Oak Street Health, Inc. (OSH) Q4 2020 Earnings Call Transcript

Oak Street Health, Inc. (OSH)
Q4 2020 Earnings Call
Mar 11, 2021, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Oak Street Health fiscal fourth-quarter 2020 earnings call. [Operator instructions] Please be advised that today's conference is being recorded. Hosting today's call are Mike Pykosz, chief executive officer; and Tim Cook, chief financial officer. The Oak Street press release, webcast link, and other related materials are available on the Investor Relations section of the Oak Street website.

These statements are made as of March 10, 2021 and reflect management's views 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 and financial performance and financial conditions and often contain words such as anticipate, believe, contemplate, continue, could, estimate, expect, intend, may, plan, potential, predict, project, should, target, will or 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 expectations, and management of future growth, our market opportunity and 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 for 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 Mike Pykosz, CEO of Oak Street.

Mr. Pykosz?

Mike Pykosz -- Chief Executive Officer

Thank you, operator, and thank you to everyone that is joining us this morning. Joining me on today's call is Tim Cook, our chief financial officer. Before we dive into our fourth-quarter results, I'd like to thank our team at Oak Street for their extraordinary dedication to and support for the patients and communities we serve. Our teams adapted to and excelled in challenging circumstances over the course of the year to continue to provide outstanding care.

When the COVID pandemic hit the U.S. a year ago, we knew it was imperative for Oak Street to continue to be there for our patients and our communities. Over the course of the last 12 months, we had outstanding telehealth offerings and providing 90% of these virtually last spring to ensure our patients continue to have access to primary care. This meant leveraging our green bands to deliver safe family health to patients facing food and security.

An outstanding opening of community testing sites in the fall to help community navigate the surge in cases, all while continuing to run Oak Street care model and providing outstanding care quality and patient experience. Since the holidays, our team has taken up the additional challenge of vaccinating our patients, as well as the overall health in our communities. I cannot be proud of how our team has stepped up to lead our communities out of the pandemic. We have transformed the community rooms and majority of our centers to be mini vaccination clinics.

We have mobile vaccination teams traveling to senior living facilities, as well as setting our vaccination day by community organizations. We are running a weekend mass vaccination center as part of the City of Chicago's efforts to close gap in vaccine access. Since we started the center, the neighborhood of our mass vaccination centers have experienced the fastest growth in vaccination compared to any community in Chicago. We are currently giving over 11,000 vaccine doses per week and has given 75,000 since the beginning of the year.

And that number is accelerating as we are able to access supply in additional places. We have capacity to administer 80,000 doses per week across Oak Street. What makes Oak Street's efforts incredibly impactful is not just the number of doses we are giving, but the targeted way we are ensuring vaccine access to the patients and communities who need them most. At a time when equitable vaccine access is a national story, Oak Street has leveraged our community outreach team to proactively engage older adults in our communities to help overcome vaccine hesitancy and ensure that challenges using technology or finding limited slots aren't impairment access.

I've had the opportunity to volunteer at our vaccine centers and is one of the most rewarding experiences I had at Oak Street. The excitement that time, combined without apprehension, from patients taking their vaccine coupled with the positivity and sense of purpose from the team as we work our way toward light at the end of the COVID tunnel. This is something I will never forget. I'd like to share a representative story of two of our patients.

Mr. and Mrs. J, husband and wife, who we recently vaccinated. Mr.

J was excited to get the vaccine. His wife, not so much. Mr. J scheduled a visit to their doctor at Oak Street for the two of them, hopeful to use the trust Mrs.

Jay had for her doctor to get her over the home to get the vaccine. While Mrs. J was nervous, she's able to get her questions answered by her Oak Street doctor who had earned her trust over time. And decide to get the vaccine along with her husband.

Mr. J left grinning ear to ear and even Mrs. J had a smile on her face knowing she had taken the first step in relieving the fear and anxiety that COVID had brought. In addition to the impact we were able to make on our existing patients and communities, we were able to continue to bring our model to new communities in 2020 as well.

We successfully opened up 28 new locations in 2020. This represents more centers than we opened in the first five years of our existence. Because of our care model, focused on keeping our patients healthy and improving their outcomes, it's completely aligned with our financial incentives. This outstanding performance by the team in 2020 led to our strong full-year and fourth-quarter results.

We generated record revenue of $248.7 million in Q4, exceeding the top end of the guidance range we communicated to investors. This represents an increase of 43% from the fourth quarter of 2019. Our full-year revenue growth increased 59% in 2020. We achieved this growth despite essentially turning off our sales and marketing function for much of the spring and summer and needed to replace our community event-based marketing approach with new essential channels.

We finished the year with 79 centers. And from August until Thanksgiving, we opened 23 new centers for an average of two centers per week. We also saw strong center-level performance that continues to reinforce our confidence in our ability to scale the organization. We have previously shared our 2015 vintage as an example of level ramps.

We have shown the incredibly strong unit-level economics of the de novo Oak Street center. With less than $5 million total capital invested, including capex, operating losses, sales and marketing, and overhead, our centers nearest capacity now have a contribution of $9 million annually and growing. We are pleased to share that our subsequent vintages have continued to improve off of our already strong base, with our larger 2018 and 2019 vintages, both having higher percent of revenue and higher personnel contribution than 2015 vintages at the same point in its development. We've set a goal for ourselves every year to both improve the center of the ramp from previous vantages, as well as put more new centers up than previous years.

We were clearly successful in both in 2020 and are confident in our ability to continue hitting both goals in 2021 and beyond. In order to improve center economic ramps, we will focus on investing in our care model and patient acquisition approach, while leveraging the new drug contracting program to increase the percentage of our patients we receive risk-based economics on. We will continue to invest in our care model in Canopy, our technology, and data platform. We believe the best patient experience and care quality comes from availability of in-center, in-home, and virtual visits for both longitudinal and on-demand care.

Having this suite of options in the same organization will help both access to the preferred and clinically appropriate care venue along with coordinated care across venues. Additionally, as we gain scale at Oak Street, we are able to invest in the development of programs for more specific patient conditions. For example, we will be implementing a new program focused on our patients with end-stage renal disease this year, and we're excited to invest to improve health outcomes and lower costs in the small, but complexity of patients. Along the same lines, we will continue to invest in our Canopy applications and data science capabilities to derive insights from our growing patient data sets and deliver those insights to our teams in the field with easy-to-use tool to ultimately drive better patient care.

We're excited to see the results of these investments on our quality of care and financial metrics in 2021 and beyond. Along with investing to improve our care model, we will also, to accelerate our outreach model to increase the pace of patient acquisition. This will include continued expansion of our digital and telesales channel. While we are proud of the results we have achieved as we ramp these channels in order of magnitude over the second half of 2020, we believe that it is still in infancy, and we continue to expand and optimize both, allowing us to increase the number of patients brought in through that without increasing the cost of acquisition.

