Oak Street Health, Inc. (NYSE:OSH) Q3 2021 Earnings Conference Call November 9, 2021 8:00 AM ET
Sarah Cluck - Head, IR
Michael Pykosz - Chairman & CEO
Timothy Cook - CFO
Conference Call Participants
Justin Lake - Wolfe Research
Ricky Goldwasser - Morgan Stanley
Jessica Tassan - Piper Sandler & Co.
Gary Taylor - Cowen and Company
Lisa Gill - JPMorgan Chase & Co.
Kevin Fischbeck - Bank of America Merrill Lynch
Jamie Perse - Goldman Sachs Group
Elizabeth Anderson - Evercore ISI
Richard Close - Canaccord Genuity
Lance Wilkes - Sanford C. Bernstein & Co.
Jack Senft - William Blair & Company
David Larsen - BTIG
Good day, and thank you for standing by. Welcome to the Oak Street Health Third Quarter 2021 Earnings Conference. [Operator Instructions].
I would now like to hand the conference over to your speaker today, Sarah Cluck. Please go ahead.
Good morning, and thank you for joining us today. With me today are Mike Pykosz, Chief Executive Officer; and Tim Cook, Chief Financial Officer. Please be advised that today's conference call is being recorded and that the Oak Street Health press release, webcast link and other-related materials are available on the Investor Relations section of Oak Street Health's website.
Today's statements are made as of November 9, 2021, reflect management's view 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 performance and often contain words such as anticipate, believe, contemplate, continue, could, estimate, expect, intend, may, plan, potential, predict, project, should, target, will and would or similar expressions. Forward-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 expectation and management of future growth, our market opportunity, our ability to estimate the size of our target market, the effects 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. Please refer 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 a 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 a substitute 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. Refer to 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 our CEO, Mike Pykosz. Mike?
Thank you, Sarah, and thank you to everyone for joining us this morning. Looking back at the third quarter, we believe our results demonstrate strong operating performance, along with significant accomplishments to advance platform. I want to first thank our team for the continued dedication and focus on our patients, our communities and our mission necessary to make that happen. Our team had to navigate through a challenging operating environment, including the Delta COVID surge and a historically tight labor market. Despite these headwinds, operationally, we achieved strong results across all the major drivers of performance for the third quarter.
We had strong revenue growth, driven by new patient adds in both new and existing centers. We are on pace to exceed our center opening projections. Third-party medical costs, which we'll cover in more detail, as well as direct cost of care and corporate costs were all in line with expectations despite an increase in COVID hospitalizations, driven by the Delta variant. The net result is a quarter in which we exceeded the top end of our guidance range against revenue, membership and adjusted EBITDA. Additionally, as we continue to gain more insight in 2022, we remain confident that the COVID-driven headwinds in 2021 will begin to subside, and we will return to a level of performance in line what we experienced prepandemic.
Strategically, we were thrilled to be selected by AARP as the only primary care provider to carry the AARP name. We're also extremely excited about our recently announced acquisition of RubiconMD to advance specialty care delivery in the Oak Street model.
In the third quarter, we generated record revenue of $388.7 million in the quarter, exceeding the high end of the guidance and representing 78% growth compared to Q3 2020. Our revenue growth continues to be driven by our organic B2C and marketing approach. This includes both central channels such as digital marketing and our core community-based outreaching. Our community-based team has continued to improve month-over-month despite having to navigate COVID surges in our communities.
We are excited by the continued progress considering our teams were expecting significantly less COVID restrictions and hesitancy in the community when Q3 began. This improvement solidifies our confidence we can grow through any future peaks and valleys from COVID. We're excited to see our results when this COVID wave hopefully subsides, and we have the power of the AARP brand behind us.
Medical costs have trended in line with the revised expectations we shared going into Q2. This combined with direct cost of care, sales and marketing and corporate costs, all in line with expectations, and higher-than-projected revenue growth resulted in adjusted EBITDA of negative $64.3 million, which is higher than the top end of our Q3 guidance. Specifically on medical costs, we highlighted 3 areas of increases in costs that exceeded prior expectations in our Q2 earnings call. These areas continue to be a headwind in 2021, but we also remain confident that they're largely temporary in nature as direct results of the pandemic and can be mitigated in 2022 and beyond.
First, cost and COVID admissions. In our Q2 earnings call, we shared that in the first half of the year, Oak Street experienced $15 million of costs directly from COVID admissions. In Q3, we estimated we experienced $10 million of additional COVID costs in COVID admissions. These costs were highest in August and declined slightly in September, bringing the estimated total year-to-date direct cost of COVID to $25 million.
Looking forward, our COVID hospitalization costs generally rise and fall proportionally with the hospitalization rates in our communities. We are hopeful with the rollout of boosters and vaccines for children 5 to 12 that we will continue to see declining spread in the communities we serve and declining hospitalizations for our patients. That said, we recognize the majority of patients we serve are in northern markets that have historically experienced surges as the weather turns cold and people spend more time indoors.
Second, nonacute utilization. In our Q2 earnings call, we discussed the nonacute utilization, including specialist business, diagnostics and outpatient procedures increased $80 PMPM compared to historical average in March following the vaccine rollout for older adults. These costs have decreased by roughly $15 PMPM in the subsequent months, but remained elevated compared to historic averages. Roughly 1/3 of this increase would be expected from medical cost trend for 2019 until this year. The net result is an estimated $35 million of increased costs across the first 3 quarters of the year, above what we would have expected from increased trend.
We believe this increase is driven in part by increased comfort with patients to access medical care following vaccination, relaxed payer standards due to public health emergency and specialist and hospital system behavior. Additionally, based on the higher prevalence of chronic illnesses we are seeing in our patients, especially those who have joined us over the past 18 months, we believe part of this increase in nonacute utilization is driven by greater patient disease burden requiring more care. Based on the diagnosis codes we've captured for our patients year-to-date, we will be able to offset the cost with additional revenue to compensate for increased disease burden as we'll discuss in more detail shortly. This is also the cost category where we feel the acquisition of RubiconMD will have the greatest impact.
Third, new patient medical costs. In our Q2 earnings call, we shared that new patient medical costs were 50% higher than what we have historically seen and drove $20 million in higher costs in the first half of the year. New patient medical costs have remained elevated compared to historic levels, but not to the magnitude we saw earlier in the year. However, new patient revenues have further declined to a level less than what we received for new patients in 2019 on an absolute basis and significantly less than what we would have expected when considering trend.
