how we would how folks would be modeling center growth. So.
I don't know how everyone has developed their own forecast, but im assuming that as the centers grow because of the greater investments out of the marketing is of great investment GAA. So I'd say look.
As we roll forward as we expand from 25% to 40 centers and from last year the.
Incremental six centers, we opened we are running the same math on those centers as we would any other centers so that in my mind isn't.
Not necessarily a headwind of 2022 and it just we will have more centers in 2022.
Probably increased the losses in 2022 of those centers continue to ramp to breakeven, but obviously that's business as usual right. That's just more of the same more centers than we otherwise had interest other than we had earlier anticipated.
On the on the the care programs investments assuming those work we would continue to make we would I would expect the continue to see those dollars in the P&L starting at the new baseline for for those expenses for 2021 and 2032 of beyond obviously, the you said that we're not seeing the returns that we mentioned we would dial those back and we're very optimistic that we will given the opportunity.
Of that as presented by those programs. So what I would hope to see in 2022 is some offset to medical claims expense from the benefit of those investments. Obviously, we did again, we did not incorporate any of that in the 2021, but as they look forward of 2022, I hope to see that and then finally on the patient contribution dynamics I mentioned.
We would expect.
To the extent of those are meaningful right.
The RAF issue will be real based upon what we're hearing of the marketplace. We expect all of those to reverse out in 2022, obviously that assumes that.
Covid as we know it.
Feeds out of existence I'm sure that won't be entirely the case, but at least from medical cost perspective will be less of the phenomenon. I think we've got every reasonably that we can manage our patients from our from of documentation of our risk or perspective, the harder question and answer of what will happen the medical cost, but again I think perhaps optimistically speaking, but sitting here early March I feel as though.
We can be helpful of that by the end of the year as we looked into 2022 medical cost that COVID-19 won't be much of an impact there. So would expect all of the patient contribution impact of whatever that might be in 2021 should not be of headwind in 2022 and beyond so sorry.
Ricky in summary, I don't think any of that is really the impact to future periods from a net from a sort of the change the profitability profile of the business.
Again more growth would require more investment as you roll your model off of 2023% of Unfortunately, five you'll you'll see greater profitability because of those new centers.
And we'll see a nice we fixed the nice return on our care programs of investments so.
Hopefully that gives you a sense.
Justin Lake with Wolfe Research your line is open.
Yes.
Thanks, Good morning.
First question.
Sure.
That's the number you havent historically provided but one of your peers hold an analyst day talked about churn in there and one of the specific markets in the business being about 30%, which I think some of the prior to a lot of people. So I'm. Just curious if you can share you'll till the number just any thoughts around that 30 per side, which I think that's kind of an industry.
Average per well.
All of kind of learning about this business as we go.
Yes, Youre right just the we have not historically shared our churn numbers.
I don't have the exact numbers right in front of me Theyre certainly not 30%.
I think that number of field high to us as well.
On site.
I don't I don't know, which company, you're referring to or what release, so heartbeat hard for me to comment upon the number of other than to say.
That's not been our experience.
Got it and then the.
Question on the Web College right there of a couple of questions one.
It would be so youre going to get the 10 to 13000 members I'm curious if you could tell us.
Whether you're you know what percentage of your kind of D. C eligible patients that makes up meaning kind of what's your what's your penetration rate. There and then I know you've said that you expect to do better on.
Voluntarily align patients. So maybe you can give us the mix there on the 10 to 13 pardon me your voluntary versus claims.
Yes.
The reverse order.
Sure.
And again I would say all of these of the caveat that we're working on the preliminary reports in our analysis on those reports.
On a program that is brand new so it's kind of caveat I mean, I'd say with those as far as claims the Lindberg voluntary line.
We think initially less than half of our share.
Sure of contracted patients will be claimed the line and then we don't think the claims of line number kind of by definition will grow much at all over the next year or so and so all of the growth from there'll be voluntary lines are the about the.
The growth so I think it will be kind of less than half the start unclaimed blinded, obviously shrinking shrinking from there as we keep adding more patients.
