SNF emergency telehealth provider Call9 shuts down most operations, after $34M raise (updated)

Is it a symptom of a bubble’s downside? In an interview with CNBC, Dr. Timothy Peck, the CEO of Call9, profiled in TTA only a month ago, confirmed that his company will be shutting down operations. Call9 provided embedded emergency first responders in skilled nursing facilities (SNFs) on call to staff nurses. The first responders not only could provide immediate care to patients with over a dozen diagnostic tools, but also would connect via video to emergency doctors on call. 

Headquartered in Brooklyn, the shuttering of the four-year-old company has laid off over 100 employees as it winds down operations. They claimed 142,000 telemedicine visits and 11,000 patients who were treated via its services. In the past few months, Call9 had inked deals with Lyft for patient transportation and was expanding to Albany NY. They also operated a community paramedicine division utilizing their emergency doctor network.  

This Editor can now reveal that through a reliable industry source, I was informed of Call9’s difficulties earlier this month. Not wanting to ‘run with a rumor’, I contacted Dr. Peck. He confirmed to me information that later appeared in the CNBC article: that the company was refining its model in the face of a change in previous funders and working with some new partners to stay in a model with embedded clinical care specialists in nursing homes. While they would scale back, they still had current contracts. However, the changes in their model would mean that the company would be in a ‘bit of a stealth mode’. After we discussed the business situations that most early-stage health tech companies have faced with funding, we agreed to touch base in a few weeks when things developed.

CNBC, with a different source, had essentially the same information from Dr. Peck on the winding down of the company but in this case also confirmed layoffs, including a ‘pivot’ of the company into a different model around technology in nursing homes. They also confirmed that a part of the company, Call9 Medical, will remain in operations.

Update: Skilled Nursing News had additional detail on Call9’s partnerships which included SNF providers Centers Health Care, CareRite, and the Archdiocese of New York’s long-term care arm, ArchCare. Their first client was Central Island Healthcare, where Dr. Peck lived for three months testing the model. The article goes on with Central Island’s executive director explaining that he is now seeking a telemedicine provider, as they adjusted their services to Call9’s capabilities.

Payer providers included Anthem, Blue Cross Blue Shield, and Healthfirst, plus some Medicare Advantage plans, splitting the savings from avoiding unnecessary ER admissions. Another appeal made by the company for its services was to keep in place higher acuity–sicker–patients in SNFs who would otherwise have to go into the hospital.

As our Readers know, these pages have covered the comings and goings of many health tech and app companies. Some succeed on their own, are acquired/combined with others and go on in different form, or are bought out at their peak, leaving their founders and some employees cheerful indeed. On the other hand, and far more common: the demise of some is understandable, others regrettable, and nearly none of them are cause for celebration in our field–Theranos and Outcome Health being exceptions. This Editor has been a marketing head of two of them (now deceased except for their technology, out there somewhere), and has discussed marketing, funding, and business models with more startups and early-stage companies than she can count.

If anything, investors have less patience than they did back in the Grizzled Pioneer period of the early 2000s, when a $5 million round put together from a few personally (more…)

CEO change at GE may mean delay or cancellation of GE Healthcare spinoff–for good or ill

The well-publicized and unvarnished dumping of GE‘s CEO John Flannery after only 13 months has led a leading research analyst to predict that the planned GE Healthcare spinoff will be delayed or even halted. Analyst Jim Corridore of CFRA stated on CNBC that incoming CEO Lawrence Culp, a recent board member who was CEO of Danaher, a scientific, industrial and healthcare conglomerate, may decide that the division should stay. 

At $19 billion in revenue with a profit of $3.4 billion, 15.8 percent of GE’s total sales and 43.2 percent of its operating profit in 2017, the wisdom of a GEHC spinoff always seemed doubtful. The selloff was in line with Mr. Flannery’s strategy of refocusing on GE’s industrial and energy business. However, this was not going terrifically well, at least in the BOD’s view, with a sluggish turnaround, shares dropping off the S&P 500 and the Dow Jones Industrial Average, projections of missing year-end targets, activist investor Nelson Peltz hovering, and exacerbated by problems at GE Power with its new line of natural gas-fired power turbines. Perhaps a few were doubly offended by the selloff of the corporate jets (relative pennies) as well as the expensive and frankly hard-to-justify corporate HQ move from Connecticut to Boston.

Mr. Culp is apparently well-thought of, having retired after a highly successful 14-year run at Danaher, but he has his work cut out for him. He will also need to quickly judge whether to continue the GEHC spinoff process or bring the cattle back into the fold, as the drive was well underway down the trail. Somehow, spinning off 40 percent of your operating profit seems strategically foolish given a plummeting share price.

A jaundiced opinion. Perhaps as an outsider, Mr. Culp can change the ‘death star’ culture at GE. This Editor, in her brief encounter with GEHC as part of an acquired company (Living Independently Group, developer of QuietCare, circa 2008-9) found their business practices and many of their people to be both ruthless and self-referential to the point of stumbling blindness. The LIG acquisition was part of an ill-considered and perhaps ego-driven experiment by GEHC’s CEO at the time to get into home, remote monitoring, and assisted living health, a developmental, small-scale, early-stage area. It was obvious that GE’s vaunted methodology and hospital-based acute care experience were worse than useless when it came to understanding what is still a developmental area. The home health businesses were sold, closed, or (in the case of QuietCare), spun off into a joint venture. That CEO and a few other people leveraged it well; LIG’s employees, shareholders, and others at GEHC did not. 

As Star Wars fans know, Death Stars are destroyed in the final reel.