The net result is a decline of new patient economics driven by a combination of higher costs and lower revenue than what we have experienced historically. This resulted in an estimated $36 million in lower patient contribution in the first 3 quarters. We have looked at new patients by geography, center vintage, provided tenure and marketing channel, and we see a similar decrease of patient contribution across all cuts of the data.
For that reason, we do not believe that new patient economics are being negatively impacted by new centers on markets. But instead, we continue to believe the primary driver of lower new patient economics is lower engagement of older adults, especially those in low-income communities by the health care system in 2020. Lower engagement results in higher medical costs because of unaddressed medical conditions and lower revenue because those conditions went undocumented.
As a reminder, risk scores lag by a year and depend on diagnosis captured during provider visits. Thus, the lack of engagement likely had a double effect of reducing incoming risk score while also likely increasing disease burden. When we consider disease burden we are capturing for our new patients year-to-date, we believe that their economics will revert back to what we normally see for a second year patient in 2022. We are optimistic that increased engagement across the health care system for patients who lead to new patient economics more in line with what we have seen historically, although it remains to be seen how long it will take for new patient economics to revert to previous results.
A smaller factor impacting new patient economics was a lower mix of patients coming from community-based marketing channels compared to historic performance. While patients from community marketing channels had similarly lower patient contribution in 2021 compared to 2019 as new patients overall, patients from community market channels tend to be our most profitable channel in their first year at Oak Street. So as a mix shift back to community channels, this should improve new patient economics overall.
We continue to focus on operating our care model to keep our patients healthy and out of the hospital. Because of these efforts, we've seen a decrease in non-COVID acute care for our tenured patients compared to the same period in 2019. This decrease has largely offset the increase in COVID and nonacute cost for these patients, resulting in equivalent patient contribution for our existing patients this year compared to 2019. Because of this, the overall decrease in patient contribution in 2021 is largely driven by the decrease of new patient contribution, which, as we discussed above, we believe is mainly caused by lower engagement with the health care system in 2020.
As we discussed in Q2, based on the data collecting year-to-date, we have seen that the disease burden of our patient population is substantially increasing compared to prior years, which we believe is a trend that began in 2020, both masked by less effective patient assessments due to more care being delivered virtually. The data we've captured year-to-date is more representative of our patients actual disease burden, and we expect that the increase in revenue per patient in 2022 will drive significant improvement to the patient economics we have seen this year.
If COVID-related medical costs we see causing medical costs to revert to a level more in line with what we witnessed prior to the first half of the year and/or our care models able to further impact the cost trend, we will see significant improvement in per patient contribution compared to 2019. This, combined with the continued strong results on patient growth and operating costs gives us confidence in the continued strength of our center economics and center ramp. We plan to share additional details around 2021 and forecasted 2022 center economics in comparison to historical performance in our year-end call following Q4.
Looking forward, our mission in Oak Street is to rebuild health care as it should be. For us, that means redesigning the way older adults are cared for across the health care continuum. This includes how older adults are engaged by the health care system, the composition and operating model of the team that provides them care, the resource that develops them beyond traditional primary care and the data and technology that bring it all together. We believe Oak Street has driven transformational change across all of these dimensions. That said, we continue to innovate across all parts of our model and will continue to do so long in the future to advance our position at the forefront of value-based care.
I am proud of our performance to date and the impact our team makes on our patients and communities every day, and I'm confident we'll continue to improve along all dimensions as we build out our model. to that end, Q3 is an exciting quarter for Oak Street as we announced our relationship with AARP and the acquisition of RubiconMD. Both have been in the works for a long time before Q3 began and were made possible by hard work and perseverance from our team.
Being the only primary care provider selected by AARP is an exciting milestone for Oak Street and a testament to the quality of care and outstanding patient experience we deliver. We are the only senior-focused primary care provider nationally to carry the AARP name, and we believe it will enhance our ability to attract and engage patients.
We often face a challenge when engaging with potential patients of getting them comfortable trying something that sounds to be cure. AARP is the most trusted brand for older adults. And by going to market with AARP in a co-branded manner, over time, we believe we can more quickly build trust leading to faster patient growth and deeper patient engagement. AARP has a long track record of helping organizations grow across a range of industries, including within health care. Additionally, we are collaborating with AARP on ways to bring wellness activities, enhanced patient education and other benefits to Oak Street patients and AARP members.
A few weeks ago, we closed the acquisition of RubiconMD, the largest virtual specialist network of its kind. Our acquisition of RubiconMD will allow us to improve specialty expertise in the primary care setting. It will also give us the ability to provide new specialty care quickly and be tightly coordinated while reducing unneeded specialist visits. We believe this is the way specialty care should be delivered.
In a similar manner to how we designed primary care for older adults from the ground up, the RubiconMD acquisition will also be the same for specialist care for our patients. The result will be better access, lower cost, superior outcomes and improved experience. We believe both our exclusive AARP relationship and the RubiconMD acquisition further differentiate Oak Street, both from the traditional primary care providers and will continue to drive our long-term success.
One additional item to comment upon. We disclosed in our 10-Q filed yesterday that on November 1, we received an inquiry from the Department of Justice seeking information related to our relationships with third-party agents or entities and also regarding any advertising or promotion of our transportation services. At this point, we have had no meaningful conversations with the department and do not possess any additional details beyond the information requested in the inquiry. Since the early days of Oak Street Health, we've aimed to create a compliance-focused culture and maintain what we believe to be an effective compliance program, including utilizing both internal and external compliance advisers. Oak Street strives in all of our business operations to operate compliantly and transparently.
Our team is currently working on responding to the Department of Justice inquiry, and we intend to cooperate with the department's request. At this point, we do not possess enough information to speculate on the precise reasons for, the outcome of, or the duration of the Department of Justice inquiry. Although we understand that it is not unusual, particularly in the health industry, for these inquiries to take months or even years to be fully resolved. While we respond to the department inquiry, we intend to remain focused on our mission of providing high-quality care to those on Medicare.
In summary, we're encouraged by the performance across the quarter on our key operating metrics. We're also thrilled with the strategic additions of our AARP relationship and RubiconMD acquisition. Over the last quarter, our team has navigated through COVID surge, challenging labor markets driving near-term results while, at the same time, setting the platform up for differentiated long-term success, transforming health care for older adults.