Yes.
So.
The last question.
The percentage of eligible at the it's a hard question to answer because we're still trying to determine and kind of who the eligible and all of the different kind of eligibility requirements.
The reasons people wouldn't be and right. So when we get a report and we will be surprised.
This set of patients.
Where previously aligned to.
And ACO because of their former documents part of the health system that was in the Medicare shared savings program ACO and therefore looking back at the preponderance of their claims over 2018, 2019 and 2020, they got a lines of the system's ACO in 2021 for example, because of this program starting in April and the program starting started from the beginning of the year.
Here like they always do.
The.
The <unk> CMI decided that kind of ballpark claims alignment to a msft ACO with Trump direct contracts actually is going to change in 2022, but we didn't.
No way for us to know which of the patients happened to have a former doctor who was part of the house system that was part of an ACO and and so we kind of we kind of final all of these things out kind of as we go so it's hard to answer that it's already of the question of what percentage of our eligible patients because I think we're still trying to understand exactly who are.
Eligible patients are even even that definition is changing over time of the program. So.
Again, I think our goal is to really understand where every patient is make sure every patient does sort of voluntary alignment form and then if they don't flow through understand why they didn't flow through and see what we can do to change that right.
As always Thats always our goal.
The other thing that always moves right.
The patients are gateway of should help a lot of them will choose Medicare advantage and so people who thought that come in to all of the foreign branches of Medicare.
I may find which obviously, we're very happy with it they do.
Then they won't be part of the program as well so there's a lot of moving pieces of change over time, and we're obviously continue to add patients I was just the it's a little harder number to pin down I understand is that what you're asking for but I can't answer.
Hi, Daniel <unk> with William Blair. Your line is open.
Yes. Good morning, Thanks for taking the questions in my opinion, perhaps one of the more important data point is fundamentally is the improvement in the ramp of your stores and I am curious if you could go a little bit more into the centers and what the key factor of factors are driving that meeting is it faster member ramp is it.
Revenue per member of medical cost management I'm sure. It's certainly an element of all of that but in your mind as are the key to that metric, that's giving you that increased comfort.
<unk>.
Yes.
The combination right. So if you if you go back to the 2015 inches is always the the.
The baseline vintage and Ryan I remember, our conversations and the.
The early IPO days, when we share that is kind of an example of vintage and all of the questions. We got were looking at was that your best vintage ever of your heavier economics around it over time. So we were excited to share with the group more data points around that that actually know the outcome patent had gotten better over time, if you take if you can.
Go back to Oak through 2015, right I'm proud of our performance and the team them, but we are we are doing significantly more sophisticated organization today than we were of that so I think of a lot of the change has been the technology right building out our canopy wasn't a thing in 2015, so as we built out our canopy applications that has really locked in workflows and gaming.
Teams.
Better access to the data they need to drive our care model the kind of real time within our care model right and that's something that's not stopping right. We are rolling out more canopy modules. Every every quarter. This year and of those models are on I think it will continue to drive better performance better consistency of form and better kind of topline outcomes from our care model. That's the only part of it.
It.
Similarly on the on the the outreach side, we pilot new things were trying things and we learn we learn ways to engage people and bring on more patients and the work we.
The hardware and continue that path of we're constantly innovating there.
2020, with the little bit of a strange year on that front because.
As we talked about of what we had to stop of lot of the things that work really well and develop a whole bunch of new things and so again, we can't be more excited for the back half of it at the year and in 2022 of them. We can kind of take all of the new things, we figured out of that work with all the things that we knew worked in the past and do them. All at the same time. So we're really excited about that so it really just wanted to add one thing is really just kind of incremental improvement across all of the levers of our <unk>.
Model and that drives better patient outcomes that drive more patients and you put those two things together and drive better better better performance of vintages.
Hey, Tim from quantify but can you I know you hit the numbers and I kind of of that quantification of the improvements of 2015, yes. If we look at our 2020 performance for the centers that we opened from 2016 through 2019 those centers in aggregate generated about $400 million and revenue of about 936 centers and about $9 million of center of the profit.
