🏥 Value-Based Cardiology Care

Diving into the Karoo Health Model and talking all things value-based specialty care in 2025

PARTNERED WITH Happy Thursday, Hospitalogists! I'd like to apologize for my most grievous error I made on Tuesday. In fact, maybe the worst mistake I've ever made in Hospitalogy. I stated that the PGA Championship was at Oakmont when in fact, it's at Quail Hollow. Please, fellow golfers, forgive me. I got the U.S. Open and PGA mixed up. It will never happen again. Today's post is all about value-based specialty care with an emphasis on cardiology and Karoo Health (note: not sponsored). Enjoy! Was this email forwarded to you? Subscribe Here SPONSORED BY PHRMA When middlemen own it all, you lose.  Chances are your insurer and PBM are the same company. They also own big chain pharmacies – and are even buying up doctors' offices. As a result, a few big health care companies decide what medicines you can get and what you pay at the pharmacy counter.   It's time to protect patients and rein in the middlemen.  Learn more BLAKE'S BREAKDOWN The next frontier of value-based care is, of course, value-based specialty care (VBSC). We know the stats around the opportunity and level of spend present in downstream specialty care segments. In my '2024 state of value-based care enablement' piece in 2024, I talked about several companies in the value-based specialty care game across kidney care, MSK, oncology, and…cardiology.   Despite a tighter capital environment in recent memory, VBSC companies have managed to attract large rounds by pointing to the immense savings possible in specialty care. We're talking nine-figure raises and unicorn valuations for several kidney and multi-specialty players, and solid eight-figure rounds in oncology and MSK. Strategic investors (payors, provider incumbents) are also betting on these startups or forming joint ventures, which brings us to today.   Today we're taking a dive into the cardiology VBSC space - an emerging but rapidly growing area of VBSC. In cardiology, we see a combination of tech-driven entrants (Karoo, Heartbeat) and practice aggregators (Novocardia, USHV) likely to converge, with enablers partnering with scaled provider networks to deliver results. Cardiology value-based care is still early, but given heart disease prevalence, is a nascent and rapidly growing opportunity.   In particular, we'll be looking at Karoo Health, who, led by Ian Koons, has quietly built the largest network of forward thinking cardiologists in the country. And they're just getting started. So here's a primer on everything you need to know related to value-based specialty care and cardiology. Why Specialty Care is Embracing Value-Based Models Specialty care has historically been a fee-for-service stronghold – think procedure-centric fields like cardiology, orthopedics, nephrology, oncology. So why the shift toward value now?   Skyrocketing Costs & Outcomes Gaps: Chronic specialty conditions drive a disproportionate share of costs. For example, cardiology is the single largest driver of U.S. healthcare spending, and kidney disease treatment costs Medicare over $87 billion annually. Despite this spending, outcomes (like heart failure hospitalizations or late-stage kidney failure rates) could be vastly improved upon.   Success of Primary Care VBC: Models like Medicare Advantage, ACOs, and medical home programs showed that paying for value can reduce costs and improve quality in primary care. But while primary care accounts for only ~5-7% of healthcare spend, the specialists control the costly stuff (procedures, hospitalizations, specialty drugs). Expanding value-based principles into specialties is the natural next frontier. And of course, folks will hotly debate this topic til they're blue in the face.   CMS Pushing Specialty Models: CMMI has rolled out specialty-focused alternative payment models – e.g. Kidney Care Choices (CKCC), the Enhancing Oncology Model (EOM) for cancer care, and Transforming Episodes of Care Model (TEAM) for hospitals. Some are even mandatory (TEAM will require hospitals in selected regions to take bundled payments for certain episodes starting 2026).   More Risk in Medicare Advantage: Medicare Advantage enrollment just crossed 51%+ of Medicare beneficiaries (34+ million seniors in MA plans), growing at a 7.2% CAGR over the past 5 years (though growth is decelerating in recent years). MA plans bear full risk for members and are highly incentivized to engage specialists in value-based arrangements to control costs. As MA grows, so does demand for specialty value models (e.g. oncology care pathways, cardiac care management) that they can dump risk onto can save money. Zooming out, insurers have latched onto VBSC startups to gain capabilities they can't build in-house. A great example: Zing Health (an Illinois-based MA plan) partnered with Karoo Health in early 2025 to launch a cardiac value-based care program for its members in six states. Karoo will provide virtual cardiology services and care management to Zing's enrollees with heart conditions, with the two companies sharing risk. This exclusive partnership essentially makes Karoo the cardiac care arm for Zing's MA population. We've seen similar deals in kidney care and other specialties. For the health plans, these partnerships are quicker and more effective than trying to hire nephrologists or build a cardiology program from scratch.   