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 produced another strong quarter with record revenue of $388.7 million, representing 78% growth from a year ago and exceeding the high end of our guidance range by approximately 8%. For the year-to-date period, we crossed the $1 billion of revenue mark for the first time in the company's history. We also continue to see strong demand for Oak Street services as we provided care to 100,500 at-risk patients, which include our direct contracting patients during the third quarter, resulting in growth of 69% compared to Q3 2020.
At the end of the third quarter, we operated 110 centers, an increase of 15 centers compared to Q2 2021 and 43 more centers than we operated at the end of Q3 2020. We are operating 123 centers as of today.
Capitated revenue for the third quarter of $376.7 million represented growth of 78% year-over-year. Additionally, $15.4 million of capitated revenue in the third quarter 2021 was related to prior periods. The largest driver of this prior period amount was patient retroactivity pertaining to the first half of 2021. Excuse me, as a reminder, patient retroactivity is typical and occurs when health plans pay Oak Street retroactively their patients managed in prior periods, but not previously included their rosters and therefore, not previously recognized in revenue or medical claims expense.
Other patient service revenue for the third quarter was $12 million, representing growth of 97% year-over-year. $3.9 million of this growth was attributable to savings generated in 2020 for the performance of our Acorn ACO. As you may have seen, our ACO generated the fourth highest savings rate across the 513 participants in the Medicare shared savings ACO program in 2020.
Our medical claims expense for the third quarter of 2021 was $309.7 million, representing growth of 100% compared to third quarter 2020. We recorded $9.4 million of medical claims expense, primarily due to an increase in prior period incurred claims, primarily driven by the same patient retroactivity impacting capitated revenue.
Our cost of care, excluding depreciation and amortization, was $76.3 million for the third quarter, a 77% increase year-over-year, driven by higher salaries and benefits expense from increased headcount as well as greater occupancy costs, medical supplies and patient transportation costs all related to the significant growth in the number of centers we operate and our patient base.
Sales and marketing expense was $30.5 million during the third quarter, representing an increase of approximately 97% year-over-year and was driven by a $9.4 million increase in advertising spend to drive new patients to our clinics as well as an increase in salaries and benefits related to headcount growth. As a reminder, growth in year-over-year sales and marketing expense was artificially inflated, as it was partially depressed during Q3 2020 due to the COVID pandemic, which included the temporary suspension of community outreach activities and other marketing initiatives.
Corporate, general and administrative expense was $77 million in the third quarter, an increase of 35% year-over-year, primarily driven by headcount costs necessary to support the continued growth of the business. We generated significant operating leverage year-on-year with corporate, general and administrative expenses, excluding stock-based compensation and transaction expenses decreasing the 10% of revenue in Q3 2021 compared third quarter 2020.
I will now highlight 3 non-GAAP financial metrics that we find useful in evaluating our financial performance. Patient contribution, which we define as capitated revenue less medical claims expense, grew 17% year-over-year to $67 million during the third quarter. We expect at risk per patient economics to improve along with our patients that are part of the Oak Street platform. And as Mike mentioned, this metric has been impacted by the number of new patients to the Oak Street platform in 2021.
Platform contribution, which we define as total revenue less to some of medical claims expense and cost of care, excluding depreciation and amortization, was $2.7 million, an 87% decrease year-over-year from $20.2 million. The year-over-year decrease was driven by the previously discussed increase in medical claims expense as well as the significant recent growth in our center base and therefore, the portion of our centers which are immature. Over 50% of our centers have been opened for less than 2 years, and approximately 2/3 have been opened for less than 3 years.
Adjusted EBITDA, which we calculate by adding depreciation and amortization, transaction and operating related costs and stock and unit-based compensation, but excluding other income to net loss, was a loss of $64.3 million in the third quarter of 2021 compared to a loss of $22.8 million in the third quarter of 2020. We finished the third quarter with a strong balance sheet and liquidity position. As of September 30, we held over $1 billion in cash, restricted cash and marketable debt securities. Note that those balances are prior to the effect of our acquisition of RubiconMD in October.
Our liquidity position will support our continued growth initiatives, primarily our de novo center-based expansion. For the 9 months ended September 30, 2021, cash used by operating activities was $125.9 million while our capital expenditures were $40.6 million.
Finally, I'll provide an update on our 2021 financial outlook. For fiscal 2021, we are increasing our guidance for total centers to 128 to 129, which represents 49 to 50 new centers in the year 2021; our at-risk patients to a range of 111,500 to 113,500; and our revenue guidance to a range of $1.42 billion to $1.425 billion. Note the low end of the revenue range was inaccurately shown as $1.4 billion in the 8-K released last night, but has been amended to reflect this $1.42 billion.
We are narrowing our adjusted EBITDA guidance loss to a loss of $235 million to $230 million. We expect headwinds in Q4 relative to our prior guidance of approximately $6 million, roughly half of which relates to supporting RubiconMD's EBITDA loss and the other half is associated with investments in growth, including creating new centers than previously contemplated and investment in sales and marketing during the annual enrollment period to capitalize on our AARP relationship.
We also remain focused on potential COVID costs in Q4 given our experience in Q4 2020 from Mike's earlier comments and are taking a cautious view heading into the last quarter of the year. Adjusting for these factors, our Q4 guidance is effectively in line with the high end of our full year guidance provided during our Q2 earnings call.
And with that, we will now open the call to questions. Operator?
[Operator Instructions]. Your first question comes from the line of Justin Lake of Wolfe Research.
I wanted to follow up on the DOJ inquiry. First, can you tell us if you have any idea what the DOJ might be getting at? And specifically, I think a lot of us would benefit from your kind of insight and what you would -- vis-à-vis some of the mechanics around what they were talking about in terms of third-party agent relationships.
Thanks, Justin. I appreciate the question. Honestly, at this point, we really don't have enough information about the inquiry to answer those questions. We got it a week ago. We haven't had any meaningful dialogue with the DOJ. So we're still learning as well and will share really what we know in the statement.