It.
We compare that to the 2015 cohorts of what would the centers of done if they had performed similar to the 2015 cohort 2020 revenue had been about $355 million in profit of about $4 million. So were 13% ahead of revenue of 140% of add on on profitability, albeit on a small number but what it is we're seeing really nice ramps in our earlier vintages relative to that 2015 based on.
<unk> vintage.
Okay. That's very helpful. And then Tim one for you if we think of the headwind from COVID-19 into the current fiscal year, how much of that relates to newer patients I assume.
The bulk of it is somewhat related to that meaning that one the risk scores on newer patients are probably going to be a lot lower than what you've been able to do with your.
The consistent customer base and then number two is there are more concerned about medical claims among that group because perhaps people entering didn't get the appropriate preventive care.
Versus your patients and therefore might have higher institutional cost this year versus your core group.
Sure so.
As we think about the potential impact of patient contribution related to Covid I would say new patients are part of it I would say, they're more it's easier to draw the distinction within the revenue or any of our existing patients. We did a great job engaging them in 2020, our ability to document them and their risk scores look consistent what we've seen historically.
No.
As we think about 2021 is really the uncertainty around what will new patients look like and.
From what we've heard from others, we probably expect that again, we would expect those risk scores to be lower to the kinds of theyre not the question could be well if theyre higher or are you getting patients that are sicker, and therefore net of cost to be higher and so we haven't made any specific assumptions around newer patients being more costly than existing patients due to COVID-19.
Candidly, we are probably not that sophisticated in how we're thinking about our new patients at this point, but so as we think that may cause it is less a function of new patients in more of a function of uncertainty around the entire population.
Kevin Fischbeck with Bank of America. Your line is open.
Great. Thanks wanted to ask a question about the.
Direct contracting.
Profitability of it sounds like you guys expect it to actually be additive. This year as you are already carrying a lot of the costs.
But can you talk about the ramp of profitability in that business over time, and if you're already incurring the costs shouldn't it already come in at the Max.
The Max profitability in year, one what would cause the improvement.
Thanks, Kevin This is Tim.
For the random profitability per direct contract in patients if we think about it.
In two different buckets the versus what are the economics of the underlying patient and then what are the cost to manage the patient from our cost of care perspective, we expect relative to a very minimal of any incremental cost to manage those patients. So we're really talking about what is one of the revenue is lots of medical expenses for these patients and that's what I would say, it's similar to what we experienced in our.
And they book of business, we see an improvement of patient economics over time as a function of both.
Better understanding of the disease burden of those patients and documentation and therefore, a better calibration of our care model to better manage the medical cost of those patients. So we see nice improvements I think as folks know over of years two three of four patients being on our platform. We expect something similar for direct contract conditions and to Mike's earlier comments, our goal of to hasten that ramp every year, but the reality of it.
Does exist somewhat a function of how Medicare advantage works sort of the annual cycles of the program. So given the fact, the direct contracting is essentially drafting off of that program I would expect to see a similar range over time, where we see more modest profitability in year. One for these patients and then as you know as they become on the platform for years, two and three we expect to see a nice ramp in profitability. So.
Along the way of saying the 2021 contribution from those patients those direct hodgkin patients won't be all of that meaningful because again. They are in their first year with Oak Street, and I'd expect the the patient level, probably the lower than it would be for a patient that's more tenured.
Okay that makes sense and then just maybe ask a question.
Our final question somebody asked earlier about the consistency of of the.
Some of the costs that you're including in your guidance today I guess, if we were to how do you think about the boost in clinics.
This number that youre, adding this year now kind of the new way to think about new clinic growth going forward. So we should kind of be thinking about $50 million.
Of course next year as you add a similar number of sites or was this the kind of a one time.
Seizing the opportunity.
I don't I don't expect us to.
Lower of the number of new centers, we put up in the subsequent year.
I think if we're performing to the level, we performed historically, we will keep increasing that number.