Additionally, we'll continue to invest in training for our field-based outreach team, so we're prepared to successfully relaunch our community-based channels in the back half of this year. If we're able to maintain our central marketing performance while returning our field outreach team performance to 2019 levels, we'll see an increase of patient growth of over 50% from where we are today, and our team believes there's ample opportunity to improve performance from there. Finally, we believe the direct contracting program has the ability to meaningfully improve our central brand. We expect to have between 6,000 and 7,000 direct contracting members on April 1.

We continue to add voluntary aligned patients to the program every day and expect that number to increase by 2,000 or 3,000 per quarter, depending on flow-through in MA enrollment, leading to a 10,000 to 13,000 direct contracting patients by October. We're confident that over the next year, this number will continue to increase, leading to a significant increase in the percentage of our patients that are on risk-based contracts. Because we are already incurring the cost of care for our traditional Medicare patients at Oak Street, moving them to a risk-based contract will allow the expected patient contribution to improve 10 times and drop straight to the bottom line, leading to an improvement in center-level revenue and a proportional larger improvement in center-level patient contribution over time. In parallel to improving our center-level economics, we will also look to leverage our platform to accelerate the pace of our expansion.

We're planning to keenly increase the pace of de novo and center openings. We are targeting 38 to 42 new centers in 2021, up from the target in the time of our IPO of between 25 and 30 de novos. With a similar level of performance of historic vintages, we expect our 2021 vintage alone to generate $1.3 billion of revenue or $250 million of center contribution in 2026. We believe we have the infrastructure and talent pipe on in place to support this case expansion and more, consistently ensuring strong center-level performance and ultimately providing the same return on the investment in early center ramps that we've seen in our mature vintages.

With continued strong center-level performance, we'll look to continue to increase the number of new centers per year next year and beyond. In summary, we are thankful for the strong contribution from Oak Street team, leading to a strong finish to a challenging year, and we are pleased with the results from our fourth quarter. Looking to 2021, we believe we have the team, technology, culture, and mission to truly transform how care is delivered for the patients who need it most. In doing so, we believe we can create a new standard for primary care for older adults and are excited to take the next steps on our mission to rebuild healthcare as it should be.

I'll now turn it over to Tim Cook, who will walk you through our financial results in more detail. Tim?

Tim Cook -- Chief Financial Officer

Thank you, Mike, and good morning, everyone. We were pleased with our fourth-quarter results with our key metrics coming in ahead of the guidance we communicated in November. In terms of our membership, total patients grew roughly 23% year over year, while our at-risk patient base, which drives our financial performance, grew by 34% to 64,500 patients. At the end of 2020, we operated 79 centers, an increase of 28 centers compared to December 31, 2019.

Note that our year-end 2020 total now includes our three Walmart locations. Capitated revenue of $234.9 million for the year grew 39% year over year, driven by the growth in our at-risk patient base. The total revenue grew 43% year over year to $248.7 million. I'd note that in the fourth quarter, we recognized capitated revenue of $3 million from one-time events related to settlements with health plans and $9 million from capitated revenue that was booked in the fourth quarter but related to full-year performance.

Additionally, we recognized approximately $4.2 million of other revenue from one-time events of which approximately $2.2 million was related to HHS Provider Relief Funds, and we recognized $2.4 million of other revenue that was booked in the fourth quarter but related to full-year performance. Even when adjusting for these amounts, we still finished Q4 comfortably ahead of the guidance provided in November. Our medical claims expense for fourth-quarter 2020 of $175.5 million, representing growth of 39% compared to fourth-quarter 2019. Fourth-quarter medical claims expense included $6.5 million in one-time medical claims expenses associated with settlements with health plans and a potential reserve against potential incurred but not reported, COVID-19 claims relating to 2020 dates of service.

Our cost of care, excluding depreciation and amortization, was $61 million in the fourth quarter, an increase of 36% versus the prior year due to the growth in the number of centers we operated, as well as growth in our patient panel. Sales and marketing expense was $26.8 million during the fourth quarter, representing an increase of 88% year over year. We saw the benefit of a greater investment in sales and marketing in 2020, be it greater at-risk patients at year-end and greater expectations for Q1 2020 membership, which I'll discuss in a moment. Corporate, general and administrative expense was $72.9 million in the fourth quarter, an increase of 143% year over year.

The majority of this year-over-year increase is related to an increase in stock-based compensation expense, which was $41.7 million in the fourth-quarter 2020, compared to $1.9 million in the fourth quarter of 2019. This growth in stock-based compensation expense was driven by an accounting change related to awards issued prior to our IPO in August 2020 and is not a function of stock awards issued since our IPO. Excluding stock-based compensation, corporate, general, and administrative expense was $29.9 million in the fourth quarter of 2020, an increase of 7% compared to the fourth quarter of 2019, driven by increases in headcount to support our organizational growth. I will now discuss three non-GAAP financial metrics that we find useful in evaluating our financial performance.

Patient contribution, which we define as capitated revenue plus medical claims expense, improved 41% year over year in the fourth quarter to $59.4 million, capturing capitated revenue growth of 39% for the period. We expect at-risk per patient economics to improve the longer that our patients are part of the Oak Street platform. Platform contribution, which we define as total revenue less the sum of medical claims expense and cost of care, excluding depreciation and amortization, was $12.1 million, an increase of 397% year over year. As the individual center matures, we expect both platform contribution dollars and margins to expand as we leverage the fixed-cost base associated with our centers, as well as improving our patient economics over time.

Adjusted EBITDA, which we calculate by adding depreciation and amortization, transaction and offering-related costs, and stock-based compensation, excluding other income to net loss, with a loss of $43.5 million in the fourth quarter of 2020 compared to a loss of $36.2 million in the fourth quarter of 2019. We finished the fourth quarter with $409.3 million in unrestricted cash. Cash used by operating activities totaled $77.2 million in 2020, and our capital expenditures totaled $21 million. I want to talk for a moment about direct contracting and expand on Mike's figures.

We received a file from CMS last week that identified approximately 13,500 Medicare beneficiaries aligned to Oak Street via our direct contracting entity. However, this file did not include exceptions, which account for the delta between this figure and Mike's range of 6,000 to 7,000 patients. These exceptions include patients that have since enrolled in Medicare Advantage, patients that are aligned to other government programs such as ACS, and in patients that are disqualified due to a prior MA enrollment or lack of Part A and B Medicare coverage or other reasons. For those patients currently enrolled in Medicare Advantage, we are indifferent as those patients are helping to drive our M&A at-risk patient base, which is growing more quickly than we originally anticipated.

For patients aligned to other programs, those patients remain with that program regardless of their voluntary alignment preferences for the first year of the direct contracting program, given the direct contracting program is starting midyear in April. We are hopeful that as we move to performance year 2 in January of 2022, CMS will give priorities of voluntary alignment preferences of those patients, which would result in them moving to the Oak Street direct contracting entity. For the disqualified patients, we will continue to work with these patients and expect them to be added to our direct contracting patient base in future periods. In summary, there are significant buckets of patients not included in our 6,000 to 7,000 estimate that we believe will flow through in future periods.