Okay. But can you tell us the -- I've talked to a few of your peers, and it doesn't -- it just sounds like you -- are you buying leads from third-party agents, like eHealth, et cetera? And how does that work? Do you find -- are you finding your patients that way? And do you think that's standard industry practice? Do you -- have you been doing more of this more recently? And then I guess just lastly, is there any relationship between these third-party agent relationships and provider transportation, do you think? Any link between the 2?
Justin, I'm -- again, I'm not really sure what the link is. I mean we obviously provide transportation to our patients as part of getting access to primary care. We have a number of different patient acquisition channels, the vast majority of which we talked about are through our community-based marketing approach and then followed by our kind of central digital channels.
So there's a number of different programs out there and things we do to get patients. I'm still trying to get our hands around, again, what the inquiry is really based on and what information they're looking for.
Your next question comes from the line of Ricky Goldwasser of Morgan Stanley.
Just kind of trying to get some more clarity on the commentary on the fourth quarter. Tim, if I heard you right, I think you said that you're going to be at the high end of your guidance range for 4Q. Can you give us more clarity also on where should we expect MLR range to settle?
This is Tim. Thanks for the question. The full year EBITDA loss range we provided in the Q2 call was $220 million to $240 million loss. The revised range I mentioned this morning is a $230 million to $235 million loss. As we narrowed that range -- I just wanted to make sure folks understood that as we narrowed it, we incorporated data points that we didn't have at the time that we closed Q2, predominantly around the RubiconMD acquisition as well as the AARP relationship.
So when we factor those things in, those are -- those plus, again, taking a cautious approach in Q4 to COVID costs, those would have -- we would have guided $10 million lower had we known those things in early August. And so as we think about the $230 million to $235 million, in our minds, it's actually, from an operational perspective or sort of a run rate perspective, more akin to the $220 million to -- the high end of the prior range being 220 -- $220 million.
On the MLR, for the second half of the year, I would -- one comment I just want to make sure is clear for folks. As, Mike has said, our new patients are coming in at the lower patient contribution than we've seen historically, which means the MLR for those patients is higher. One thing that we're very focused on Oak Street is our tenure adjusted MLR. So we look at MLR not at the aggregate level, but at the specific patient tenure level. But that's just -- that's important because the MLR for a patient will change significantly the longer that patient is on the Oak Street platform.
So as we grow more quickly than we anticipated, that growth is coming from, as you'd expect, more new patients than we expected. More new patients would mean all sequel blending up of the MLR, at least for the current period. So I think we had previously discussed second half MLR to be in the 82%-ish range. Today, we are -- if we look at Q3, we were slightly higher than that, including the COVID cost that Mike mentioned. Excluding those COVID costs, we are in that 81% range for Q3.
For Q4, I would expect it to be obviously higher than Q3, just given the quarterly trends that we see. But I'm not -- hard to give a specific number at this point. I'd say the guidance I gave earlier on Q2 is still relevant when we kind of strip out the impacts of some of these onetime items both being prior-period development as well as COVID-related costs.
Okay. And just one follow-up here. You talked about being cautious in terms of COVID costs. What are you seeing within your population in October, November time frame? Because it seems like everybody else that are talking about it are saying that COVID costs have pretty meaningfully dropped off.
Yes. I'd say our experience has been similar, Ricky, in that, obviously, as Mike mentioned, we saw a surge in the latter half of the longest end of September. As we've seen more data, those costs have tailed off as we got early into Q3. That being said, most of our patients are in the northern climates. I don't know what it's like in New York and Chicago. It turned cold very quickly last week. So we will see what happens in November and December.
And the dollars that are sort of incorporated in that EBITDA guidance I mentioned before are relatively small compared to the overall COVID costs we've seen for the year. So if I think back to Q2, for instance, where there was relatively a little -- roughly fewer COVID cases, we still had a couple of million dollars of COVID costs in Q2.
Okay. So it sounds like maybe some more colder flu and cold season embedded in November and December versus direct COVID cost. Is that fair?
Sure. I mean yes. I mean look, while COVID costs are going to be lower in Q4, unfortunately, we're not in a world yet where COVID costs are going to be 0.
Your next question comes from the line of Jessica Tassan of Piper Sandler.
So can you maybe help us understand some of the dynamics impacting capitated revenue rates PMPM going forward? Specifically, is direct contracting expected to be dilutive to the growth rate that we might otherwise forecast for at-risk patients given the year-over-year increase in average risk levels?
Sure. Jessica this is Tim. Thanks for the question. So generally speaking, if we had very steady state and consistent growth in every -- and we were paid for every member we served in every period, i.e., there wasn't this patient retroactivity dynamic, what we would see over the course of the quarter is Q1 PMPM revenue would be the highest; Q4 PMPM revenue would be the lowest, and we stepped down over the course of the year.
And the reason for that being that our patients in Q1 are the most -- the longest tenured. And as tenured patients that attrite over the course of the year, you're replacing those tenured patients with new patients. And new patients come in at a lower revenue PMPM, predominantly because the patients that we're serving are generally unengaged with the health care system. And therefore, historically speaking, their disease burden has been less accurately recorded, documented by the health care systems. So that is the general dynamic here.
So what we're experiencing in 2021, Sarah, is consistent with what you outlined, which is -- and what Mike discussed, right? New patients are coming in with a lower revenue PMPM than we've seen historically, the reason being that in 2020, those patients were even less engaged in the health care system given all of the impacts of COVID and their ability to access the health care system. So that would -- all the things being equal, that would exacerbate this downward trend in revenue PMPM from Q1 to Q4. Offsetting that a bit in Q2 of 2021 would be the impact of direct contracting patients coming into that patient cohort. Direct contracting patients, just to remind everyone, coming at a higher revenue PMPM. So that would distort that quarter-to-quarter change.
As we look from Q2 to Q3 or Q3 to Q4, direct contracting patients will impact that trend a bit. But I would say likely not significantly enough to make it -- to reverse it. And yes, I'd say, as you look at those changes from period to period, it's -- obviously it's important to adjust for prior periods because that would be revenue that we're booking in the period, but not related to that quarter's actual performance. And the membership count that you're looking at, at the end of the quarter doesn't include all the member months we were paid for in that quarter, if that makes sense.
Yes, that's helpful. And it's Jess, by the way. But just as a quick follow up...
Sorry, Jess. I apologize. Early morning.