Obviously.
Yeah.
Better than I do but the thing about the financial results of Oak Street Health right. There is it's really driven by how many how many mature centers do you have and how many immature centers do you have and when you get out when you get high enough portion of your centers mature that can cover all of your your new center growth and beyond right and so if you think about today the semi.
The nine centers, we have today.
Half of those centers are within the first two years of being opened right. So when when the when it was the money.
We put up 40 more centers this year give or take right and we have of 120 centers at the end of this year give or take.
More than half of those right at the 28, we put up in 2020, plus the already moving up this year. So it's 68 of the 120 will not be in their first few years. So we are actually if we accelerate the pace of fed ramp we are increasing the number of immature centers related to mature centers.
As I share with you earlier, our centers that are nearing capacity contributing $9 million give or take each.
And so you can do you can offset a lot of new centers with the kind of a couple of mature centers.
Really.
We kind of look to accelerate our growth into the huge market opportunity.
The investment period.
So we're definitely in 2021 and I expect to be 'twenty 'twenty two to kind of begin this investment period, where we are.
Putting up the.
Putting up more centers, obviously, feeling very confident our ability to operate and execute that number of centers of putting on more vendors to meet.
A massive market demand.
Couple of years of those centers I shared before just the kind of just the centers. We put up this year, we expect to be $1 3 billion of revenue $250 million of center contribution.
In five years and so again the.
The model is really strong but.
Again, we feel like the right thing to do is to invest against putting up more centers and so what are kind of the.
The the extra of $50 million timber describe it really kind of how much more than the baseline of 25 centers would it take the put up 40.
And so if your baseline is still 25% and future years, yes, youll incur extra costs, but obviously the pretty soon right that cost will be offset by the investment we've made in prior years.
The Kevin one thing I'd add is relatively formulaic for us right in the New center has the ramp we see that ramp over time, so from our perspective.
It's just the number I gave you is just the I provided just a function of if we open more center of what would the cost be nothing nothing more than that.
David Larsen with <unk> Your line is open.
Hi, the call.
Cost of care increased by about 50% sequentially and obviously the medical claims expense was up about.
$20 million sequentially can you talk about what drove that and how much of that was related to like say inpatient admissions tied to COVID-19 if any thanks.
Sure. So on the cost of care the largest driver of there is just a function of the number of centers. The opened in Q4 relative to Q3, so just to remind folks we yes, we held off on opening new centers during the.
The depths of the pandemic of that was if that's the right term for Q2 early Q3 of last year, we really started reopening centers in August. So you are seeing in Q4, a bunch of new centers coming online as well as a full quarter of the centers. We opened in Q3, so thats kind of lead to.
The greater cost of care. In addition to all of the other costs that we have to manage the growing patient base on medical cost for the quarter.
Did see an increase in COVID-19 related to of the surge in cases between kind of call. It mid November to the end of the year I think consistent with what the broader market had seen.
As we close the books for 2020.
In early January or even as we wrapped up our audit.
February it's still hard to know exactly what claims you will get in December related to Covid. So we did make an estimate per my comments of potential costs related to COVID-19 in Q4 above and beyond the we'd received.
It was about $9 million, so youre seeing that in those numbers and that Q4 number too. So that's going to be I would expect the sequential increase from Q3 of Q4 day, but just given the seasonality of our business, but also youre seeing an incremental step up because we did take a reserve against potential COVID-19 costs that we might incur in Q4 that we hadn't received but we felt it's prudent to do so versus.
Having a negative development in Q1 of our Q2 of 2021 related to 2020.
Okay, Great and just one more quick one under MA I think youre getting about 12000 Bucks a year per patient and revenue what is it under direct contracting please.
Yes, so in M&A, it's probably closer to the average purchase price of $14 about $1200 per member per month, so that closer to $14 $15 per year.
Contracting we don't know is the simple answer yet we'll know here shortly a couple of weeks, but what we would tell you is that four of voluntary line patients. We would expect the revenue to be greater than that because the <unk>.
<unk> the.
