Employers are facing soaring healthcare costs while the quality of the patient experience and health outcomes are not necessarily rising at the same pace.
"Nowhere is this more apparent than in the case of the surgical and complex care space," said Sach Jain, founder and CEO of Carrum Health. "For someone who is diagnosed with a condition that requires a surgical intervention today, it is typically a very frustrating experience. You don't know who the good doctors are, you don't know what will happen before, during or after the surgery."
There's very little price transparency, so patients are often uncertain as to how much the surgery will cost even with insurance, he noted.
Carrum Health developed a service that enables employers to purchase healthcare services and specialist medical care directly from top providers for a bundled price. Utilizing a Centers of Excellence network, with an all-inclusive pricing model and 30-day warranty on care, Carrum members receive surgical and cancer treatment guidance and coordination through the entire care journey with upfront pricing, according to the company.
Self-insured companies can offer their employees the best care from top surgeons while effectively managing their spend, executives said.
"We match patients with the best doctors, typically the top 10% of doctors and providers across the country, and we provide them with tools and a concierge care team to help guide them through the entire episode of care. From a patient standpoint, you don't have to worry about the quality, the process, or the financial stress, you can just focus on getting healthier," Jain said in an interview.
The company launched in 2014 and has seen rapid growth.
"Our COE solution is proven to deliver significant savings on healthcare spend and generate measurable cost savings within the first year of deployment. In a time when employers are looking to consolidate benefits, we've seen 100% year-over-year growth in new customers and zero churn of existing customers," Jain said.
Over the last three years, Carrum Health’s compound annual growth rate in revenue has been 90% to 100%, he said.
The company clinched $45 million in an oversubscribed series B financing to build out its oncology benefit offerings and scale its surgical care service lines. The company has raised $96 million to date.
'Historically, Carrum Health's focus has been on specific specialties including musculoskeletal, orthopedic and spine, bariatric and cardiovascular. Over the last two-plus years, a lot of employers have been coming to us asking if the service could be extended to oncology, which is emerging as a top spend area for employers," Jain said. The company launched its oncology offering in 2021 and now plans to aggressively invest in that service, he noted.
The company partners with top cancer care providers across the country, including AccessHope, City of Hope, Memorial Sloan Kettering Cancer Center and the University of Chicago Medicine. In 2022 alone, the company added six new partners: CVS, Included Health, Accolade, Rightway, Sword Health and Virgin Pulse.
Carrum Health's unique value-based program addresses acute care scenarios, such as orthopedic surgery and cancer treatment, which account for nearly half of total employer spend. According to a published study by the RAND Corporation, Carrum Health's Centers of Excellence solution not only reduces unnecessary procedures by as much as 30%, leading to better patient outcomes, it can also result in savings of up to 45% per care episode.
"Every business in America is looking to manage costs, but they can't afford to sacrifice the benefits they offer employees. Carrum Health firmly believes that the path to reducing healthcare costs starts with delivering higher quality care," Jain said.
He added, "Employers are asking for more value from every single benefit dollar they spend."
In response to strong employer demand to control and contain growing musculoskeletal spend, two years ago the company partnered with Hinge Health to pair its MSK surgery bundles with the startup's digital MSK clinic. The two companies provide a fully integrated, end-to-end digital MSK solution that offers employers an affordable and complete clinical care model, the companies said.
After two years of explosive growth during the COVID-19 pandemic, the health tech funding market has contracted and VC firms are taking a more cautious approach to investments.
Jain acknowledged the funding environment has dramatically changed.
"We are certainly not in the same environment where we were roughly two years ago," he said, adding that investors are looking for startups with an immediate value proposition. Ongoing demand for solutions that help employers and health plans control health costs, and Carrum Health's work as a value-based care player positions it well in the current market, Jain said.
"Whether you are an employer or health plan or whoever who are in the healthcare ecosystem, you are looking for an impact this year, not in future years," he said.
Health equity also is top of mind with employers as they want to ensure employees have access to quality care, Jain noted.
"We take a lot of pride in how much equity we create because regardless of whether you have a white collar job or a blue collar job, you have access to the best doctors in the country like Johns Hopkins, Cleveland Clinic, Mayo Clinic and the Hospital for Special Surgery without having to worry about any out-of-pocket expenses," he said. "We hear stories about patients who are putting off getting a certain procedure for years because they cannot afford the out-of-pocket expenses. Solutions like Carrum Health help to make care more accessible, especially for folks that are strained by putting money on the table for out-of-pocket expenses."
The funding round was led by Omers Growth Equity, and investors Revelation Partners, Tiger Global, Wildcat Venture Partners, Cross Creek and SpringRock Ventures also backed the round.
Teresa Lee, managing director of Omers Growth Equity, will join Carrum Health's board of directors.
"With its Centers of Excellence network, digital platform and data-driven surgical episode bundling capabilities, Carrum Health has created a solution that allows for real-time and measurable value to employers, as well as a superior patient and clinician experience," Lee said in a statement. "The company is well-positioned to transform how healthcare is delivered and paid for, and we look forward to supporting the management team in realizing that vision."