Yes. Early morning. Yes. So just as a follow-up, can you kind of help us understand what percent of your 132,000 patients you've been able to see in person or in an Oak Street -- either in an Oak Street Center or in their home year-to-date? And kind of what are you doing qualitatively to reengage some of the older patients who fell off the radar in 2020 or 2021, early 2021?
Jess, the number I have kind of at ready regarding engagement is the completion of annual wellness visits for our patients. So obviously, some of our patients we've seen haven't done the annual wellness visit itself. But I believe we're in the kind of low to mid-80s on annual wellness completion against our patients so far this year. And so I think we've certainly seen -- those are all in home or in person. So we certainly see more than that if you include kind of just normal check-in visits. But hopefully that gives you a sense of engagement so far this year.
And that compares to, sorry, what at this time last year?
That is significantly higher than this time last year when you take away virtual visits. Because last year, a fair amount of our annual wellness visits were completed virtually. It is similar to what we experienced, I think, slightly ahead of what we saw in 2019 and 2018.
Your next question comes from the line of Gary Taylor with Cowen.
Just wanted to hit a couple of things. Maybe I missed this in the Q with a lot of Qs flying yesterday. Did you give us your direct contracting enrollment? And then I thought last quarter, we sort of talked about the MLR you were booking or the contribution. So I may have just missed that.
No, we did not break out direct contracting separately, membership nor drug contract economics. So you may be thinking of another Q that flew at you.
Okay. So -- but I thought last quarter, you guys, maybe on the call, disclosed that. I thought we were looking at 6,500 members, but that's -- that's not something you're updating quarter...
Yes. Sorry, Gary, on our Q2 call, we did talk about direct contracting starting in Q2. We expected to start the program with about 6,000 to 7,000 patients, 6,500 being the midpoint, that was roughly right. We also mentioned we expect to add about 2,000 to 3,000 patients a quarter in the program. All of that guidance is still largely relevant or accurate.
I'd say the one caveat, the reason why we're more focused on total at-risk patients is we are agnostic predominantly between those 2 programs. So we are most focused on growing our at-risk patient base. Many of these direct contract patients we engage -- that we signed up initially, ultimately enrolled in MA, right? So they may never even show up in our direct contract accounts. And as we're continuing to drive more and more patients to our centers, a little less relevant to us which buckets they fall into.
As you think about our growth in the quarter, our growth is driven almost entirely by our MA book just given its proportional size. From a contribution perspective, we have not broken out those details. Those patients are profitable to us today, albeit we're 6 quarters into the program -- or excuse me, 6 months into the program.
Got it. And then on Rubicon, when we see that in the fourth quarter, external sales are just going to go in other patient service revenue. And then there'd be eliminations for the consultations they're doing to Oak Street members, is that how we think should about it?
And is there -- I know you had talked about some of the EBITDA impact for the 4Q, but just sort of thinking about revenue, EBITDA, either quarterly or kind of run rate, how should we be thinking about that into the model?
As you're talking about going into 2020 -- excuse me, 2022?
Either for the 4Q impact, if that's easier, just 2022, thinking about that, yes.
So obviously, there's an implied Q4 performance given the kind of $1.42 billion to $1.425 billion in revenue for the quarter. Q4 is obviously a starting point for Q1, but a lot of changes from Q4 to Q1, one being, obviously, the resetting of risk scores based on 2021 documentation; two, being all the growth we're experiencing right now or embarking on right now as part of AEP.
So there is a step function change every year as we move from Q4 to Q1. So it's hard to take Q4 and use that as sort of a run rate basis, particularly on the profitability line, to Mike's point, right?
Well, I was just thinking Rubicon specifically.
I'm sorry, I'm sorry. Just Rubicon?
Yes. I was just -- I wasn't trying to vector the '22 guidance yet. I was just...
Okay. All right, okay. Sorry, Gary. I totally missed that. Yes, Rubicon roughly -- I apologize. Rubicon is a relatively small contributor on the revenue line, also obviously a small drag on EBITDA. So from a top line perspective, it's high single digits of revenue.
Yes. Gary, how we think about this going forward, obviously, in the fourth quarter, we're -- we just finished the acquisition. We're just starting the integration work, et cetera. In 2022, we're hopeful we'll get the strategy with Rubicon up and running. And we hope we start to see an impact, which should offset the kind of burden from operations from Rubicon. And then in 2023 is when we'll start to see the full benefit, we believe. So that's kind of the ramp period.
From a revenue perspective, as Tim said, I mean it will contribute to other revenue, but it's not going to be a major contributor. Rubicon -- but for Oak Street Health, I think it's losing money today, I think it certainly can be a breakeven outside of Oak Street Health over time. But really, the real value, why we are incredibly excited about the acquisition is for what it can do to our medical cost, right, and our quality of care and our patient experience. And so where I think you'll see the benefit in 2023 is a relatively small amount of external revenue, some hopefully, and that will offset some of the operating costs for the platform, but the real benefit being lower cost of care and better patient experience and just an improved model for specialty care for our patients.
Last one for me. Is the AARP relationship, is that exclusive in terms of primary care clinics or some category? Or is it...
Yes, it is. It is exclusive for primary care, yes.
Your next question comes from the line of Lisa Gill of Morgan Stanley -- of JPMorgan.
Mike, one of the comments that stuck out to me was that when you talked about the headwind of lower mix from community market channels. When we think about members who joined from the community market channels versus others being more profitable, can you maybe just spend a minute and talk about what the differential is with those members versus other channels? And then typically what a new joiner mix looks like by channel?
Yes. So to kind of reverse your question, if you go back to kind of 2019 and prior, the prepandemic years, the majority, maybe even the vast majority of our patients were coming through our community marketing approach. That was really the core of what we did. And it was quite effective. And I think because we were generally finding people at community events, I think it was more active channel.
I do think the patients who came in tend to be a bit more engaged and also just not as media on health care services. It was much more engaging people kind of -- some people obviously, we're coming in very much needing an access point. That always happens. But I think when you shift the mix to more things, for example, digital marketing, now people are actually going to click on because they want a doctor, it tends to mean they have more health care concerns.
And so if you look at what that looks like for a kind of a year 2 and beyond patient, the 2 channels converge. So you really don't see a meaningful difference between them going forward because you have enough of an offset from the kind of disease burden on the patients who are coming in who really need your care. But what we do find is because people who are finding you need your care generally have higher medical costs, right, in year 1, there's different economics.