And those patients are incremental to the 2,000 to 3,000 patients we expect to add per quarter that Mike mentioned. I'll now turn to our 2021 financial outlook. As of December 31, 2021, we expect to have 105,000 to 110,000 total at-risk patients, including direct contracting patients. For the full-year 2021, we are establishing an expected revenue range of $1.275 billion to $1.325 billion and an adjusted EBITDA loss of between $215 million and $165 million.

We anticipate having 117 to 121 stand-alone centers opened by December 31, 2021, including our Walmart centers. Our 2021 EBITDA guidance includes the impact of several factors. The first factor is related to our accelerated growth rate. As discussed, we are increasing the pace of new center expansion and the start-up expenses tied to these de novos will weigh upon near-term profitability.

As Mike discussed, we expect to continue making these investments provided we continue to see recent cohorts operating at levels that further validate the unit-level economics of our operating model, which they currently are. When you consider the impact of center contribution and sales and marketing and G&A dollars associated with this accelerated growth, we will invest approximately $50 million in these new centers, above what we would have expected at the time of our IPO in August 2020 given the 73 and 98 centers we initially estimated we would be operating as of year-end 2020 and 2021, respectively. The second factor is related to investments in our care model programs in 2021, as we believe these programs can drive improvements in patient outcomes and medical claims expenses in future periods. As we continue to grow our patient base, we are reaching a scale where it's economical to invest in certain programs that we believe will improve our patients' well-being and result in a lower per-patient medical cost in the future.

We expect these investments in these programs to be approximately $20 million, and we expect that we will recoup these investments in a future period through improved MLR. We have not assumed any benefit in 2021. The third and final factor pertains to patient contribution and impacts both per-patient revenue and per-patient medical costs. We estimate, our per-patient revenue will be lower than we would ordinarily expect due to lower risk scores.

Consistent with recent commentary we have heard from Medicare Advantage payers, we expect the low utilization experience in 2020 due to COVID will result in lower risk scores for new at-risk patients who joined Oak Street in 2021, creating a headwind as we grow this year. On the medical cost impact, 2021 is a challenging year to estimate our medical costs. In a typical year, we would evaluate the prior year's experience and make an estimative of trend based upon a number of input factors. Given the impact of COVID-19 and 2020 medical cost, the baseline is hard to establish.

Furthermore, it is unclear what impact, if any, COVID-19 will have in 2021 medical costs as we did see an increase in COVID-19 cases in Q4 2020, and new variants of the virus represented risk to the efficacy of the current vaccines, making it difficult to predict what Q2 2021 and beyond will look like from a medical cost standpoint. Additionally, the Consolidated Appropriations Act passed in December 2020 included an increase in Medicare physician fee schedule for 2021 and suspended sequestration for Medicare payments for the first quarter of 2021. We expect the net combination of these two factors will result in an increase in per-patient medical costs related to specialist care provided to our patients. Slightly offsetting these headwinds is the impact of direct contracting.

When we net all of these factors, patient contributions can be approximately $40 million or lower than we would have otherwise expected. It is important to note that we are basing the assumptions on very preliminary data, and we believe this impact to be a function of COVID-19 and limited only to 2021 results. For the first quarter of 2021, we are forecasting revenue in the range of $280 million to $285 million. We are forecasting an adjusted EBITDA loss of $25 million to $20 million.

We anticipate having 84 to 85 centers and at-risk patient count of 74,000 to 75,000 by March 31. I'll make one final point regarding growth and the seasonality of our business. 2020 was an unusual year in that at-risk patient panel grew by 9,000 patients or 17% from the end of Q1 2020 to year-end 2020. As a point of comparison, for the same period in 2019, we grew our at-risk patients by approximately 15,000 or 42%.

This was driven by the decision to lower sales and marketing during the spring and summer of 2021 as we learn to operate during the pandemic and something we do not plan to repeat. We expect our growth in 2021 to be more consistent with pre-2020 periods, with at-risk patients growing 47% from the end of Q1 2021 to year-end 2021 based upon the guidance I just provided. As we add new patients over the course of the year, we expected that our aggregate per at-risk patient economics to decline as our newer patients are less profitable than our senior patients. And with that, we will now take any questions you may have.

I'll turn it back to the operator.

Questions & Answers:

Operator

Certainly. [Operator instructions] Robert Jones with Goldman Sachs, your line is open.

Robert Jones -- Goldman Sachs -- Analyst

Great. Good morning, Mike and Tim. I guess just to go to the headwinds and a lot of detail there, so very helpful. I guess the sizing of the COVID had been to MLRs in the 8-K was really helpful.

And Tim, you just touched on some of this again. But I was wondering if you could break down or give us any sense of the size of the impact specifically to treatment and testing related to COVID? And then just as we think about the rollout of the vaccine, how variable is that estimate to the overall headwind that you're sizing to EBITDA in 2021?

Mike Pykosz -- Chief Executive Officer

So on the first one, as far as increases in third-party medical cost related to COVID, the testing, etc., is pretty minimal on the big scheme of things from a cost perspective. But the largest cost setting for us is key hospitalizations. And obviously, to the extent that our patient population is catching COVID, they're obviously at a much, much higher likely to go to the hospital because of it. So where COVID impacts us financially is really on the hospitalizations.

So we saw that to some extent in Q4. The debt is still preliminary, but as the resurge in across most of the country and certainly most of the markets we were in, we did see that play out in our financials and our third-party net costs. So I think that's where you see the biggest impact from COVID is the cost of vaccinations or the cost of COVID testing is de minimis when it comes to the third-party med costs. So we are hopeful.

We are optimistic that with the combination of lower case rates and our efforts to vaccinate our patients in our communities that we won't see another surge of hospitalizations. That said, we're obviously watching the new variant closely like everyone in the country is. And there's just a lot of unknown. We haven't come down from a 100-year pandemic in 100 years.

So, yes, there's a lot of error bars around there. So I think your last question around kind of how much we know and how certain we are. I mean, the answer is we're not on the third-party medi cost front. So if everything goes well, and we don't see another surge of COVID, and we don't see hospitalizations, I think we can certainly perform better than probably in our estimates.

But COVID, short of anything, it's unpredictable. So we want to make sure we are being thoughtful as well.

Robert Jones -- Goldman Sachs -- Analyst

Got it. So on the treatment side, you're clearly taking more of a conservative approach in the initial guidance, it sounds?

Mike Pykosz -- Chief Executive Officer

We hope so. But again, hopefully, we're talking to you guys in a couple of quarters, and life will be back to normal, and you can remind us of this.

Robert Jones -- Goldman Sachs -- Analyst

Yes, we can hope. I guess just one second question on the accelerated center rollout. Any sense you can give us on the split between existing versus new geographies? And then just given the decision to accelerate the rollout, any motivating factors there? Was it related to just opportunity? Increased competition? Just curious what sparked the decision to accelerate the rollout of the centers.

Mike Pykosz -- Chief Executive Officer

Yes. I don't know the breakdown of new versus existing at my fingertips. It's going to be roughly proportional between the two, depending on how you find a new market. Obviously, some of the markets like New York City are technically existing markets in 2021 because we were there in 2020.

