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Oak Street Health’s compelling economics

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Harvard Business School’s Michael Porter, a big fan of bundled payments, praises the work of  the Chicago area primary-care provider  Oak Street Health.

Here’s how Paul Barr describes it in Hospitals & Health Networks:  “Oak Street receives a risk-adjusted global capitation payment from CMS-hired insurers for seniors with low income, basically the senior dual-eligible population.

“That payment is designed to cover everything. ‘We are at risk for all of the care,’ says Griffin Myers, founder and CMO of Oak Street. “That’s not just primary care. If somebody ends up in the hospital, we pay the hospital bill; if they end up in a specialist’s office we pay the specialist; if they end up in a rehab, we pay the rehab,’ Dr. Myers says.”

“But Oak Street Health provides a cranked-up version of primary care at a cost that is roughly triple the annual amount spent on primary care with the average Medicare patient, but far cheaper than inpatient care, Dr. Myers says.

“The economics are compelling: If Oak Street’s primary-care efforts are good enough to reduce inpatient admissions sufficiently, the patients are healthier and Oak Street harnesses the savings. Myers estimates that the average cost of a hospitalization for seniors of about $13,000 equals the cost of about 100 clinic visits. Under that scenario, if they can prevent a single hospitalization as the result of 90 primary-care visits, they’ve saved money, he says.”

Hit this link for the whole H&HN article.

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