The withhold from CMS as 2% versus what we typically experience of the health plan, which is closer to 15% that being said we've hit the medical cost also be greater because.
Traditional Medicare is more of an open access product versus.
And then MA product most of our patients are in HMO, which is more restrictive you tend to see higher medical cost of the extent of the plant plan design is more open. So we expect higher revenue from those direct countries patients higher medical costs. The net of those two we would expect to be about the same.
I'd say that Thats predominately for voluntary line patients. There are some program differences between voluntary aligning claims aligned we would expect the claims of line patients to probably be a little bit inferior to what we expect in the voluntary lines, but again a lot for rest of learn over the coming months as we get more data from CMS as to what patients were actually what specific patients.
Our aligned to us and what the underlying economics of each individual patients.
Yeah.
Richard close with Canaccord Genuity your line is open.
Yes, thanks for the questions maybe to go back to Ryan's.
Question on the core cohorts.
Performing better I was just curious if you could maybe give some.
Description of the different markets or geographies are you seeing any major differences.
In the performance of centers based on certain states or whatnot, new and existing markets.
No and I think Thats one of the reasons, we have so much confidence in our ability to expand we really see little to no variation between markets actually youll see more variation within a range.
<unk> between centers and the same in the same market right and so.
What we see as the.
The kind of the needs of our patient demographic are similar across markets.
Both from a patient experience perspective, how we can offer something that is much more compelling ministers of the doctor's office and from a care perspective of how we can generate much better outcomes as I think.
While a lot of markets that kind of different organizations of how health care systems organize and how primary care fits within hospital systems et cetera kind of from a patient perspective, theres not a lot of differences and we're able to make a big difference and so what you're really at the lot of the one.
One we are incredibly consistent across our standard all of our early centers are profitable we've never been close of the centers et cetera et cetera.
But I think even when you look at the variations between centers, it's usually driven by things like kind of leadership in the center of the team in the center and its pretty actually out of the EBIT requires focus and management, but the leverage the turnaround are pretty similar if you followed the Oak Street care model with Fidelity Youll get great results and we have.
All of the technology tools reporting dashboard of et cetera to kind of monitor that and so again, we see a lot of consistency across all of our different markets.
Whether its Dallas, or North Carolina, or Philadelphia or <unk>.
Flint, Michigan, or Youngstown, Ohio, or kind of these are all very different places and all see very similar results.
That's helpful and then Tim just on the direct contract Jang in this.
Mike's comments on six to seven for the year and then two to three.
Per quarter going forward.
It sounded based on your comments that there was some opportunity for that number to come in ahead.
Of the targets you just said.
Stated as that.
Looking at that correctly or no.
So I'd say look.
There's a lot of movement between 13500 of.
The mid part of the range of 6500.
And so on.
Our best guess is we end up between the 6007 thousand based upon all of the sort of the inferential math. We are doing is it possible that is higher.
At the lower to right those are possible I mean, we are pretty close at this point. So we hope we're making we're being.
Our math is.
I know the math is right, but the assumptions underlying the math are accurate, but we'll obviously know more I would say.
Yes, there is the potential of that.
We could do better of course, either through faster patient growth or through some of those patients that were excluded rolling in over the course of the year.
I think it depends on what you assume Richard So I mean.
If you were willing to assume 2000 per quarter, maybe of upside is there upside above and beyond 3000, yes, theoretically so a lot to learn so yes.
Yes. It is possible of the simple answer we'll know more of us.
We continue to progress throughout the year.
Gary Taylor with Jpmorgan Your line is open.
Yeah.
Hi, good morning.
I wanted to check on a few things with direct contracting so.
Just listening to the conversation about your expectation around the per member per month.
From the accounting is finalized on the Youll have the the.
The gross revenue per member per month in your net revenue that's how the revenue recognition will work.
Hey, Gary it's Tim It is not final we have had conversations with our auditors we been through one or two rounds. We are working on getting the final the termination candidly. We've just been more focused on getting through our last follow on offering as well as through this earnings period, obviously, we need to have that determination made here shortly because we're getting closer.