It's not massive, but it's real. So I think kind of that combined with all the other pieces, I think the biggest piece being the lack of engagement in 2020 in the health care system, I think those are the reasons why we are seeing, obviously, worse patient economics this year than we've ever seen for new patients. And again, I think that gives me, I guess, confidence despite that, is seeing that next year when we actually are able to capture the disease burden of patients we're bringing in, that will be on track. And that actually for our existing patients, we're seeing similar economics in MLR to what we saw in 2019 on those patients.
So obviously, something we need to work through. And I think we need to focus on really getting our patients engaged very quickly, understanding their conditions very quickly and taking great care of them. But I do think as the health care system normalizes more after 2020 and how patients are interacting with it and how they're engaged, and we're able to keep opening up more of our channels. Again, I'm optimistic that we'll start to see a reversion back to what we've seen for years historically.
And then just my follow-up would just be your comments around the big 3 headwinds with #1 being COVID admissions, $25 million. As we think about the new antiviral treatments that are coming to market with a potential of $400 to $500 type of price tag, how should we think about COVID costs going into 2022? Is the expectation that you would be able to manage those patients, so roughly 90% are not hospitalized based on the data that we see from Pfizer? Or -- just how do we think about that opportunity on the antiviral medications that are coming versus hospitalization?
Yes. I mean if those results -- which obviously, we all read with a lot of excitement. As those play out, I think it's another really valuable tool in the toolkit. And so obviously, we'd much, much, much rather spend $500 on medication to keep our patients out of the hospital, most importantly, keeping our patients out of the hospital. And so whether that be breakthrough infections or people for -- who have chosen not to be vaccinated, either way, you're going to reduce hospitalizations. And obviously, that would, most importantly, lower the number of patients who we have that are in the hospital that have poor outcomes, but obviously, would be a nice cost favor, too. So anything that keeps patients out of the hospital is a potential tailwind for us.
[Operator Instructions]. Your next question comes from the line of Kevin Fischbeck of Bank of America.
All right. Great. Wanted to ask, you mentioned in your prepared comments that you manage through labor, tight labor market. Can you just talk a little bit about where those pressures might most likely manifest themselves as far as pressure on you guys and how you're dealing with it?
Yes, absolutely. I mean first off, we've expanded a lot this year, as I know you're aware, which means both for our existing centers and for new centers, we've hired a good deal of providers. Provider hiring, our team will tell you, it's never easy. But actually, I think over the years has actually gotten easier even today because I think we're getting more well known in Oak Street. And people -- I think providers are very excited to join our model and practice medicine differently. More of the challenges have come in, in kind of some of the lower skilled jobs at Oak Street Health that -- the less licensed jobs like call center team members, receptionist, things of that nature.
And to be clear, I'm proud of our team for really managing through it and still putting up strong results and not letting that become a headwind. But it is certainly the most helpful to hire kind of that type of role that has been since we started the organization 9 years ago. And the team, I think, is doing a very nice job of building a great culture and generating referrals from our team members and using tactics like that to fill the roles. But just posting a role and expecting job offers to come in, it's not a strategy that works anymore. So we've had to really work with our teams and be creative and make sure we get roles filled.
All right. Great. And then as far as the local cost commentary, is there anything that you would spike out? I guess you obviously made comments about tenure of the MLR. So I guess probably these sites are acting differently than existing sites. But anything else that you would kind of spike out as anything geographically going on around costs or...
I wouldn't even say that on sites. Sites that have been around since 2014, 2015 are seeing the same challenges with new patients at sites that are in brand-new markets and our new care teams that have been around for years, right, some of those early sites. And providers that have been around for years are seeing the same challenges as they bring on new patients to theirs.
So I think it is definitely something that is system-wide, which is, again, one of the reasons why we believe more and more of that is driven by kind of the strange engagement with the health care especially for lower-income, older adults in 2020 and not something that is a function of our model behaving differently.
And obviously, when we look at our tenured patients, and tenured patients can be patients who joined us in 2020 and a new market in 2020. Tenured patients can be someone who's been with Oak Street for 6 years. When we look at that group, right, that group is essentially the same patient contribution as it was in 2019. So we're not seeing that in that group, which again, I think, makes sense to us because those patients were seen by us in 2020 and by us -- so we don't have some of those kind of other challenges.
So again, it really -- I think it's an issue we have our hands around as far as the new patients go, but I think it's going to take into 2022 before we can kind of have a reset from what happened to 2020 for patients who weren't in our control in 2020.
Your next question comes from the line of Jamie Perse of Goldman Sachs.
So you guys have made some comments just about revenue stepping up next year on a PMPM basis and that mitigating some of the higher costs you're seeing this year. So I wanted to follow up on that comment. You also mentioned just this higher disease burden of your patient base. So with that in mind and 2020 being kind of a lost year from a risk asset standpoint, how should we think about the step-up in revenue PMPM going into 2022?
Jamie, it's Tim. Thanks for the question. As we think about PMPM revenue going into 2022 for our new patients, we intend to be more focused on patient contribution -- the PMPM patient contribution dollars, obviously, the net of the revenue and the medical costs. What we're saying is the medical costs, while we believe we can more effectively manage them than the 2021 results may suggest, particularly with COVID being less of a factor from a financial perspective, let's assume for a moment that is not the case. To Mike's earlier commentary, what we believe is the revenue increase associated with those patients will enable us to get back to 2019 levels of PMPM profitability for patients that are new to us this year that next year will be second year patients.
Okay. And I just wanted to go to the center guidance that stepped up a little bit this quarter. Just wanted to get your thoughts on that for 2022 as well on a longer-term basis. So will it be something like 20 centers this year versus last year in terms of the increase in de novos? What are your thoughts just in the context of the elevated MLR currently as it relates to new center openings into next year?
Yes. I mean for us, and again Tim mentioned this, but for us, MLR is really much more a function of mix. We look at MLR on the top line. So what we really look to is what is our MLR by cohort, right? And then what is actually more important than MLR per cohort is what that means for our -- what that means to our unit-level economics. And so the thing that we're very focused on is how do we think our centers are going to perform in 2022, right? Because we know 2021 is going to be a strange year and really driven by those new patient dynamics. And you guys -- you've seen our growth rate, a lot of our patients by this time of the year, and especially in Q4 will be new patients. So the question is what are those new patients going to look like? What are the patients who joined us in 2021 look like next year? What's our existing patient base that joined us in 2020 prior going to look like next year? And what does that mean for the unit level economics of centers next year and beyond?
