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Why did Call9 Fail?

What Happened To Call9 & Why Did It Fail?

January 24, 2025

Call9 was a telemedicine startup that aimed to reduce unnecessary emergency room visits by providing immediate medical care to nursing home residents through a video platform. Despite raising $34 million and initial success, the company struggled with high operational costs and securing additional funding, leading to its eventual shutdown.

What Was Call9?

Call9

Call9 offered a telemedicine service connecting emergency physicians to nursing home residents via a video platform. Its unique value proposition was reducing unnecessary hospitalizations, thus improving patient outcomes and cutting healthcare costs. Notably, Call9 raised $34 million and conducted over 142,000 telemedicine visits, treating more than 11,000 patients.

What Happened to Call9?

The story of Call9 is a compelling narrative of innovation, challenges, and eventual closure:

  • Founding and Early Success: Call9 was founded by Celina Tenev and Timothy Peck with the mission to reduce unnecessary emergency room visits for nursing home residents. The company raised $34 million from notable investors and conducted over 142,000 telemedicine visits, treating more than 11,000 patients.
  • Innovative Approach: Call9 utilized a video platform to connect emergency physicians with nursing home residents, aiming to improve patient outcomes and reduce healthcare costs. Despite its innovative model, the slow adoption of value-based care in the healthcare industry posed significant challenges.
  • Financial Struggles: Despite raising substantial venture capital, Call9 faced financial difficulties and struggled to secure additional funding. The company eventually ran out of cash needed to scale its business, leading to the layoff of approximately 100 employees.
  • Market Challenges: The nascent stage of value-based contracts and pressure from venture capitalists for quick returns created a disconnect between Call9's mission and financial sustainability. This misalignment contributed to the company's inability to maintain operations.
  • Lessons Learned: The experience of Call9 highlights the importance of aligning with partners who share a long-term vision. Founder Timothy Peck emphasized the need for strategic decisions that support the company's mission, a lesson learned from the challenges faced by Call9.

When Did Call9 Shut Down?

Call9 began winding down its operations in late June 2019, as reported by MedCity News on June 25, 2019. The official announcement of the shutdown was made shortly thereafter, with TechCrunch publishing an article on July 1, 2019, confirming the closure.

Why Did Call9 Shut Down?

  1. Inability to Raise Further Funding: Call9 struggled to secure additional financing, which was crucial for scaling its operations. Despite raising $34 million, the company ran out of cash, leading to the layoff of approximately 100 employees. The slow adoption of value-based care contracts further hindered their ability to attract investors.
  2. Slow Adoption of Value-Based Care: The healthcare industry's slow shift towards value-based care posed significant challenges for Call9. Their business model relied heavily on these contracts, which were not yet mature enough to sustain the company. This misalignment between the market and their innovative approach contributed to their financial struggles.
  3. Investor Pressure for Quick Returns: Venture capitalists' demand for rapid returns conflicted with Call9's long-term mission. CEO Tim Peck highlighted the pressure to abandon their value-based care model in favor of fee-for-service, which would have compromised their core mission of improving patient outcomes and reducing healthcare costs.
  4. High Operational Costs: Operating a telemedicine service with trained specialists in nursing homes was costly. The financial burden of maintaining these operations without sufficient revenue streams made it difficult for Call9 to sustain its business, ultimately leading to its shutdown.
  5. Market Competition: Call9 faced stiff competition from other startups offering similar outcomes-based services. Competitors like Cityblock were more successful in landing deals with insurance plans, making it harder for Call9 to secure a foothold in the market and achieve financial stability.

Lessons Learned from Call9's Failure

  • Align with Long-Term Partners: Ensure your investors and partners share your long-term vision to avoid conflicts that can derail your mission.
  • Adapt to Market Realities: Be prepared to pivot your business model if the market is not ready for your innovative approach.
  • Manage Operational Costs: Keep a close eye on operational expenses to ensure they do not outpace your revenue streams.
  • Secure Sustainable Funding: Focus on building a robust financial strategy that includes securing sustainable funding sources.
  • Understand Industry Dynamics: Stay informed about industry trends and shifts to better align your business model with market demands.
  • Balance Innovation and Practicality: While innovation is crucial, ensure your business model is practical and financially viable in the current market landscape.
  • Learn from Competitors: Analyze competitors' strategies and successes to identify opportunities and avoid common pitfalls.

We Shut Down Startups

Call9's journey underscores the complexities and challenges startups face, from securing funding to managing operational costs. When it's time to wind down, Sunset ensures a smooth transition by handling all legal, tax, and operational burdens.

Don't let the end of your startup be as stressful as its beginning. Book a demo with Sunset today and move on to your next venture with peace of mind.