For a start of our accounting for Q2, when the program goes live no changes to our expectations based upon those conversations that it'll be treated the same as our EMEA book of business, where we would we would recognize the full premium as revenue and obviously the full metal costs as medical expenses.
And if you are around this 1200 per member per month.
With the voluntary of little above aligned the little below sort of ball parking about $60 million of.
Revenue contribution for the year, just given sort of the phased.
Enrollment is that it.
Is that about what you have embedded in your 'twenty one revenue guidance.
Yes, I'd say it's.
We're within the ballpark of it's probably a little bit higher I would say, we would expect remember we use a voluntary 200 of what MAA as we'd expect voluntary to be above that right given the differences in the discounts within MA plan versus the CMS. So from a revenue perspective, it's probably a little bit more than what you mentioned just given given that dynamic, but youre doing your math right.
John Ransom with Raymond James Your line is open.
Hey, good morning.
Youre rolling out the diabetes solution.
How do you feel philosophically at last count there were exactly 8 million 412 point solutions out there.
How do you think about kind of the build versus buy when you integrate point solutions in the year of pop health.
The health Golf management.
Yes, so I mean, we do have a very comprehensive diabetes approach as well.
The program, we're talking about is end stage renal disease.
Right.
All of this but regardless of any program. We think about look we always want to push ourselves and say is there something we can get.
On the market that is going to be of effective or more effective when we can build ourselves because there is no reason to reinvent the wheel or put a lot of our energy to building something so we're always looking at what are the solutions out there and then also how important is that the integrate that solution into our overall share and I think one reason why we've been so successful at Oak Street Health, we are not in AG.
<unk>.
Dozens of point solution programs that are all siloed, but everything we knew of integrate together so our behavioral health program, if more successful and impactful because it is completely integrated with our disease management program and with our transition programs and with our in home care and Telehealth program et cetera, et cetera, et cetera. So I do think it's something where.
Your whole of much greater than the sum of the part of I think a mistake that health care generally of having a lot of.
Parts, but those parts of the equity talking a lot of times of the same people that.
Have the worst outcomes and drive a lot of the costs and really need the most help.
Multiple of these problems and they all of the day all of SaaS freight each other.
I think that's actually a really important aspect of wildly successful and how we think about program how integrated.
The extreme example, I'll give you I don't ever expect of an MRI to Oak Street health, an MRI machine because there are more MRI in Chicago, the entire country of Canada, we can get great access to them and reading of MRI image does not need to be integrated to our our careful right. So like the we don't well I had.
Plenty of.
Radiology salespeople, calling oak street over the years in telecom with the money, we can be making by capturing the radiology volume on our patient base that the company will never do because there's plenty of it and the only add more cost of the system.
But what we did do would be built to be about program really leveraging social workers the base of that program.
Reimbursable wacky per service not something you feel hot.
And the community, but actually when you can make a huge difference to your patients and that difference is magnified when it's called the integrated with the disease management programs and the overall longitudinal primary care. So that's it.
Long answer to your question about how we think about it always the first thing is they're a better solution, we can buy and kind of integrate with our model and if we feel like we can do it really well ourselves and it's incredibly important that of integrated that when we go out and go on and build ourselves.
Tim is giving me the the look of that we are already running overtime. So I think at this point, we probably need to.
And the questions.
Really appreciate all of the engagement.
We're really excited about the fourth quarter and more importantly, we're really excited about 2021 of the out in Oak Street again.
We really demonstrated.
The scalability portability and the effectiveness of our model, but we are we are not even starting to scratch the surface on kind of the demand the need for what we do and so we're really excited to continue to invest to bring it to more people under the confident we can kind of continue to keep improving our results of wild wild wild really expanding in a big way so.
Everyone on the OTT was excited hopefully hopefully that I'm going to share. It. So thank you everyone.
Yes.
This concludes the Oak Street health fiscal fourth quarter 2020 earnings calls we thank you for your participation you may now disconnect.