Anyone who has work in actual healthcare (not insurance or retail pharmacy) could have told them that Primary Care is not a profitable business. Walgreens and Walmart have learned that the hard way. When will they write down the value of Oak Street?
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They were only marginally successful thanks to glut from CMS and aggressive risk adjustment coding
Please understand the Oak Street business model. It is not a standard primary care model where doctors work on volume because reimbursement rates are not great. Even worse for pediatricians. Research their model. They were successful.
My guess is Oak Street was to be a loss leader akin to Minute Clinic or to eventually be a forced provider.
As in “on Aetna, you just use an oak street provider if ____” akin to Caremark is forced to use CVS.
I don’t think it was ever assumed that oak street would be profitable but rather that they would slash costs by keeping it all in the same eco system.
This one stop shop mentality of healthcare only really works if one person is truly 100% within an eco system though.
Another example that KL is Hella d-mb....
The two frat bros who were the CEOs of Oak Street and Signify somehow ended up with EVP positions at CVS. That way when it tanks, they’ll still be rolling in cash. Karen put one of them in a new completely made up position just for him LOL!
They're doubling down on MA. They bought a MA broker, Hella Health, and didn't bother to share how much they paid. I'm sure it came with a BIG over inflated premium. https://finance.yahoo.com/news/cvs-acquires-medicare-advantage-broker-092004720.html
I was shot down by a VP for saying in a meeting that primary care does not make any money by itself. It has to be combined with specialists. It’s the specialist referrals that make primary care valuable
$18b for oak street and signify for basically 0 ebitda. Fire everyone involved (I guess except the oak street/signify CEO’s, they had the common sense to recognize a su---r when they saw one)
Think that was a bad purchase, just wait….KL has worse ones in the pipeline