And when we do that math, we feel very confident that we will still have a very strong center ramp, which is something, like I said in my comments, we will share kind of the embedded center ramp in guidance, what we're looking at. And I think that -- again, when we look at the data, we think it shows that every center we put up is a fantastic investment. I think it shows that we're still seeing very strong results on the kind of intermediate tenured centers and the new centers compared to what we saw for our early centers, which are very profitable.
And so that gives us confidence that we still have very strong unit economics. We're not always seeing a degradation over the economics as we scale. So assuming that's still the case, and so far, every -- well, the Q3 results very much strengthened that amongst our team, then I think we will see a step-up in the number of centers we put up for 2022. Because, again, I think that right now, we're just trying to grow through a period of time. We really don't have that many tenured, mature centers, so we didn't grow that fast in 2013, 2014, 2015, 2016, 2017. So we've got to play a little bit of catch-up and get a big enough installed base because it's a huge need for what we do, and that's the period we're in.
Your next question comes from the line of Elizabeth Anderson of Evercore ISI.
Maybe following up on some of the prior questions about the MLR. If we think about a traditional maybe non-COVID effective change between, say, first year patients to Oak Street and maybe year 2 or year 3 patients to Oak Street, can you talk about that MLR difference?
Yes. I mean look, as you can tell based on my comments, if we're similar to the patient contribution we saw in 2019 on existing patients, and we are not where we were on an overall MLR basis compared to where we were in 2019 overall, like you can tell that new patients obviously got the significant works and the gap has widened between kind of more tenured patients and new patients.
As I shared, I think that the same new patients issue, that headwind will be back on track and no longer a headwind in 2022 based on what was captured to date on their disease burden. So we do think it's a very -- a large issue around under documentation.
Generally, there is a step up. Every year, we see a patient, the longer we have them, the more profit they are. The step up of this is not nearly the step function historically that we are seeing this year. It goes up after year 2, but it also goes up when we get from year 2, year 3, and it goes up from year 3 and year 4, et cetera. And so I think this is -- again, this is certainly an outlier year from every other year we've had results, and we think we have a handle on why. And so again, there's some tactics we can certainly mitigate to take better care of our patients faster, which we will obviously always try to do regardless of what their economics are. But I think when we look at our tenured patients and we look at the kind of expected revenue even for our new patients next year, we do believe our model is working and working to the same, if not better, effectiveness than it was in 2019 and earlier. It's just now it's a question of working through this last lingering impact of what happened in 2020.
Okay. That's helpful. And I noticed also that CapEx stepped up a bit in the quarter relative to sort of prior quarter spend. Can you talk about what drove that increase? And should we sort of run rate that maybe $23 million amount going forward?
Elizabeth, it's Tim. Generally speaking, the largest -- the 2 largest drivers of CapEx are going to be new center development as well as anything related to IT development and labor, with the latter being a minority contributor. So typically speaking, you're seeing increases in CapEx driven by increased center opening ramp. And remember, just because we opened a certain number of centers in the quarter, we've got several -- when you look at the guidance, right, we're up 17 centers in Q4. So as you think about that, those centers are underway now. Obviously, they were underway as we were coming out of Q3. So it's not just the centers that opened in that period. So predominantly, it's going to be that center opening -- the pace of center openings essentially. So I would expect CapEx to increase commensurately with the number of centers we're opening in any given time period.
Your next question comes from the line of Richard Close of Canaccord Genuity.
Just to maybe expand on Kevin's labor question a little bit. Tim, can you quantify any like meaningful changes in the recruitment costs or wage inflation that you're seeing maybe on those lower positions? And then anything to speak of on turnover at maybe more mature centers?
Sure. Richard. On the impact of the tight labor market on cost. I'd say at this point, the impact on cost has been relatively minimal. We benefit from a very unique mission at Oak Street, which really resonates with our employees. And thus far, that has enabled us to manage through the labor market conditions fairly well. Obviously, it's a challenging market to recruit folks in. So retaining talent has been less of an issue. We have not had a situation where we've experienced significant labor cost pressures across our book of business. So at this point, the answer -- the simple answer to your question is relatively minimal.
Your next question comes from the line of Lance Wilkes of Bernstein.
Just a couple of quick clarifications. First one is on medical cost management. Just interested, in addition to the 3 major drivers of kind of incremental medical claims expense costs this year, just on the core operations, what are the major medical cost action plan items that you guys are focused on kind of beyond the acquisition of Rubicon or new patient or COVID admissions?
And then the second question is just related to the AARP relationship. Just trying to understand the economic model a little better there, kind of where will the cost be housed within the P&L. Is it fixed or variable cost? Is there any sort of splitting with AARP? Or is it something where it's more like a licensing agreement?
Yes. On the first question, I mean, the core of what we do is keep our patients happy, healthy and out of the hospital. And the majority of our spend, despite some of the movements in 2021 -- so majority of our spend still maintains -- it still remains patients and hospitalizations. And so our big focus of our care model is understanding patients' needs, engaging them in our model, seeing them on a regular cadence based on that need, enrolling them in other programs such as behavioral health or care in the home if they need that for our sickest patients and really keeping them out of the hospital.
And there's a very consistent approach across all of our centers. We use the same operating model, the same data, the same technology, the same team structures. And so that remains a large focus, and will continue to main a large focus. As well as we've done, reducing hospitalizations by about 50%, I'm confident we can do better.
Part of that getting better, as you mentioned, is making sure we're understanding our new patients and engaging them faster so we can have a quicker impact on their medical costs. Part of that will be, again, making sure all of our patients are complying with our instructions and making sure we're providing them with a great experience. And then obviously, for the other 1/3 of the spend, the nonacute utilization, I think this is where -- I think Rubicon will be a huge part of our strategy because I think we can both provide a better alternative than referring patients to a specialist. That's a better alternative for coordination of care. That's also a better alternative for the patient experience. I think we can bring a lot more expertise into our model faster to, again, to help arrest the chronic illnesses and drive better quality of care.
So those are our really big focuses. And I think what we continue to learn is that our model works very well. While we'll always be adding things to the model, oftentimes, what we also really focus on is making sure that all of our patients are engaged in the model and getting the care that we know they need.
