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The San-Francisco based primary care startup plans to broaden its footprint beyond the 13 metropolitan markets it operates in to include North Carolina and Wisconsin, per Fierce Healthcare. This news arrives on the heels of strong Q2 2020 earnings: It posted a 25% year-over-year (YoY) jump in membership to 475,000 members, and an 18% YoY spike in revenue, reaching $78 million. For context, the startup combines digital and in-person services for offerings like chronic disease management, behavioral health, and cancer screening.
Primary care startups at large are seeing success amid the pandemic — and their prowess in digital care services will enable them to continue reeling in consumers. Oak Street recently expanded to include new markets in eight states — and subsequently filed for an IPO last month, for instance.
We think the key driver of primary care startups' growth is their ability to seamlessly combine virtual care with in-person visits: An Accenture survey revealed that 40% of patients started using new apps or devices since the pandemic began, citing convenience as a top reason for use.
We expect that the ease and personalization of virtual care — services that traditional primary care offices often lack — will have droves of consumers increasingly relying on startups like One Medical and Oak Street.
The financial strain of the pandemic has smaller primary care practices struggling — and we think their failure to invest in new tech means they could wave goodbye to patients. In May, almost half of independent physician practices said they only had enough cash to last a month — with 68% deliberating partnerships with larger health systems to offset their financial woes.
As a result of this financial strain, only 22% of doctors said their practice was able to boost digital tech like telehealth since the onset of the pandemic. On the other hand, primary care startups' stores of VC funding and smaller patient bases make it easier for them to pivot to meet consumer demands: For example, Oak Street nabbed more than $100 million across four funding rounds — and in April, it rapidly shifted to offer telephone visits upon realizing seniors would prefer this mode of care.
As traditional primary care practices use their funds to keep their doors open, we think they'll continue to lag behind on their digital offerings and risk losing their tech-savvy patients — who will likely jump ship for more convenient, rapid digital options even after outbreaks subside: 70% of US health consumers expect their relationship with tech to be more prominent in the next three years.
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