Investors & Innovation Flooding In: There's been a surge of startup activity in specialty care enablement. New companies are proving that when you coordinate specialty care, add navigation and preventive services, and align financial incentives, you can actually reduce expensive events like hospitalizations, ER visits, unnecessary procedures, or push procedures into lower-cost settings. Early successes like value-based kidney programs cutting hospital readmissions nearly in half (or preventing CKD from progressing) or oncology care navigation saving millions in chemo costs are turning heads. Specialty care is too ripe a target for value-based transformation to ignore any longer, and both public and private sectors are leaning in. So next, let's dive into why cardiology is a particularly interesting and emerging sector of value-based specialty care. The Current State of Value-Based Cardiology Similar to other specialties, the talking points for VBC in cardiology are compelling.  We've all seen the statistics. Cardiovascular Disease (CVD) generates $251 billion in direct medical expense per year. 121 million Americans currently suffer from it, and 61% of the U.S. population is predicted to have some form of CVD by 2050. With these staggering numbers, it's not surprising that innovative payers and some government officials have finally made it a priority to address this issue from both a cost and humanitarian perspective.  However, payers, the government, and our society as a whole, is playing catch up. The shortage of enterprise solutions, with CVD-targeted value-based care technology and national cardiovascular practice networks, is slowing progress in driving meaningful change. We need to move faster, before the burden of CVD does irreparable damage, through insurmountable cost, to our healthcare system. In response to this crisis, as payors begin to take action, margins have begun to shrink in both traditional fee-for-service (FFS) cardiology and among risk-bearing primary care (PCP) groups. These fast-thinking payors have become the catalyst for adoption of cardiac VBC models, beginning the move away from both traditional FFS models and disease-nonspecific delegation into risk-bearing PCPs. And as a result, they're now looking to emerging specialty-focused solutions like Karoo Heath, possessing both the required VBC technology and cardiologist partner networks, as the right place to park cardiac risk. At the same time, health systems, fighting for financial viability under tight margins that are heavily dependent on surgical volume and seeing profits erode in non-invasive cardiology, are seeking a solution to achieve non-surgical profitability. This dynamic is why we're hearing so much about cardiology in the ambulatory environment - cath labs and the like. Until now, hospitals and health systems haven't had a mechanism to achieve these goals.  But in 2025, they are looking to diversify revenue and leverage ambulatory assets to the maximum possible benefit. Because cardiology is such an important specialty (high spend, high contribution margin) on the inpatient side, hospitals and health systems need to retain and play ball with their employed or aligned physician base. So players like Karoo Health are gaining strong momentum as a result as a partner to cardiologist groups.  The value prop from Karoo's side of the equation makes a lot of sense: they're a scaled provider of value-based cardiology services (500+ clinicians and physicians), can deliver a sophisticated enterprise-level offering, leverage their technology, and tailor their service offerings (even take meaningful risk) for their non-invasive cardiology business.  As a result, Karoo's ROI communicated to their enterprise prospects is that they help to generate financial return and meaningful margin where there was none previously, while guaranteeing throughput to those high-dollar surgeries that are the lifeblood for any health system. Spotlight on Cardiology: Karoo Health's Journey and the New Wave in Heart Care Let's go a bit deeper on Karoo Health and cardiovascular care with Karoo's journey since forming in 2022.   Karoo's Mission & Model: Founded in 2022, Karoo Health specializes in value-based cardiovascular care – essentially acting as an enabler for cardiology groups, payors, and risk-bearing entities to thrive under cardiac value-based contracts. Karoo deploys a hybrid care model: it provides on-site support to cardiology practices (integrating with their workflow) plus virtual care services between visits. Its secret sauce is a proprietary tech platform called Kohere.ai that facilitates real-time patient monitoring, predictive analytics, and communication among care teams. In plain English, Karoo combines specialized care managers, analytics, and 24/7 tele-cardiology to manage high-risk heart patients, aiming to prevent costly events like ER visits, strokes, or heart attacks.   