Venture-backed telemedicine startup Call9 is shutting down

More than three years ago, we told you about Call9, a young, Palo Alto, Calif.-based telemedicine startup that wanted to reduce unnecessary visits to emergency rooms by those who call 911 most frequently, which is people in nursing homes.

The company’s co-founders — Celina Tenev, a radiology postdoctoral fellow from Stanford, and Timothy Peck, who worked previously as an emergency medicine physician and faculty at Harvard Medical School — met while working part-time for a now-defunct startup and shared a disbelief that the patient experience still typically includes spending several hours in an emergency room.

Unfortunately for Tenev and Peck and investors who wound up plugging $34 million into the startup —  including Index Ventures, YC, the YC Continuity Fund, Index Ventures, Joe Lonsdale and 23andMe co-founder Anne Wojcicki — Call9 is shutting down after failing to raise further funding. About 100 people are losing their jobs as a result.

The company, which provided medical equipment and a video platform (via iPad) that enabled doctors to talk with nursing home residents, says its struggle owed to the country’s very slow adoption of “value-based care” — in which doctors are paid based on patient outcomes — rather than the current “fee-for-service” model on which the healthcare industry still relies largely. As CNBC reported last week, Call9’s business plan involved landing deals with insurance plans to split the savings from avoiding an outcome like an unnecessary emergency room visit.

Still, the outlet noted that other startups are selling outcomes-based services to insurers with more success. Among them: Cityblock, a company that spun out of Alphabet and provides healthcare services to low-income people on Medicaid. Cityblock has raised roughly $85 million, including from Lonsdale’s fund, 8VC.