But obviously, we're just at the start of building them out versus places like Chicago and we will also continue to grow in 2021, I've been there for a while. So it will turn via combination that obviously, we've announced multiple new markets as well. And I think we'll continue to announce more on top of what we've announced over the next month or two. As far as the decision, honestly, it has nothing to do with competitors and has everything to do with -- we see it's just an absolutely massive market opportunity, a very open market regardless of what competitors are doing and really strong performance historically.

That really leads us to feel like it's the right decision to invest. I shared this a little bit in my earlier remarks. But if you look at the unit level ramp of Oak Street centers, it's absolutely phenomenal. It's incredibly unique with capital and incredibly strong return.

And so the question we ask to ourselves is, do we feel like we have the kind of internal capacity to put more centers up? And what has happened historically to the ramps over time? And I think we opened up two centers per week during a surge in the pandemic not too long ago. So we feel very good about our capacity to put more centers up in full-year 2021, along the same lines, the performance isn't eroding. It's actually the opposite, performance over time is improving. So when you're seeing those factors, you're seeing such a huge open market.

We need to grow more. Frankly, right now, the limiting factor to our growth is now a market opportunity. We can put an order of magnitude more centers in 2021 and still be scratching the surface of the overall market opportunity. It really comes down to us having the appropriate level of confidence in our ability to execute.

And I think we will skew it by what I talked in the call, titrate up the number of centers every year to make sure that everything is going smoothly, and we are continuing to see the same kind of trajectory of improvements of our vintages. As long as we're seeing that, we'll put up more centers next year and repeat. So again, we're really, really excited about the future opportunity and putting up more centers. That was a pretty easy decision because the market can support 10,000 Oak Street centers.

So we are a long way from making a dent in that market, and we feel a huge need to put up more centers because we also feel like the quality of care we are providing is just differentially better. And so we want to bring it to more people.

Robert Jones -- Goldman Sachs -- Analyst

All makes sense. Thanks, Mike.

Operator

Sean Wieland with Piper Sandler, your line is open.

Sean Wieland -- Piper Sandler -- Analyst

Hi. Thank you. Good morning. So you called out a $20 million investment to manage medical claims expense.

Can you give us a little bit more specifics on what this entails exactly? And also, just describe how managing medical claims expense in the direct contracting program is different than that in the MA program?

Mike Pykosz -- Chief Executive Officer

Yes. And to your first question, there's a number of programs embedded in that number. Part of the one I called it out is, generally, we will implement a series of new net cost and care model programs every year. And for any time you're developing a new program, there's the cost to develop the program, there's the cost to pilot the program, there's the cost to build out the kind of technology and training to roll it out more broadly.

There's the implementation costs of going out more broadly. And then obviously, we wouldn't be developing to align further. We can have a strong conviction that that program will ultimately lead to better health outcomes for our patients, and therefore, lower medical costs overall, and obviously, we have a strong ROI in that program. But there's a period of time where you're rolling out the program and not getting that return, number one.

Number two, when we think about having our budgeting and guidance, we don't take in a lot of the benefit right away. We do bake in all the costs. And so in this case, there's a number of programs under that number. The biggest one is a program focused on our end-stage renal disease patients.

We're not offering dialysis. Obviously, we'll work with partners on that. But actually, the majority of cost for a patient with end-stage renal disease is not dialysis. It's actually all the other kind of acute episodes that occur.

If you go on to dialysis for the most part and your -- and you have a lot -- a number of chronic conditions that caused you to have end-stage renal disease. And so we saw this huge opportunity to really improve the quality of care for these complex patients. It's right in line with what we've proven with other parts of our care model. And now that we are getting bigger, and we have, I think, a critical mass of those patients, we can really make that investment.

And so that's the biggest one. There's a couple of other ones underneath. There are some more care in the home components and transitions, components and things. So we really believe strongly that these programs will pay off over time.

And that kind of latter part of this year and really more into 2022, we'll see a pretty big benefit from the programs, but we have that upfront investment. And this year is kind of a unique year because I think we'll have more of those investments than we otherwise would have because a lot of the things we were going to roll out in 2020 didn't happen, right? Because the same teams that would have rolled those out were focused on inspection control protocols and testing and COVID care programs, now, vaccinations, etc. But again, that's kind of where -- within those numbers, and we hope we're -- we do not just hope. We are confident that there'll be a return on those investments not too long from now.

Sean Wieland -- Piper Sandler -- Analyst

OK. And then just more broadly, what's different about managing medical claims expense in the direct contracting program versus a member enrolled in MA?

Mike Pykosz -- Chief Executive Officer

Well, I think it's actually one of the reasons why Oak Street is very well situated for the direct contracting program. If you think about the program overall, you don't have the kind of traditional managed care levers in direct contracting, right? So you don't have networks. It just is open access like traditional Medicare. You don't have prior authorizations either or kind of the gatekeeper model.

So I think some of the more traditional kind of, call them, kind of MSO-type models, I think are going to be harder to implement in direct contracting. That's not what Oak Street does. And so from our perspective, the focus of our care model and our approach is to really provide a phenomenal experience for our patients, so they come to us voluntarily, really focusing on how do we ensure we understand all of our patients' conditions really well, and we're leveraging data, technology in our model to get ahead of any potential episodes and keep patients healthier out on the hospitals. If we do that, we'll generate a lot of savings.

And so nothing on what I just said will change within direct contracting. Like we are already taking care of these patients. We believe strongly we're already lowering the admissions and keeping these patients healthier and improving their outcomes. And so really what it becomes is though they don't have a financial mechanism where we'll be paying differently.

And I think that will allow us to capture the savings we're generating. So I don't look at it for Oak Street. It's very different, although I think that depends on what is your model and your approach. That factors in a lot of how different the approach will be for those patients.

Sean Wieland -- Piper Sandler -- Analyst

All right. Thanks. Can I slide in one quick one? Of the 38 to 42 de novos this year, how many of those are going to be under Walmart?

Mike Pykosz -- Chief Executive Officer

None.

Sean Wieland -- Piper Sandler -- Analyst

I thought you said that your forecast includes Walmart.

Tim Cook -- Chief Financial Officer

No. Sorry, I was saying about 117 to 120 I mentioned will include -- including those three Walmart centers we opened in 2020. Walmart is going well thus far. Still obviously very early to be making any final confirmation as we continue to talk to Walmart about how we can work together beyond those three centers.

But at this point, as we think about 2021 and the 38 to 42 centers, not of those would be in Walmart. So sorry if that wasn't clear, but that's what we said.

Sean Wieland -- Piper Sandler -- Analyst

All right. Thanks for the clarification. Thank you.

Mike Pykosz -- Chief Executive Officer

Yes. Thanks, Sean.

Operator

Ricky Goldwasser with Morgan Stanley, your line is open.

Ricky Goldwasser -- Morgan Stanley -- Analyst

Yes. Hi. Good morning. First question on patient acquisition.