Network Footprint: By mid-2023 (at launch), Karoo had 100+ providers signed on (including 75 cardiologists) in its initial markets of Arizona and New Mexico. These were likely forward-thinking cardiology groups willing to pilot value-based care. Ian anticipated expanding to 5 states by the end of 2023, and Karoo's recent partnerships have extended its reach. The big leap came in early 2024 when Karoo partnered with Heartbeat Health, the nation's largest virtual cardiology provider network, effectively giving Karoo access to Heartbeat's clinicians in all 50 states and on-demand telecardiology services. This partnership created what they tout as the first truly national end-to-end cardiac value-based care enterprise. In addition, Karoo's exclusive MA plan deal with Zing Health covers members across Illinois, Indiana, Michigan, Mississippi, Ohio, and Tennessee. So, in just a year from launch, Karoo went from two Southwestern states to a multi-state footprint through strategic deals. To date, Karoo sits at 500+ cardiologists in its network.   Platform and Business Model Breakdown: Karoo's solution holds a few key components. First, dedicated wraparound care teams: nurses, dietitians, pharmacists, health coaches – who work alongside cardiologists to manage patients. They tackle medication management, lifestyle coaching, symptom checks, and care coordination. Second, the Kohere.ai platform aggregates data (vitals from remote monitors, EHR data, claims, and much more) and leverages machine learning and other AI functions to flag risks, find high-risk patients, and facilitate interventions. For example, Kohere enables instant alerts if a patient's blood pressure is trending high or if they missed a medication refill. It also provides performance dashboards to providers (so a practice can see their hospitalization rates, for example). Third, 24/7 virtual clinical services via Heartbeat Health – patients can literally get a cardiologist or advanced practitioner on a telehealth call at any time, which is an absolute necessity in cardiology if a patient has concerning symptoms at 2am. Chest pain is among the most common reasons someone hits up the ER at that time (and maybe that ER trip can be avoided by talking it through with a practitioner). And of course, underlying the platform is the value-based payment model. Karoo typically enters into shared savings or risk contracts with either the health plan or the provider entity. In the Zing Health MA deal, for instance, Karoo will share accountability for cost/outcomes of Zing's cardiac patients. Karoo even has a pragmatic approach to onboarding practices: they often start by billing fee-for-service for 6–9 months and tracking improvements, then shift to risk contracts after proving their value. It's like a trial period that builds trust with cardiologists before asking them to take financial risk.   Proven Results (So Far): For a young company, Karoo has been eager to publicize early outcomes and they're impressive. In a recent proof-of-concept pilot, Karoo achieved an 86% conversion of eligible patients to its program (meaning 86% of patients that the cardiologists referred or identified actually enrolled and engaged – a very high uptake). Once on the platform, 98% of patients were actively engaged digitally (using the app, responding to outreach). Most striking: 29% of enrolled patients were diverted from at least one unnecessary ER visit. That's nearly a third of participants avoiding an ER trip. Considering an acute cardiac ER visit can cost $8,000+, Karoo's model likely saved significant dollars. In fact, Karoo reported these ER diversion results translated to substantial cost savings, validating its impact. Karoo's CEO noted that by December of their pilot year, they were converting 83% of all eligible patients and continuing to improve outcomes each month. For at-risk providers or plans, these figures are eye-opening – it shows a high-touch cardiac management program can actually engage patients (even older Medicare folks) and keep them out of the hospital.   