A Start-Up Fails (But Is Rebranding) — A Case Study with Tim Peck

Our new host, Logan Plaster, chats with Timothy Peck, MD, co-founder and CEO of Call9 Inc, about the challenges he faced with his start-up company. (This episode is a cautionary tale of the roller-coast ride that almost all health care start-ups face at one time or another. Peck's company recently shut down and is now figuring out how to rebrand with a different payment model (working with ACOs) in a way that could generate cash in the short-term.) Peck started Call9 to try to stem the rising tide of transferring patients from nursing homes to hospital emergency rooms. Calls9, in effect, ran a remote emergency department that dealt with patients and provided palliative care, while electronically connecting family with their loved ones. Call9 raised more than $30 million from investors, Peck notes, but was forced to shut down, in part, because of the transition in health care today from fee-for-service to value-based care, in which providers are compensated for outcomes and instead of services provided. Call9 was launched as a value-based company that entered into contracts with smaller providers but found resistance from other large providers. This group only offered Call9 a fee-for-service option and were seeking involvement of a larger patient population. Call9 changed its culture — at least temporarily — to be fee-for-service based, but that metamorphosis did not prove fruitful. Having created something for the company that wasn't necessarily in the best interests of the patients it was serving had an "eroding" effect on everyone, according to Peck. When the company pivoted to FFS, that made it difficult to keep up the valuation Call9 had established for its business as a value-based company. Peck also discusses how the RUSH Act, which is designed to prevent unnecessary hospitalization of Medicare patients in nursing homes, could help save Medicare money and ultimately benefit patients with value-based care. This episode is emotionally intense and should be listened to for its discussion of value-based care v. FFS; challenges and opportunities for health care start-ups; and a personal story of an entrepreneur on a mission to save lives.