And then to your second question on AARP, I think your hypothesis is correct. Any costs associated with it will be in sales and marketing and I think a license agreement probably could be a good frame of reference.
And just on that first part, as far as trying to keep people out of the hospitals and keep them healthy. Are you guys doing anything with respect to either hospitalists or embedding care management downstream like that? Or different network contracting strategies maybe drive patients to like a more narrow network of hospitals?
So we have a transitions program, and that involves nurses and other providers, including medical experts and nurse practitioners, depending on the patient need, who are managing where the patient goes from a post-acute setting, making sure that's the right venue, the right length of stay. They're also really focused on readmissions, how do we make sure that we're doing medication reconciliation, identifying factors for re-admission and really making sure our patients don't go back to the hospital and let go. So both kind of the -- what -- and everything around what happens after the admission is a big focus. We have a very specific program against that, that again is integrated fully with their care team, mobile technology and process. So again, it's very coordinated from the patient perspective, not a silo program. So yes to that question.
We don't have as much focus today on kind of rates and contracting individual hospitals. I mean our model obviously is much more geographically spread. So take a place in Chicago, in any of our markets, we generally cover the majority of neighborhoods in those markets, which means we have to work with majority of hospitals. And for most of our patients, they're going to go to the hospital that's closest to their home or where they're taken. And so we think we need a strategy that doesn't just work at a couple of hospitals. And frankly, our strategy is less focused on kind of rate arbitrage and pushing patients to places, and it's more focused on patient choice and higher quality care and keeping patients healthier.
So that's our focus today. We do, do things around utilization management to make sure that hospitals are doing the right level of care and the right kind of level of care that the patient needs is happening. And so it's beyond just keeping patients healthier, but the core is keeping patients healthier.
Your next question comes from the line of Ryan Daniels of William Blair.
This is Jack Senft on for Ryan Daniels. I think most of our questions were answered. But I guess just keeping on the labor front, are you guys seeing any trends of folks who are kind of facing burnout, but still coming to Oak Street after the past year of stress in other markets? And I guess -- in our minds, they'd just be kind of bolstering Oak Street as an escape from these pressures and demonstrating kind of your insulation from the labor pressures? And if not, I guess kind of what are you seeing on that front?
Yes. I mean great question. I think you have to divide up team members across Oak Street by kind of role and function, right? We have a workforce that spans a lot of different types of team members. I think -- one reason I think we are as effective as we are, it is a very multidisciplinary and look for opportunities to able to work at the top of the license. And so I absolutely think that's the case for providers.
We hear that all the time from doctors and their physicians joining Oak Street Health, that this is the model they've been looking for, and this is the way to practice medicine. And that's the big reason why they come to Oak Street Health is because they actually get the resources they need to do what they went to medical school for, which is keeping patients healthy, right? So that certainly is the case.
I think that's the case when you kind of talk to health care professionals generally. I think if you move to other roles, the example, I think is probably the other extreme, is call center team members. I think that they're less coming to Oak Street because of the normal burnout pressures in primary care. I think they're coming to Oak Street because they believe in our mission, and I think we've created a really great culture across the organization. And so that's really what we try to use as our biggest factor to attract and retain employees. This is a great place to work.
We recently received an award from Chicago actually around being one of the best places to work. And so we take our culture and in being -- we have 4 objectives at Oak Street Health, bringing on more patients and growing to help more people; providing the best care anywhere; providing unmatched patient experience; and being the best place to work in health care. And I think you need all 4 of those to really achieve our mission. I think employees feel that, that 1 of your kind of 4 objectives is about them.
Your next question comes from the line of David Larsen of BTIG.
Just one really quick one for me. Can you maybe just comment on the competitive environment? Like we're obviously seeing Cano, One Medical and Iora, Walgreens is putting a big investment into VillageMD. And is this having any impact on like, let's call it, adverse risk selection where maybe older Medicare members are potentially joining Oak Street as compared to those perhaps in their 60s? Just any color there would be very helpful.
Yes. Obviously, over the last, I don't know, 15 months or whatever it's been since we went public, there's been a lot more organizations who are public and growing in the space, which is great, I think, for our country because we need more value-based care. We need better quality of care for people. So we're definitely cheering all those groups along as well because at least at this point in time, we don't really feel like there's a lot of pressure or competitive dynamics influencing our performance.
We have some centers that are near a competitor's operations, we have some centers that there's no competitors in the market. And we really don't see a difference in performance, I guess any to mention, whether that be growth or economics, et cetera. I think the reality is the vast, vast, vast majority of older adults are still receiving their care from a traditional primary care doctor office or even worse in the neighborhoods we serve, oftentimes, they receive the care from the emergency room.
And so what is the enabler of our success, and I think will be for a while is our ability to engage people in the communities and educate them about why primary care is important. And I think if they are wanting to see a doctor, Oak Street is a great place to get that care. We think our experience is very strong. And obviously, we have a 90 Net Promoter Score that backs that up.
And so for us, it's all about maintaining our culture, leveraging our technology, our data, our model. And frankly, what I believe, and I'm biased, a phenomenal team to continue doing what we do. And in 10 years, we may have a different conversation about stealing share and that will be a very good problem to have for everyone. And we are confident with the platform we're building. We'll certainly be one of the big players in the space in 10 years. And we can -- we'll cross the bridge on competition then. Because right now, it's really all about what we control.
Do you have any desire to get into the commercial markets?
No. I think that one of the reasons why we are so successful and will continue to be successful is because of our focus. And maybe when we take 60 -- people who are 60 and up who have chronic illnesses, but that's really just an extension of our core population.
I think that our model works incredibly well for our patients. It's obviously a resource-intense and expensive model. And if you had a patient population that was statistically healthier, it wouldn't necessitate the level of investment we make. And now we wouldn't be taking costs out of the system, we'd be adding cost to the system. And I joke with my wife that I wish I was an Oak Street patient because the experience is pretty darn good. But the reality is I don't need that level of focus, right, and that level of resources because I don't have enough expected net cost to necessitate it. So we're going to keep focusing on what we do well and really build a differentiated experience and care model for our patient population.
Great. Congrats on your success.
This concludes today's conference call. Is there any closing remarks?
Thank you, everyone, for joining the call, and we look forward to talking to you again soon. Thank you.
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