Anyone who has experienced the U.S. healthcare system has no doubt realized just how complex it is. Navigating healthcare can be extremely difficult, and that is especially true when it comes to surgery, where it’s often not clear who may be the best provider or how much the procedure will cost. This leaves the patient is in the dark about their own care.
That’s why a number of large employers set up what are known as Centers of Excellence (COEs), where they are able to contract directly with providers in order to provide price transparency to the market. These programs generate cost savings for employers, while also improving the quality of care and experience for employees. The problem is that, for the most part, they were only available to large employers who were able to negotiate such deals.
Carrum Health is on a mission to change that. The company has taken the concept of COEs, and created a platform that makes the model scalable to employers of all sizes.
On Wednesday, the company announced that it has raised a seed funding round, taking $6.5 million from Wildcat Venture Partners, with contributions from venture capital firms SJF Ventures and SpringRock Ventures. This is the company’s first funding since being founded in 2014.
The idea behind Carrum, the winner of the People’s Choice Award at Vator Splash Health in 2016, is to take the concept of COEs and to expand them beyond just the largest employers in the country.
Through Carrum’s platform, self-insured employers, and their employees, can purchase planned surgeries directly from top-quality providers. The company curates data to identify the top-tier providers worthy of the COE designation, and then contracts with them directly using standard bundled payment arrangements.
The company is able to offer high-impact bundles and takes a regional focus, which allows it to bring together employers and providers within the same geographic area, giving employees access to top quality providers without the cross-country flight. That is a key aspect in making the model more effective and employee friendly.
Carrum offers large benefits for employers: every procedure saves employers between 30 to 50 percent on average, depending on the surgery and their historical payments. For employees, Carrum also provides support and guidance for the patient.
Over the past year, Carrum Health has seen massive growth, going from one employer in early 2016 to currently serving more than 400 employer groups on the West Coast of the U.S.
The company currently offers over a dozen bundles in orthopedic, spine and cardiac care, and it says it will use the new funding to expand its platform to offer additional acute care bundles in orthopedic, spine and cardiac and adding key service lines such as bariatrics and maternity.
The company is looking to expand to those areas in particular as they are where the company “can make the biggest impact,” Sachin Jain, founder and CEO of Carrum Health, told me.
“Procedures that are high volume, high average cost, high cost-quality variation and are bundlable. We want to focus on them first because that’s where Carrum can make the biggest impact through standardized care,” he said.
“We’re excited about this funding because it positions us to meet the demands of current and future customers by expanding our bundled payment offerings. We believe expanding into bariatrics and maternity in addition to going deeper in orthopedic, spine and cardiac will help us continue to deliver even bigger value on per member basis.”
In addition to expanding Carrum’s bundles, the new capital will also go towards enhancing the company’s technology and operations platform while improving its analytical insight capabilities. Carrum will also be expanding geographically, moving beyond the West Coast. Jain didn’t say specifically where he was looking to go next, only that the company will be “continually evaluating and selectively picking our spots to expand where it makes sense.”
“While current clients are asking for more bundle offerings, there is significant interest among employers and providers outside the West Coast wanting Carrum to offer its solution in their local markets. We want to be very thoughtful about the next iteration of bundles in current markets and how broadly make our solution available. We are constantly evaluating different markets and expanding where it makes sense,” said Jain.
Ultimately, what Carrum wants to do is bring transparency to the healthcare marketplace for both employers and their employees.
“Carrum’s goal is to become the go-to marketplace for healthcare bundles and dramatically improve patient outcome and experience in the process. In five years we want to be the preeminent bundled payment marketplace solution nationwide and envision this concept expanding to every area of care continuum that lends itself to bundling.”