Innovation Diffusion: Oak Street Health CEO Mike Pykosz on Building a Care Model for Seniors

Oak Street Health is on a mission to provide better care to people who often need it the most, older adults. Just two years after first opening their doors at two centers for senior care in Chicago, the team is in the process of hiring their 600th employee at their 15^th center. This year they continue to grow their footprint and take care of more seniors by expanding further into Illinois and neighboring Indiana. Oliver Wyman Associate Terrance Wallace checked in with Oak Street Health CEO Mike Pykosz on the special considerations in designing care models for seniors, as well as the unique challenges posed by expansion:

Terrance Wallace: You’re a lawyer by training and spent several years in management consulting. Tell us about your journey? What was it about healthcare that captured your interest?

Mike Pykosz: I originally wanted to be a doctor and was a biochemistry major in college. I went through the process of applying to medical school, and as I did that I wasn’t so sure I wanted to be a doctor. I also knew I didn’t want to be a biochemist. So, I applied to law school as well and ultimately decided to go that route. I learned that I was more interested in the business side of things and, after law school, went into consulting. Early on I got exposure to a lot of industries, gradually migrating to healthcare because of my biochemistry background. The areas that I worked on in consulting were chronic care management, primary care model improvement, and Medicare Advantage strategy. Because healthcare is so complicated and at the same time so inefficient, it presents a lot of opportunities for improvement and impacting people’s lives. I saw how with the right model of care with the right incentives and resources in place, you could generate much better outcomes for patients, and you could do it at a lower cost. I was struck by the fact that more people weren’t doing this.

TW: Could you give us an overview of how you started Oak Street?

MP: I co-founded Oak Street with two consulting colleagues: Geoff Price, now our Chief Operating Officer, and Griffin Myers, now our Chief Medical Officer. We kept asking ourselves why more innovation wasn’t being done in Chicago and in the Midwest. Great things were happening in Florida and California but not much in the rest of the country. We were motivated to build an organization focused on caring for the senior population because it is the group that has the most need. The most complex and chronically ill seniors account for 2% of the population and 25% of the cost. That is where the most impact can be made, and it’s not possible to solve the healthcare challenges we have in our country without addressing that population. Geoff and I both had an entrepreneurial mindset and started to ask what we could do here to provide better care. We knew we needed someone with clinical expertise, but also someone who understood the business of healthcare and immediately thought of Griffin who is an MD / MBA and an ER doctor by training. We went to Griffin and he took the bait! With Griffin on board, the three of us went out and started Oak Street.

TW: What is the primary mission of Oak Street Health?

MP: When you peel back the onion, we all know that healthcare is very complex. To address that complexity, the thesis behind Oak Street Health was that we wanted to do more in primary care for our patients: create an environment where PCPs can spend more time with patients, integrate population health analytics, and integrate care management. By doing these things we felt that we could create a great experience for our patients while keeping them healthy and out of the hospital. The result was that we could save a lot of money with this approach. That’s the basic premise, and it hasn’t changed in the last three years. We’ve learned a lot along the way and have refined our model, but the general thesis is the same.

TW: What are some aspects of your care model that specifically apply to older adults?

MP: Relationships and time with our providers are a huge part of our care model. In an era where so much innovation is focused on faster and more efficient interactions on a mobile device, we invest time in getting to know our patients. We want to take the extra time to answer their questions, review their care plan, and check up on them. The trust and understanding that is built during that time is crucial to a partnership between our providers and our patients to work together to drive better health outcomes. This approach is especially appreciated by older adults whose complex problems are much harder to address over an app.

TW: What has been your most recent milestone achievement?

MP: When we first started Oak Street, we were debating the best way to tackle this problem. We knew the model of care that we wanted to implement, but the challenge was how to get it implemented in a very fee-for-service (FFS) driven market. What we ended up doing is starting de novo centers that would only see seniors. We started by focusing on lower income seniors because there is more of a need there and a greater ability to make a meaningful impact. We went into communities and started telling older adults what we were doing and why Oak Street would be a better place to receive their care. That was in 2013. This year we’ve hired our 600^th employee. We started with two centers in Chicago a little over two years ago in September 2013, and we now have 15 centers. This year was exciting because we opened outside of Chicago, in Rockford, IL. We also opened four clinics in Indiana. We're continuing to grow our footprint and to take care of more and more seniors.

TW: What does the future of healthcare look like to you?

MP: One thing I think we all know is that it doesn’t look like the past. The way we provide care for most people today is not effective. We pay more than most other countries and drive worse outcomes. The amount of money that we pay for the results that we get is just not sustainable. So to your question, how is it going to change and what will the future look like? I’m biased, but I think we will drive a lot of value earlier in the process, through prevention and primary care. Today the system is largely built around acute episodes: What happens when you get really sick? What happens when you go to the ER? What happens when you go to the hospital? The best way to prevent those episodes is through early intervention. That just doesn’t work really well in a FFS system with a lot of infrastructure. Value-based payments will start to change that. Another issue is that for the most part a 20-, 50-, and 70-year-old all go to the same doctor’s office for care. The current operating model for each of those distinct groups is the same, but their health needs are completely different. The system is set up for failure when you have people with very different needs being treated in the same model. What we do at Oak Street is very difficult. We take care of very sick people, and we take responsibility for their care while taking on a lot of complexity within in the healthcare system. We want to make sure they stay healthy in all aspects of their life, and that’s hard to do. We only focus on one population, older adults. It would be impossible to effectively run that same model for younger adults. What we will see is more and more sub segmentation in how people access the system. Our model works very well for one segment of the population. Going forward, I think we will see more and more approaches tailored for particular populations.

TW: What advice do you have for other startup leaders?

MP: There are a couple of things that I would offer here: 1) Do your best to surround yourself with people who have done it before. They don’t have to have done exactly what you want to do, but find people that have built companies or run successful businesses and learn from them. 2) Really focus on what you’re doing very clearly and early on. Then get out there and talk to people: advisors, stakeholders, and the people that you want to serve. One mistake is to be internally focused on perfecting your idea and not talking to stakeholders. Inevitably, if you are doing something new and innovative it’s going to be confusing to some people. When we first started talking to seniors, though, this was too good to be true, and they thought there must be some sort of catch. So really work on getting out there and telling your story. As you do that, you’ll continually refine your message, and it will become much easier to educate people.

TW: Thanks Mike! This has been very insightful. Do you have any final thoughts?

MP: There are a few things that make Oak Street very special. One is our mission-driven focus. We’re providing better care to people that need it the most and have the least access to care; that’s typically low income seniors. We want to improve their care, make them healthier, and have a positive impact on their lives. The most rewarding part of the job for me is to hear that feedback. We have a culture of people that are excited to be at Oak Street Health because they truly believe in that mission. They’re willing to work harder, take more on, and do more for our patients because they believe in that mission. The mission-driven focus of our team is very special. If you do the right thing and keep people healthy by making a difference in their lives, improving their experience, and giving them great care, the other things will take care of themselves – you are going to make them healthier, they are going to cost less money, and you are going to experience shared savings. Those things will happen if you focus on the right things.

About the Interviewer
Terrance Wallace is an Associate in Oliver Wyman's Chicago office. He has received numerous honors and awards for his clinical expertise and scholarship in geriatrics. He now brings this perspective to strategy work in healthcare.