Funding and Growth Trajectory: Karoo has raised modest funding so far but is rumored to be on the cusp of more. The company closed a $3.4M oversubscribed seed round led by First Trust Capital Partners in June 2023. That capital was used to launch operations in summer 2023. By early 2024, Karoo had raised about $6M total to date. With the Zing Health contract and Heartbeat JV announced, rumor has it that investors are lining up to get a chance to participate in its funding round later this summer. Investors are buzzing about the platform (though hopefully not a pacemaker buzz - but I'm sure Karoo's team would catch that). Karoo Health may be one of, if not THE only live solution with the scale and tech capabilities to move the needle for better value-based cardiology care. Investors are likely intrigued by Karoo's early metrics and the sheer size of the cardiology market. Big TAM makes for big VC eyeballs right? It doesn't hurt that Karoo's story is personal. Ian's inspiration for Karoo comes from losing his best friend to a heart attack at age 29, which he often mentions as a driving motivation, and an area of sore need in healthcare. Wrapping up the Karoo Story so far I love learning from and watching new innovative companies grow and thrive, and Karoo Health is a great company to watch in the space. I've enjoyed chatting with Ian over the years since its founding. With a flexible business model, the aforementioned network of 500+ cardiology physicians and clinicians, and proprietary data & tech to boot, I'm looking forward to seeing how Karoo tries to transform cardiac care. Karoo creates meaningful partnerships with its network, with whom they work in tandem, not around.   It's been a whirlwind, but this trajectory highlights how quickly VBSC models can scale when they demonstrate outcomes. Karoo is essentially trying to do for cardiology what Somatus did for kidney care a few years prior, and if it succeeds, it could become the go-to partner for cardiologists entering value-based contracts for years to come with a significant first-mover advantage and proprietary tech as a differentiating moat.   Bigger picture: all these partnerships, proprietary datasets, and specialized business models in highly complex parts of healthcare signal a simple truth: nobody can do VBSC alone. Specialists need the administrative side, data, and care management wraparound; payors need the clinical boots on the ground and more specialized partners to drive total cost of care down; and startups need capital, clinical expertise, and strategic insight to iterate on their models. The result has been an increasingly interconnected ecosystem of contracts, alliances, and joint ventures – a good sign that VBSC is becoming mainstream. COMMUNITY EVENTS 🔍 Pulse Check: H1 Trends & 2025 Outlook   We're halfway through 2025. 🤯   What do we need to be watching for the rest of the year?   Join me and my hand-picked panel of investors and analysts as we dig into key trends from H1 and discuss what we all need to be watching in H2.   Hear insights from: Grant Hesser on the current state of the healthcare IPO environment and digital health public market performance, Jeff DelVerne on a retrospective look at health insurance carrier Q1 trends, Eric Epstein on the latest in the early-stage digital health startup environment and where AI is making an impact, and  Drew Wozniak on the latest strategies affecting hospitals and health systems across health system transformation, physician alignment — and a look at Advocate Health's 'Re-Wire' strategy.  This is open to EVERYONE. Register here.   🗓️Thur, 5/22 | ⏰ 12-1 PM ET | 📍Register Here 💬 Members Roundtable with Longitude Health   Every month, I host a roundtable + AMA with Hospitalogy Plus members.   This month, we're meeting with the execs behind Longitude Health. We'll dig into VBC, RCM, and specialty pharmacy — and what they think is next for health system-backed innovation.   Want to join us? Register here.   🗓️Fri, 5/23 | ⏰ 12-1 PM ET | 📍Members Register Here SPONSORED BY SMARTERDX Not all AI is created equal...especially in healthcare. SmarterPrebill™ from SmarterDx was built by physicians and data scientists who knew the revenue cycle needed more than automation. It needed clinical thinking. With 3,500+ proprietary algorithms, SmarterPrebill thinks like a doctor, flagging missed or incorrect diagnoses before they're sent to billing. Hospitals using it to review charts, uncover hidden revenue, and boost quality scores are achieving a 5:1 ROI on Day 1. Over 50 health systems are already in. Smarter AI starts here. Why not join them? Discover SmarterPrebill. MISCELLANEOUS MADDENINGS Tomorrow and through the weekend I'm headed off to the absolute grand town of Frankston, Texas on a buddy's golf trip to Pine Dunes. If you haven't been out to this course it's absolutely fantastic, and we're playing 4 rounds in 3 days in a team-based competition. I'll be absolutely exhausted come Monday, but it'll be a great time. Give me a shout if you've played the course. It's one of my all-time favorites. If you're not playing or watching golf, I feel sorry for you. (Just kidding) Hope every single one of my Hospitalogists has a fantastic weekend! Thanks for the read! Let me know what you thought by replying back to this email.   — Blake   Share Hospitalogy, Earn Rewards Have friends who'd love Hospitalogy too? Click the link below to share Hospitalogy with your friends and earn awesome rewards! PS: You have referred 0 people so far Share Hospitalogy! 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