With the vaccine rollout, are you starting to see traditional patient acquisition channels already returning? And what are kind of like your expectations to when you will be able to host these events as community events and start up again? And how should we think about the cadence of those costs throughout the year?

Mike Pykosz -- Chief Executive Officer

So starting from the back of the question, from a cost perspective, we are bearing the cost right now of our community marketing team. They're SME-focused. We have the teams. They're all at their centers.

Right now, they're doing the best things too, and that job, all things considered of engaging people they've met in the community telephonically and working with different community groups and been doing what they could do. But obviously, it's more limited without kind of the more traditional event-based in-person activity that kind of what we built the team for, but we made the decision to keep the team in place, keep investing in the team because we are confident that that will pay off relatively soon. We are not -- despite the, I think, early success we've had of getting our patients and our community vaccinated, one, we're so early in doing that. Number two, society hasn't changed.

You can see we gave guidance recently. So I think we're not in a place now where we -- in our markets and what we're promoting that a group of 15, 20 older adults are doing a Zumba class in an indoor community center, right? And so we really haven't turned those channels back on yet. I'm hopeful and optimistic. Maybe in the summertime, we'll see that.

Again, it's going to be -- when we start seeing society returning more normal, then I think that will kind of come along with it, right, both from a safety perspective, like the last thing you want to do is rush those things and cause infection spread in an at-risk population. And number two is people have to be willing to do it as well. The only thing I'll say to that is the one thing we've kind of seen as a, it may not be a proxy for that because it has been pretty exciting is that as we vaccinate people in our communities, in some ways, we kind of had the first -- the closest thing to a community that we've had in over a year because we are getting a lot of people that aren't Oak Street patients coming to our community centers to get their vaccines, and they're seeing Oak Street for the first time. And I think a lot of them have been -- they get to see what we've done.

They've been very impressed by the centers, the team, the operations, the customers. That really is gone, especially if you know the horror stories, other places of waste, and confusion. And so we're really excited about the number of people we're able to make a really strong impression on. And historically, that's one of our biggest goals of our community marketing model to get people to come to our center and meet our team and see it.

Because we knew that they would be very likely to schedule afterward. So we're hopeful this will kind of be in the beginning of that. Obviously, that's not the goal of the vaccine campaigns, but hopefully, it will be a nice side benefit of just getting more people introduced to Oak Street.

Ricky Goldwasser -- Morgan Stanley -- Analyst

And my second question is on the cost. I mean, Tim, you went through sort of the list of the incremental costs that we're seeing in 2021. So just to clarify, what do you expect to revert in 2022, as we think ahead versus what part of this cost is now more kind of like structural to the model and we should kind of like update our 2022 and beyond models to adjust for that?

Tim Cook -- Chief Financial Officer

Sure. So the $50 million that we will invest in new centers between new center ramps, as well as sales and marketing, supporting new centers and G&A. I would say that's all consistent with how our folks will be modeling center growth. So I don't know how everyone has developed their own forecast, but I'm assuming that as centers grow, then the greater investments of the market is a great investment in G&A.

And so I'd say, look, as we roll forward, as we expand from 25 to 40 centers. And from last year, the incremental six centers we opened, we are running the same math on those centers as we would in the other centers. So that, in my mind, isn't necessarily a headwind to 2022, and we'll have more centers in 2022 that will probably increase the losses in 2022 as those centers continue to ramp to breakeven. But I would say that's business as usual, right? It's just more of the same, more centers than we otherwise had in -- than we had earlier anticipated.

On the care program investments, assuming those work, we would continue to make -- I would expect to continue to see those dollars in the P&L. So I think that's a new baseline for those expenses for 2021, 2022, and beyond. Obviously, you said that we're not seeing the returns that we mentioned. We would dial those back.

We're very optimistic that we will, given the opportunity that is presented by those programs. So what I'd hope to see in 2022 is some offset to medical claims expense from the benefit of those investments. Obviously, again, we did not incorporate any of that in 2021. But as we look forward to 2022, I hope to see that.

And then finally, on the patient contribution dynamics I mentioned, we'd expect -- to the extent that those are meaningful, right? We think the wrap issue will be real based upon what we're hearing in the marketplace. We expect all those to reverse out in 2022. Obviously, that assumes that COVID, as we know it, fades out of existence. I'm sure that won't be entirely the case, but at least from a medical cost perspective, will be less of a phenomenon.

I think we've got every reason that we can manage our patients from a documentation and a risk score perspective. The harder question to answer is what will happen to the medical cost? But again, I think perhaps optimistically speaking, but sitting here early March, I feel as though we can be hopeful that by the end of the year as we look forward to 2022 medical costs that COVID won't be much of an impact there. So we expect all of the patient contribution impact, whatever that might be in 2021 to not be a headwind in 2022 and beyond. So sorry, Ricky, in summary, I don't think any of it is really an impact to future periods from a sort of a change in the profitability profile of the business.

Again, more growth would require more investment. And as you really model out to 2023, '24, '25, we'll see greater profitability because of those new centers. And we'll see a nice -- we expect to see a nice return on our care programs investments. So hopefully, that gives you sense.

Operator

Justin Lake with Wolfe Research, your line is open.

Justin Lake -- Wolfe Research -- Analyst

Thanks. Good morning. First question around churn. I know that's a number you haven't historically provided, but one of your peers called an analyst day, talked about churn in one of their specific markets and the business being about 30%, which, to the extent it is high to a lot of people.

So just curious if you can't share your churn number, just any thoughts around that 30%, if you think that's kind of an industry average that we're all kind of learning about this business as we go.

Mike Pykosz -- Chief Executive Officer

Yes. You're right, Justin. We have not historically shared our churn numbers. I don't have the exact numbers right in front of me.

They're certainly not 30%. So I think that number feels high to us as well. I don't know which company you're referring to or what release, so It's hard for me to comment upon the number other than to say that's certainly has not been our experience.

Justin Lake -- Wolfe Research -- Analyst

Got it. And then a question on direct contracting -- a couple of questions. One, it would be -- so you're going to get to 10,000 to 13,000 members. Curious if you could tell us whether -- or what percentage of your kind of B-, C-eligible patients that makes up, meaning kind of what's your penetration rate there.

And then I know you've said that you expect to do better on voluntarily aligned patients. So maybe you can give us the mix there out of the 10,000 to 13,000, how many are voluntary versus claims? Thanks.

Mike Pykosz -- Chief Executive Officer

Yes. To take it in reverse order, and again, I'd say at least from the caveat that we're working off preliminary reports and our analysis on those reports a program that is brand new. So I just want to caveat what I mean I say with those. As far as claims-aligned versus voluntary-aligned, and we think initially, less than half of our direct contracting patients will be claims-aligned and that we don't think the claims-aligned number, kind of by definition, will grow much at all over the next year or so.

And so all the growth from there will be voluntary-aligned or the vast majority of the growth. So I think it will be kind of less than half to start on claims line then obviously, shrinking from there as we keep adding more patients. So that's the latter question. The percentage of eligible is a hard question to answer because we're still trying to determine kind of who's eligible and all the different kind of eligibility requirements and reasons people wouldn't be in, right? So when we get a report, and we'll be surprised.

