Health Tech, Health Services

Oak Street plans to add virtual specialty care with $130M acquisition of RubiconMD

Oak Street Health plans to integrate virtual specialty care into its primary care centers for Medicare patients. It struck a deal to acquire RubiconMD for $130 million in cash, with another $60 million in milestone payments.

In another big tie-up between two tech-enabled healthcare companies, Oak Street Health plans to acquire RubiconMD. The company, which operates dozens  of primary care centers for Medicare patients, plans to build out a virtual network of specialists.

Oak Street would buy RubiconMD for $130 million in cash, with up to $60 million in additional payments tied to performance milestones.

New York-based RubiconMD was founded in 2013 by CEO Gil Addo and President Carlos Reines. Both of them will stay on with the combined company.  They built a platform for specialists to provide e-consults to primary care physicians, improving patient care and potentially saving them from unnecessary tests or procedures.

RubiconMD currently has a network of 230 providers covering all major specialties. Oak Street Health plans to add this to its existing network of preferred specialists for in-person care.

“Like traditional primary care, specialty care is broken for older adults, but together with RubiconMD, we can rebuild it into a model that meets patient needs,” Oak Street Health CEO Mike Pykosz said in a news release. “Integrating and virtualizing specialty care into Oak Street Health’s innovative model enables us to improve access, experience and coordination for patients while substantially lowering costs.”

Both companies also have some overlap in their missions. Many of Oak Street’s patients are moderate- or low-income, and have at least one comorbidity. RubiconMD also has worked with several Federally Qualified Health Centers, who care for at-risk and underserved patients.

RubiconMD has spoken about the diversity of its leadership and board, and Oak Street says the majority of its staff are people of color.

“We share similar cultures and values, as well as a commitment to delivering high-quality patient care and lowering costs, and we look forward to continuing to innovate together,” Addo said in a news release.

Oak Street Health went public last year at a $9 billion valuation, and is now valued at $14 billion.  In its second quarter, it reported revenues of $353 million, up 65% from 2020, but also reported a widening net loss of $100 million, compared to a $26.8 million net loss the previous year.

It cares for the majority of patients through risk-based agreements with Medicare Advantage plans, and claims it has driven a 51% reduction in hospital admissions and a 51% reduction in emergency room visits compared to Medicare benchmarks.

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