Eren Bali, CEO of primary and urgent care startup Carbon Health, is fresh off a Series D round with $100 million from CVS (CVS) and a partnership agreement that would bring its services to some of the retail health giant’s stores.
The partnership marks CVS’s latest investment into medical and telehealth services. But it also gives Carbon the funding it needs in the current funding environment — a markedly cooler year for biotechs and digital health as the pandemic frenzy has worn off.
“When the capital markets crashed this year, we had to change route and open fewer clinics, slow down our growth. Pretty much completely a reaction to public markets,” Bali told Yahoo Finance in an interview Tuesday.
Rock Health, which tracks digital health investments, said in a recent report that 2023 is going to be a slow year.
“With recession concerns looming, there’s a chance that 2023 could be digital health’s lowest venture funding year since 2019,” the report said.
Carbon, which started in 2015, bills itself as a hybrid health-care provider combining in-person care with virtual visits focusing on primary care and urgent care. The company originally focused on chronic care, public health, and remote patient monitoring — all three of which are now folded into its primary care strategy.
During the pandemic, the company saw a surge of investment and expanded into 13 states. It first gained attention in 2020 for stand-up COVID-19 testing sites.
But now, the company has been forced to pivot. In part, Bali blames the lack of evolution the insurance industry.
“I think on the payor side there’s a lot of friction to provide more innovative forms of care when you have to go through a fee-for-service model, where we have to bill for revery interaction,” Bali said.
Instead, Bali hopes the global payment model, known as value-based care, can gain more traction so the efforts he is putting into the various types of care can be rewarded.
“While traditional primary care providers really rely on visits, we believe what happens in between visits … is what everyday health care is about,” he said.
That type of care is not billable in the traditional insurance environment, Bali noted.
Meanwhile, the company is still focused on getting in the electronic health record space and licensing technology to other providers.
“We are already in a lot of conversations and that is definitely going to be a huge growth area for Carbon Health,” Bali said.
Follow Anjalee on Twitter @AnjKhem