I hope this set of patients who were previously aligned to an ACO because their former doctor was part of a health system that was Medicare Shared Saving Program ACO, and therefore, looking back at the preponderance of their claims over 2018, 2019, and 2020, they got aligned to this system's ACO. And in 2021, for example, because this program is starting in April, and the ACO program started in the beginning of the year like they always do, the CMI decided that kind of ballpark claims alignment to MSSP ACO, which trump direct contracts. Actually, that's going to change in 2022. But again, like there's no way for us to know which of these patients happen to have a former doctor who was part of the health system that's part of an ACO.

And so we kind of find a lot of these things out kind of as we go. So it's hard to answer like -- it's hard to answer the question what percentage of our eligible patients because I think we're still trying to understand exactly who our eligible patients are. And even that definition is changing over time with the program. So again, what I think our goal is, is to really understand where every patient is, make sure every patient does fill a voluntary alignment form and then if they don't flow through, understand why didn't flow through and see what we can get to change that, right? That's always our goal.

And the other thing that always moves, right, is as patients are engaged with Oak Street Health, a lot of them will choose Medicare Advantage. And so people who come in and solve the form for their interest in Medicare, they end up choosing MA plan, which obviously, we're very happy with if they do, then they won't be part of the program as well. So there's a lot of moving pieces that changed over time, and we're obviously happy to have patients. So it's a little harder number to pin down.

And I understand it's not what you're asking for, but I can't answer it now.

Operator

Ryan Daniels with William Blair, your line is open.

Ryan Daniels -- William Blair -- Analyst

Yes. Good morning. Thanks for taking the questions. In my opinion, perhaps one of the more important data points fundamentally is the improvement in the ramp of your stores.

And I'm curious if you could go a little bit more into the centers and what the key factors are driving that. Meaning, is it faster member ramp? Is it revenue per member, medical cost management? I'm sure it's certainly an element of all of that. But in your mind, is there any key to that metric that's giving you that increased comfort? Thanks.

Mike Pykosz -- Chief Executive Officer

Yes. You know, it's a combination, right? So if you go back to the 2015, which is always the baseline vintage. And Ryan, I remember our conversations in the early IPO days when we shared that as kind of an example of vintage, and all the questions we got were, well, OK, was that your best vintage ever? And have your economics eroded over time? And so we were excited to share with the group more data points around that, that actually know the options have gotten better over time. If you go back to Oak Street in 2015, right, I'm proud of our performance then and the team then, but we are doing significantly more sophisticated organization today than we were then.

So I think a lot of the change has been the technology, right, building out our -- Canopy wasn't a thing in 2015. So as we built on our Canopy applications, that has really locked in workflows and gave teams better access to the data they need to drive our care model kind of at real-time within our care model, right? And then that's something that's not stopping, right? We are rolling out more Canopy modules every quarter this year. And as those models roll out, I think it will continue to drive better performance, better consistency, and performance and better kind of top-line outcome from our care model. That's only a part of it.

Certainly, on the outreach side, we pilot new things. We try new things, and we learn ways to engage people and bring on more patients. And if things work, we hardwire and continue them. So we're constantly innovating there.

2020 was a little bit of a strange year on that front because as we talk about a lot, we had to stop a lot of the things that worked really well and develop a whole lot of new things. And so again, we can't be more excited for the back half of this year. And in 2022, we can kind of take all the new things we figured out that work with all of the things that we knew works in the past and do them all at the same time. So we're really excited about that.

So it really -- sort of that one thing is really just kind of incremental improvement across all the levers of our model, and that drives better patient outcome, that drives more patients and you put those two things together and drive better performance of vintages. Tim can quantify, but do you have any of these numbers and just quantification of improvements since 2015?

Tim Cook -- Chief Financial Officer

Yes. If we look at our 2020 performance for the centers that we opened from 2016 through 2019. Those centers in aggregate generated about $400 million in revenue in that 36 centers and about $9 million of center-level profit. If we compare that to the 2015 cohort to what would these centers have done if they had performed similar to the 2015 cohort in 2020, revenue would have been up $355 million, and profit would have been about $4 million.

So we're 13% head ahead on revenue, 140% ahead on profitability, albeit on a small number, but one is we're seeing really nice ramps in our earlier vintages relative to that 2015 baseline vintage.

Ryan Daniels -- William Blair -- Analyst

OK. That's very helpful. And then, Tim, one for you. If we think of the headwind from COVID-19 into the current fiscal year, how much of that relates to newer patients? I assume the bulk of it is somewhat related to that, meaning that, one, the risk scores on newer patients are probably going to be a lot lower than what you've been able to do with your consistent customer base.

And then number two, is there more concern about medical claims among that group because perhaps people entering didn't get the appropriate preventive care versus your patients and therefore, might have higher institutional costs this year versus in your core group? Thanks.

Tim Cook -- Chief Financial Officer

Sure. So as we think about the potential impact to patient contribution related to COVID, I would say, new patients are part of it. I would say it's easier to draw a distinction about revenue, right, and for our existing patients, we did a great job engaging them in 2020. Our ability to document them and their risk scores look consistent with what we've seen historically.

So as we think about 2021, it's really the uncertainty around what will new patients look like. And, yes, from what we've heard from others, we probably expect that -- again, we'd expect those risk scores to be lower. To the extent they're not, the question could be, well, if they're higher, are you getting patients that are sicker and therefore, the med cost will be higher? So we haven't made any specific assumptions around newer patients being more costly than existing patients due to COVID-19. Candidly, we're probably not that sophisticated in how we're thinking about our new patients at this point.

So as we think about med cost, it's less a function of new patients and more a function of uncertainty around the entire population.

Operator

Kevin Fischbeck with Bank of America, your line is open.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Great. Thanks. I wanted to ask a question about direct contracting profitability. It sounds like you guys expect it to actually be additive this year as you're already incurring a lot of the costs.

But can you talk about the ramp of profitability in that business over time? And if you're already incurring the costs shouldn't that already come in at max profitability in year 1? What would cause the improvement?

Tim Cook -- Chief Financial Officer

Thanks, Kevin. This is Tim. For the random profitability for direct contracting patients, if we think about it in two different buckets versus what are the economics of the underlying patient and then what are the costs to manage that patient from our cost of payer perspective. We expect very minimal, if any, incremental cost in managing those patients.

So we're really talking about what are the revenues left of medical expenses for these patients. And what I'd say, it's similar to what we experienced in our MA book of business. We see improvement in patient economics over time as a function of both better understanding of the disease burden of those patients and documentation. And therefore, better calibration of our care model to better manage the medical cost of those patients.

So we see nice improvements, I think as folks know over years, two, three, or four patients being on our platform. We expect something similar for direct contracting conditions. And to Mike's earlier comments, our goal is to hasten that ramp every year. But the reality is it does exist, somewhat a function of how Medicare Advantage works sort of the annual cycles of the program.

