This ambitious team set out to transform the way ER services are delivered to Nursing Homes
|BattleScars||Jul 26, 2019||4|
The narrative below is based on primary research and first hand accounts from employees, management, and investors, who spoke both off and on the record. A special thanks to Tim Peck, Call9 CEO, for being so generous with his insights and reflections.
Background: Call9 Medical was launched in 2015 out of the summer batch of YCombinator. The company originally set out with the noble mission of reducing the number of ER visits by elderly patients, and in turn, saving the healthcare system millions of dollars annually. The broader vision was to shepherd the elderly population to a value-based care model of healthcare delivery.
The founders were both trained physicians and the CEO actually spent 3 months living in a nursing home to develop deep empathy with the pain points of all stakeholders in a Nursing Home — The CEO, administrator, medical staff etc.
An Abbreviated Timeline of Call9’s Iteration Journey:
An iPad to video conference ER DOC and support staff + EKG monitor & ultra sound machine for bedside laboratory tests
First Revenue Model
Subscription from nursing homes, hotels, and schools + medical reimbursements
An iPad to video conference ER DOC and support staff + EKG monitor, ultra sound machine, electronic stethoscope and other equipment.
Second Revenue Model
Subscription from nursing homes & medical reimbursements
Call9 moved away from supporting schools and hotels. The low frequency of use for schools and nursing homes couldn’t justify the cost of acquiring those customers.
A software extension for nursing home EMR systems to manage data associated with Call9 care + An iPad to video conference ER DOC & support staff
Third Revenue Model
Subscription revenues from nursing homes for both iPad service & EMR Extension + medical reimbursements.
Part of Call9’s ambition was to assemble distributed teams (Physicians, nurses, social workers) to care for a nursing home resident. The team recognized early that this approach requires a seamless handoff — When one team signs off, the sequential team must assume responsibility for the continued care of the patient. Needless to say a canonical source of truth is needed for the data attached to a Call9 episode of care. So, Call9 created an integration with the three largest EMR’s for skilled nursing homes. The integration also served to give visibility to nursing home administrators on the status of their residents.
The company also expanded into Albany and Syracuse which afforded them the ability to practice being in a different geographical location outside of the New York Metropolitan area. Needing to nail a regional launch playbook would become imperative as the priorities shifted towards scaling, as you’ll see below.
The Valuation Handcuffs
Call9’s early success attracted the interest of investors, who some have said encouraged the company to raise a Series A round in 2015 — arguably before the funding was warranted. Another growth round came in 2017 with the series B.
Naturally, with a growth round of financing comes a shift in expectations for a company to grow into its paper valuation. After the series B, Call9 was serving dozens of nursing homes but needed to reach sufficiently large populations. To do this, the company sought to partner with insurance companies to get distribution. Some smaller insurance companies agreed to reimbursements anchored to value-based care, but the juggernauts? They encouraged Call9 to first enter into fee-for-service contracts with them. The logic being that fee-for-service would allow Call9 to grow its network and eventually migrate to a value-based care model.
Wrong Tools for the Job
Offering fee-for-service isn’t as simple as turning a switch on. Processes need to be reimagined and different features and tools are required. To implement this model, the company brought on leadership with traditional backgrounds from the healthcare industry. By most accounts, these were the wrong skill sets for the task at hand.
Discord Amongst the Ranks
The company was founded with the mission of reducing the cost of the healthcare system through a value-based care approach. Yet, they now found themselves in the precarious situation of having to support a fee-for-service model in order to execute against their original charter. While the company found some short term success in offering a fee-for-service model, many of their customers and other stakeholders were left disenchanted.
A Moment of Truth
By most accounts, it became clear to Call9 leadership that the transition to a fee-for-service model would be a long march, followed by a longer march to transition back to a value based care approach.
The infrastructure needed to build out a fee-for-service network state by state isn’t trivial and as Mark Pincus once said, founders can often find themselves in the position where they’re building a company they don’t want to work with.
Perhaps the learnings from Call9 can be boiled down to the following:
The age old adage in startups which is — Timing is everything
Value-based care really only received the legislative fortitude it needs with the Affordable Care Act. The legislation was phased into effect over four years. It may have just been overly optimistic to think that the hairy value chain known as the US healthcare system would be ready to adopt it within a few years.
The funding paradox
Call9 isn’t the first company to listen to the advice of, “If there is money there…take it” or “The best time to fundraise is when you don’t need to.” Yet, with funding comes expectations and no one had expected this wrench in the plan. The wrench being the need to depart from the original mission (value based care —> fee-for-service) to eventually achieve the original mission (value based care).
Tim has shared that this isn’t the end of Call9, just the end of this chapter. There are several learnings from the fee-for-service approach that he’ll leverage in the next permutation of Call9.
I’m excited to see what is to come in bringing his original mission to fruition. I tip my hat to him and his team for embarking on a journey to tackle such a meaningful problem.