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 involved investors made headlines and got you invitations to the few top conferences and premier cocktail parties. Then it was the healthcare funds growing from health systems or Big Tech, with deep pockets and longer timelines. Then healthcare attracted VC funding. The saying in the field was that with VCs 98 percent of the time, you accepted their money under the condition that for them, it was 18 months and out to an exit or a path to Big Money. Now it is even less.
Even with this ‘bedside technology’ with a clear path to reducing highly expensive ER/ED admissions in long-term care–a major CMS goal–by over 50 percent and saving several millions per year per facility, additional longer-time frame funding wasn’t in the offing despite a hefty Series A in 2016 and Series B in 2017 with investors like Redmile, Index Ventures, Refactor Capital, and Y Combinator, including 23andMe’s Anne Wojcicki and actor/investor Ashton Kutcher. Perhaps, as Dr. Peck put it in the CNBC article, it’s the difference between immediate fee-for-service revenue versus longer-term value-based care which is built on savings and outcomes for Medicare, Medicaid, and private insurers, even for (or especially for?) SNFs.
Another view is that it’s yet another example of Series B having trouble moving to Series C, despite Rock Health’s cheerleading. Which leads back to The Digital Health Funding Bubble this Editor saw in the 2018 funding trends despite all the seltzer and the bigger, fewer deals. In the context of Call9, a few excerpts come to mind:
What is the largest divergence from reality? The longer term faltering of health tech/telecare/telehealth companies with real books of business.
All too many companies apparently cannot get funding or the fresh business guidance to develop. Beyond the Rock Health list and the eternal optimism of new companies, business duration correlates negatively with success.
Call9 has reminded us that Reality Bites even When It’s Fizzy.