So given the fact that direct contracting is essentially drafting off that program, I expect to see a similar ramp over time, where we see more modest profitability in year 1 for these patients and then as you know, as they become on the platform for years 2 and 3, we expect to see a nice ramp in profitability. So a long way of saying, the 2021 contribution from those patients, those direct contributions from patient, won't be all that meaningful because, again, they're in their first year with Oak Street, and I'd expect the patient-level profitability will be lower than it would be for our patient that's more tenured.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

OK. That makes sense. And then just maybe to ask a question or a follow-on question, something that was asked earlier about the consistency of the -- some of the costs that you're including in your guidance today. I guess if we were to -- how do you think about the boost in clinics? I mean, it looked like -- is this number that you're adding this year, now kind of the new way to think about new clinic growth going forward? So we should kind of be thinking about $50 million of costs next year as you add a similar number of sites? Or was this kind of a one-time seasonal opportunity?

Mike Pykosz -- Chief Executive Officer

I don't expect us to lower the number of new centers we put up in a subsequent year. I think if we're performing to the level we performed historically, we will keep increasing that number. And, obviously, again you know this better than I do, but if you think about the financial results of Oak Tree Health, right, it's really driven by how many mature centers you have and how many immature centers you have. And when you get a high enough portion of your centers mature, they can cover all of your new center growth and beyond, right? And so if you think about today, the 79 centers we have today, actually half of those centers are within the first two years of being opened, right? So when they're losing money.

And if we put up 40 more centers this year, give or take, right, and we have 120 centers at the end of this year, give or take, more than half of those, right? The 28 we put up in 2020 plus the 40 we're going to open up this year, so it's 68 of the 120 will not be in their first two years. So we're actually -- as we accelerate the pace of center ramp, we are increasing the number of immature centers related to mature centers. As I shared with you earlier, and right, our centers that are nearing capacity are contributing $9 million, give or take, each and so you can offset a lot of new centers with kind of a couple of mature centers. But obviously, as we kind of look to accelerate our growth into this huge market opportunity, that's the investment period.

And so we're definitely in 2021, we expect to in 2022 to kind of be in this investment period where we are putting out more interest, obviously, feeling very confident in our ability to operate and execute that number of centers by putting out more centers to meet what is just a massive market demand. And in a couple of years at those centers as I shared before, just the centers we put up this year, we expect to be $1.3 billion of revenue, $250 million of center contribution in five years. And so again, the model is really strong, but we feel like the right thing to do is to invest against putting out more centers. And so what our kind of -- the extra $50 million can describe and really kind of comment more than the baseline of 25 centers would it take to put up 40.

And again, so if your baseline is still 25 in future years, yes, you'll incur extra costs. But obviously, pretty soon, right, that cost will be offset by the investment we've made in prior years.

Tim Cook -- Chief Financial Officer

And, Kevin, one thing I'd add is it's relatively formulaic for us, right? And new center has a ramp. We see that ramp over time. So from our perspective, the number I gave you is just -- that I provided, it's just a function of, if we have opened more centers, what would the cost be. Nothing more than that.

Operator

David Larsen with BTIG, your line is open.

David Larsen -- BTIG -- Analyst

Hi. The cost of care increased by about 50% sequentially. And obviously, the medical claims expense was up about $20 million sequentially. Can you talk about what drove that? And how much of that was related to, like, say, inpatient admissions tied to COVID, if any? Thanks.

Tim Cook -- Chief Financial Officer

Sure. So the cost of care -- the largest driver there is just a function of the number of centers we opened in Q4 relative to Q3. So just to remind folks, we held off in opening new centers during the depths of the pandemic, if that's the right term for Q2, early Q3 of last year, we really started reopening centers in August. So you're seeing in Q4 a bunch of new centers coming on, as well as a full quarter of this synergy over in Q3.

So that's going to lead to greater cost of care. In addition to all the other costs that we have to manage a growing patient base. On medical costs for the quarter, we did see an increase in COVID related to the surge in cases between kind of call it mid-November to the end of the year. And then consistent with what the broader market had seen.

As we close the books for 2020, in early January or even as we wrap up our audit in mid-February, it's still hard to know exactly what claims you'll get in December related to COVID. So we did make an estimate from my comments of potential costs related to COVID in Q4 above and beyond what we've received. It was about $9 million. So you're seeing that in that Q4 number, too.

So that's going to be -- I'd expect a sequential increase in Q3 and Q4 just given the seasonality of our business, but also, you're seeing an incremental step-up because we did take a reserve against potential COVID costs that we might incur in Q4 that we hadn't received, but we felt it's prudent to do so versus having negative development in Q1 or Q2 of 2021 related to 2020.

David Larsen -- BTIG -- Analyst

OK. Great. And just one more quick one. Under MA, I think you're getting about $12,000 a year per patient in revenue.

What is it under direct contracting, please?

Tim Cook -- Chief Financial Officer

Yes. So in M&A, it's probably closer to the average base is probably closer to $14,000, like $1,200 per member per month. So about closer to $14,000, $15,000 per year. Direct contracting, we don't know.

It's a simple answer. Yet we'll know here shortly in a couple of weeks, but what we would tell you is that for a voluntary aligned patient, we would expect the revenue to be greater than that because the withhold from CMS is 2% versus what we typically experience with a health plan, which is closer to 15%. That being said, we think the medical cost will also be greater because traditional Medicare is more of an open access product versus an MA product. Most of our patients are in HMO, which is more restrictive.

You tend to see higher medical costs to the extent that the plan design is more open. So we expect higher revenue from those direct contracting patients, higher medical cost. The net of those two, we'd expect to be about the same, yes. I'd say that that's predominantly for voluntary line patients.

There are some program differences between voluntary-aligned and claims-aligned. We'd expect the claims-aligned patients should probably be a little bit inferior to what we expect from the voluntary-aligned. But again, a lot for us to learn over the coming months as we get more data from CMS as the locations were actually -- supposed specific patients are aligned to us in what the underlying economics of each individual patients are.

Operator

Richard Close with Canaccord Genuity, your line is open.

Richard Close -- Canaccord Genuity -- Analyst

Yes. Thanks for the questions. Maybe to go back to Ryan's question on the core cohorts performing better. I was just curious if you could maybe give some description of the different markets or geographies.

Are you seeing any major differences in the performance of centers based on certain states or, what not, new and existing markets?

Mike Pykosz -- Chief Executive Officer

No. And I think that's one of the reasons we have so much confidence in our ability to expand. We really see little of no variations between markets. Actually, you'll see more variations within vintage between centers in the same market, right? And so what we see is the kind of the needs of our patient demographic are similar across markets, both from a patient experience perspective, how we can offer something that is much more compelling than a traditional doctor's office and from a care perspective, how we can generate much better outcomes.

As I think while a lot of markets are kind of different organizations of how healthcare system is organized and how primary care fits within hospital systems, etc. Kind of from a patient perspective, there's not a lot of differences, and we're able to make a big difference. And so what you really see is that a lot of -- one, we're incredibly consistent across our centers. All of our early centers are profitable.

