Startup Call9 shutting down telehealth services to nursing homes

Call9, a startup that provides telehealth services for the nursing home industry, is shutting down operations, according to CNBC.

The company raised $34 million in venture capital but struggled to secure additional funds to scale its business and manage the high cost of running a digital healthcare firm, reports CNBC's Chrissy Farr.

Call9, founded in Silicon Valley and then headquartered in Brooklyn in New York City, laid off about 100 employees in the process of winding down, CNBC reports.

Call9 launched in 2015, and the company uses telehealth in the nursing home space to provide facilities with 24/7 access to palliative care physicians. As part of the service, the company also embeds a paramedic, EMT or nurse in the nursing home to provide in-person care.

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Company co-founder and CEO Timothy Peck, M.D., an emergency room physician, lived in a nursing home for three months before creating Call9.

Call9's technology platform aimed to increase access to care and improve patient outcomes while also helping avoid unnecessary and harmful hospitalizations and reduce healthcare costs.

On average, nurse to patient ratios in nursing homes are 1 to 36, and most do not staff on-site physicians, Peck told FierceHealthcare in March. Through the telehealth service, remote palliative care physicians provide acute care services and have goal-of-care and end-of-life discussions with patients and family members, he said.

Peck told CNBC Wednesday that he will continue to operate part of the business, Call9 Medical, which employs doctors and provides medical care. He’s looking to potentially “pivot” the remaining assets into a new company, which would be similar in its focus on bringing technology to nursing homes but with a few tweaks, he said.

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There were several digital health startups that closed in 2018. Lantern Health, a digital mental health startup, shut down its commercial operations last August. The company got a second life in January when Omada Health integrated Lantern's cognitive behavioral therapy-based coaching into its platform through a perpetual licensing agreement.

CareSync, a Florida-based care coordination business, discontinued operations last June. CloudMine, a company that offered the ability to build digital apps through a HIPAA-compliant cloud-based healthcare platform, filed for Chapter 7 bankruptcy in November.

Peck told CNBC that the healthcare industry's slow transition to value-based care created challenges for his company and other startups as well. 

Peck said that value-based contracting is still early and slow, although he also said that it’s the “right thing.”

“We do still think that value-based contracting is better for the patient, for payers like Medicare and for the long-term health of startups. But we also know that fee for service can give you more revenue compensation in the short-term, and start-ups often feel that pressure to focus their efforts there," Peck said, according to CNBC.

Investors in Call9 included Redmile Group, Index Ventures, Refactor Capital and Y Combinator.