- From fertility benefits to chronic disease management to value-based care, Revelation is always looking for business models that improve the cost curve in healthcare. One model that has intrigued us is the Centers of Excellence (“COE”) model, which we’ve been tracking since our initial anchor investment three years ago in Carrum Health.
- Specialty care, such as surgery, cancer treatment, and other high-cost procedures, now accounts for nearly half of employer healthcare spend, with cancer care alone representing up to 16%[1] of that total.
- Traditional fee-for-service reimbursement rewards volume over value, leaving employers with unpredictable costs and patients with surprise bills and uneven quality.
- COE models — Carrum Health in particular — are emerging as the clear solution that lowers costs and improves outcomes.
- Employer adoption of COE models is accelerating, and we believe Carrum is the category’s clear leader, with an expanding nationwide network, new specialty lines, and a growing roster of health plan and ecosystem partnerships all pointing to a company scaling from early proof point to established standard.
Employers have spent years absorbing significant healthcare cost growth with few good options. Glucagon-like peptide-1 (“GLP-1”) drugs and specialty pharmacy get most of the headlines, but surgical and specialty medical care (for example, joint replacements, spinal fusions, bariatric surgery, cancer treatment) represent one of the largest line items in any self-insured employer’s health plan. Yet specialty care spend has historically been a black box: prices vary enormously for the same procedure, and quality is difficult to ascertain.
It’s no surprise, then, that against this backdrop of rising healthcare costs, employers are looking for superior specialty care solutions. By 2025, nearly 50% of employers had already adopted a COE vendor to manage specialty care costs, and an additional 25% said they planned to adopt one within two years.[1] COE models address this gap by connecting employers directly with a curated network of top-performing providers, using bundled, all-in pricing negotiated in advance rather than fee-for-service claims adjudicated after the fact. Carrum Health has built a category-defining platform, and since our Series B investment in 2023, we’ve watched the company’s value proposition play out with real, measurable results for employers and patients alike.
Why Specialty Care Spend is Broken
The fee-for-service model that still governs most surgical and specialty care creates a basic disconnect between price and quality. Providers are reimbursed for performing a procedure (and for any complications, readmissions, or follow-up care that come after it) but that reimbursement isn’t tied to the quality of the outcome or whether it was the right course of treatment to begin with. Most physicians are deeply committed to their patients’ outcomes, but the system they operate in gives them little visibility into how their own results compare to peers and gives employers and patients even less. Without that visibility, there’s no consistent mechanism steering patients toward the best procedure or away from unnecessary procedures altogether.
Patients, meanwhile, are asked to make high-stakes financial and medical decisions with limited information. Quality is opaque, since patients rarely have a reliable way to compare outcomes across surgeons or facilities. Pricing is even worse. A study published in the Journal of the American Medical Association (“JAMA”) found that roughly 1 in 5 patients undergoing elective surgery received a surprise out-of-network bill — averaging over $2,000[2] — even when they had specifically chosen an in-network surgeon and an in-network facility. For employers, this unpredictability compounds at the plan level: a handful of high-cost high-acuity specialty care claims in a given year can meaningfully move the needle on total plan spend, with little ability to predict or manage it in advance.
Traditional carrier networks haven’t solved this, and structural limitations prevent them from doing so. A national payer’s network is its core asset. Favoring a small set of top-performing providers risks tainting its relationships with larger groups of providers it depends on for its core insurance business. This limitation creates an opening for independent networks built around outcomes and cost, rather than breadth alone.
Carrum’s Solution
Carrum takes a different approach: it has built a curated COE network of top-performing academic medical centers, health systems, and specialty surgeons and contracts with self-insured employers, providing direct access to their employees. In exchange for access to these employees, providers in Carrum’s network agree to a bundled, all-inclusive price for a given procedure or treatment plan, negotiated and locked in before care is ever delivered. Employees who use Carrum’s network pay nothing out of pocket: no copays, no coinsurance, no deductible, and no surprise bills, since the entire episode of care is already priced and guaranteed in advance, typically backed by a warranty period covering complications and follow-up care. This aligned solution creates a win-win-win: employees and employers have better outcomes at lower prices, while high performing providers are rewarded with greater volumes and have no administrative burden (they don’t have to chase payments, wait on prior authorization or battle claims denials).
A key driver behind Carrum’s ability to scale this model is its technology backbone. Under the hood, Carrum leverages machine learning models to analyze terabytes of clinical claims data to vet provider performance — evaluating patient outcomes, appropriateness of care, complication rates, and readmissions before a provider is admitted to the network. On the demand side, its predictive models analyze employer population claims data to identify members who will require specialty interventions up to two years in advance with 95% accuracy.[3]
From an investment perspective, this data-driven rigor gives Carrum a structural advantage in supply-side quality control and early patient engagement that traditional networks simply cannot match.
Carrum reports that this approach saves employers up to 45%, based on independent, peer-reviewed third-party research published in Health Affairs by RAND.[4] The study found that roughly 30% of patients initially referred for surgery were instead redirected to less invasive, non-surgical treatment after an independent clinical appropriateness review — evidence that savings come from eliminating unnecessary care, not from restricting access to necessary care.[4] The study also found meaningfully lower readmission rates (80% less) among patients treated through the program compared to national benchmarks.[4]
The savings here aren’t coming at the patient’s expense. Carrum’s fixed, bundled price already covers any complications or readmissions during the warranty period, so providers don’t earn more by treating an avoidable complication — and providers who don’t perform risk losing their place in the network that guarantees them patient volume, real leverage most payer networks don’t have. Quality is enforced through curation and continued network inclusion, not through paying more for more care.