We've never had closed the centers, etc., etc. But I think even when you look at the variations between centers, it's usually driven by things like kind of the leadership in the center or the team in the center. And it's pretty actually – I won't say easy, but it requires focus and management, but the levers to turn around are pretty similar. If you follow the Oak Street care model with Fidelity, you'll get great results.

We have all the technology, tools, reporting, dashboards, etc., to kind of monitor that. And so again, we see a lot of consistency across all of our different markets, whether it's Dallas or North Carolina or Philadelphia or Flint, Michigan or Kingston, Ohio or kind of these are all very different places, they all see very similar results.

Richard Close -- Canaccord Genuity -- Analyst

OK. That's helpful. And then, Tim, just on the direct contracting and Mike's comments on 6% to 7% for the year and then 2% to 3% per quarter going forward. It sounded based on your comments that there was some opportunity for that number to come in ahead of the targets you just stated.

Am I looking at that correctly or no?

Tim Cook -- Chief Financial Officer

Yes. So I'd say, look, there's a lot of movement between 13,500 to kind of take the midpoint of the range, 6,500. And so our best guess is we end up between 6,000 and 7,000 based upon all the sort of inferential math we're doing. Is it possible that's higher? Or I mean, I guess, it could be lower, too, right? Those are possible.

I mean, we're pretty close at this point. So we hope we're making -- our math is -- well, I know the math is right, but the assumptions underlying the math are accurate, but we'll obviously know more. I'd say yes, there is the potential that we could do better, of course, either through faster patient growth or through some of those patients that were excluded rolling in over the course of the year. I think it depends on what you'd see, Richard.

So I mean, if you were willing to assume 2,000 per quarter, maybe of upside, is there upside above and beyond 3,000? Yes, theoretically. So a lot to learn. So yes, it is possible. It's the simple answer.

We'll know more as we continue to progress throughout the year.

Operator

Gary Taylor with J.P. Morgan, your line is open.

Gary Taylor -- J.P. Morgan -- Analyst

Hi. Good morning. I wanted to check on a few things with direct contracting. So just listening to the conversation about your expectation around the per member per month.

The accounting is finalized on that, that you'll have the grossed-up revenue per member, per month in your net revenue. That's how the revenue recognition will work?

Tim Cook -- Chief Financial Officer

Hey, Gary, it's Tim. It is not final. We have had conversations with our auditors. We've been through one or two rounds.

We are working on getting the file determination. Candidly, we've just been more focused on getting through our last follow-on offering, as well as through this earnings period. Obviously, we need to have that determination made here shortly because we're going to close our books for -- or start our accounting for Q2 when the program goes live, no changes to our expectations based on those conversations that it will be treated the same as our MA book of business, where we would recognize the full premium as revenue and obviously, the full medical cost is medical expense.

Gary Taylor -- J.P. Morgan -- Analyst

And if you're around this $1,200 per member per month, with voluntary a little above line, a little below, I'm sort of ballparking about $60 million of revenue contribution for the year just given sort of the phased enrollment. Is that about what you have embedded in your '21 revenue guidance?

Tim Cook -- Chief Financial Officer

Yes. I'd say you're within the ballpark here. It's probably a little bit higher. I'd say we would expect -- remember, we expect voluntary -- $1,200 is what MA is.

We expect voluntary to be above that, right, given the differences in the discounts with an MA plan versus the CMS. So from a revenue perspective, it's probably a little bit more than what you mentioned, just given that dynamic, but you're doing your math right.

Operator

John Ransom with Raymond James, your line is open.

John Ransom -- Raymond James -- Analyst

Hey, good morning. You're rolling out this diabetes solution. How do you feel philosophically? At last count, they were exactly 8,000,412 point solutions out there. How do you think about kind of the build versus buy when you integrate those solutions into your top health cost management?

Mike Pykosz -- Chief Executive Officer

Yes. So I mean, we do have a very comprehensive diabetic approach as well. The program we're talking about is end-stage renal disease or the dialysis. But regardless, for any program we think about, look, we always want to push ourselves and say, is there something we can get on the market that is going to be as effective or more effective than we can build ourselves because there's no reason to reinvent the wheel or put a lot of our energy into building something.

So we're always looking at, like, what are the solutions out there and then also, how important is it to integrate that solution into our overall care. And I think one reason why we have been so successful at Oak Street Health is we are not an aggregation of dozens of point solution programs that are all siloed, but everything we do is integrated together. So our behavioral health program is more successful and impactful because it is completely integrated with our disease management programs and with our transition programs and with our in-home care and telehealth program, etc., etc., etc. So I do think it's something where your whole is much greater than sum of the parts.

I think it's a mistake that healthcare made generally is having a lot of parts, but those parts don't necessarily talk and a lot of times, the same people, right, that have the worst outcomes and drive a lot of the cost and really need the most help, had multiple of these problems, and they all adapt to each other. So I think that that's a really important aspect of why Oak Street is successful in how we think about programs and how we integrate it. So in the extreme example I've given you, I don't ever expect have an MRI at Oak Street Health, an MRI machine, because there are more MRIs in Chicago than the entire country of Canada. We can get great access to them.

And we in having an MRI is not going to be integrated to our care mall, right? So while I said plenty of radiology salespeople calling Oak Street over the years and tell us how much money we can be making by capturing the radiology volume on our patient base. That is something we'll never do because there's plenty of them. It will only add more cost to the system. But what we did do is we built to be a helper and we're leveraging social workers off the base of that program, not reimbursable like fee-for-service, not something you see a lot in the community, but actually, you can make a huge difference to your patients.

And that difference is magnified when it's closely integrated with the disease management programs and the overall longitudinal primary care. So that's a long answer to your question about how we think about it is we're always assessing. Is there a better solution we can buy and can kind of integrate with our model? And we feel like we can do it really well ourselves, and it's incredibly important that it's integrated. That's when we go on and build ourselves.

Tim has given me the look that we are already running overtime. So I think at this point, we probably need to end the questions. We really appreciate all the engagement. We're really excited about the fourth quarter and more importantly, we're really excited about 2021 beyond Oak Street because again, I think we've really demonstrated the scalability, portability and effectiveness of our model, but we are not even starting to scratch the surface on kind of the demand and need for what we do.

And so we're really excited to continue to invest to bring in some more people. I'm very confident we can kind of continue to keep improving our results while really expanding in a big way. So everyone on the Oak Street team is excited, and hopefully, we have more exciting to share. So thank you, everyone.

Operator

[Operator signoff]

Duration: 70 minutes

Call participants:

Mike Pykosz -- Chief Executive Officer

Tim Cook -- Chief Financial Officer

Robert Jones -- Goldman Sachs -- Analyst

Sean Wieland -- Piper Sandler -- Analyst

Ricky Goldwasser -- Morgan Stanley -- Analyst

Justin Lake -- Wolfe Research -- Analyst

Ryan Daniels -- William Blair -- Analyst

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

David Larsen -- BTIG -- Analyst

Richard Close -- Canaccord Genuity -- Analyst

Gary Taylor -- J.P. Morgan -- Analyst

John Ransom -- Raymond James -- Analyst

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