The objection to any cost-containment model is that savings come at the expense of care quality. Carrum’s structure argues otherwise: because the bundled price already covers complications and readmissions during the warranty period, providers earn less, not more, from bad outcomes — the opposite of fee-for-service, where complications generate more billable care.
Why This Moment — Market Traction
The thesis behind Carrum’s model is compelling on paper, but what has made the last two years particularly interesting is how quickly that thesis is translating into real, on-the-ground scale.
In October 2025, Carrum announced it had doubled its covered lives year over year[5] — even though it was already one of the category’s most scaled platforms. That growth followed years of building toward critical density: Carrum’s network has now expanded to more than 1,400 contracted COEs and 3,000 top providers nationwide, placing the average member just 29 miles from a Carrum COE.[6] Crucially, approximately 80% of Carrum’s network is non-hospitals[6] – ambulatory surgery centers and surgical specialty hospitals – efficient, high-performing sites of service with superior outcomes, shorter lengths of stay, and lower costs. National coverage is what makes Carrum viable for large, dispersed employers in the first place; local density and high-performing site selection is what drives actual utilization once a company signs on. Together, they’re what turn a signed contract into realized savings.
Carrum has paired that geographic scale with a broader scope of coverage — expanding to serve up to 50% of total employer medical spend.[3] It has pioneered value-based care models for complex specialties – oncology and substance use disorder – two of the highest-cost categories in specialty care. While market alternatives in cancer care often rely on basic navigation that routes patients back into uncurated, fee-for-service PPO networks, Carrum built a highly curated, outcome-driven network and its treatment bundles include the negotiated cost of expensive chemotherapy drugs which others bill piecemeal. Similarly, in substance use disorder, a category historically plagued by revolving-door facilities and opaque out-of-network billing, Carrum created a value-based, bundled solution that holds providers financially accountable for sustained recovery. That breadth is attractive to employers who’d rather work with one trusted vendor across multiple categories than stitch together separate point solutions.
That growth has translated into real distribution: five national and multi-state health plans have now formally integrated Carrum’s solution, and Carrum has been named the sole Centers of Excellence partner for eleven ecosystem partners spanning behavioral health, virtual care, and care navigation. Being embedded inside a national health plan and key ecosystem partners is a major driver of growth and utilization.
Two of those partnerships illustrate the model well. In January 2026, Carrum announced a strategic partnership with Lyra Health to integrate Carrum’s surgical, cancer, and substance use disorder services with Lyra’s behavioral health platform — creating a bidirectional referral pathway for members who need both physical and mental health support.[7] And in March 2026, Carrum partnered with Virta Health to connect Carrum’s bariatric surgery network with Virta’s nutrition-first metabolic care and GLP-1 management, giving employers a single coordinated pathway for weight-related care rather than a patchwork of disconnected point solutions.[8] Taken together, these moves reflect a company extending its core Centers of Excellence model outward — into new specialties, new partner ecosystems, and new categories of employer spend — rather than simply scaling what it already had.
The Competitive Landscape
Carrum isn’t alone in trying to solve this problem, but the field is narrower than you might expect for a category addressing nearly half of employer healthcare spend — a testament to how difficult this model is to stand up. Building a genuine Centers of Excellence network requires years of provider relationships, credentialing, and trust with both sides of the market before it works for anyone; that’s a real barrier to entry, and it’s part of why the category hasn’t been flooded with competitors the way some other benefits categories have. We view Carrum as the leader among this small set.
The competitive dynamics here also tend to reinforce themselves over time. A larger network attracts more employers, which gives providers more patient volume and more reason to participate on favorable terms, which in turn makes the network more attractive to the next employer evaluating a COE solution. That kind of network effect means scale compounds rather than simply accumulates — an advantage that’s difficult for a newer or smaller entrant to close through capital alone.
Still, the handful of players in this space have taken different approaches, which are worth understanding.
Lantern (formerly Employer Direct Healthcare)[9] takes a different structural approach to network-building than Carrum: rather than concentrating volume at a smaller number of flagship Centers of Excellence, Lantern contracts directly with individual specialists across a broader geographic footprint.[10] This type of footprint suggests Lantern’s model is more similar to traditional carriers, which can lead to a combination of less savings and a reduced bar for quality and appropriateness of care.
Transcarent has taken a different path altogether: rather than starting from a Centers of Excellence model, it built a broader consumer health navigation platform and then acquired Centers of Excellence capability by way of its 2020 acquisition of BridgeHealth, a specialist in surgical bundled payments.[11] That gives Transcarent an integrated “one place for health and care” positioning — spanning navigation, virtual care, and pharmacy alongside its COE offering.[12] This may be appealing to employers looking for a single solution, but less so for employers looking for a focused solution to address key cost buckets.
Carrum’s bet is different from both: stay focused on being the best Centers of Excellence specialty care solution, rather than the broadest uncurated network or the most horizontally integrated platform, and extend that focus specialty by specialty — surgery, then oncology, then substance use disorder — rather than bolting on adjacent service categories like navigation or pharmacy.
Importantly, in our diligence and tracking of the company, traditional health plans have not emerged as competitors but instead, have begun partnering with Carrum directly to bring value-based specialty care to their employer clients. This is no coincidence as it ties back to the conflict between maintaining a broad network versus curating and guiding volume in a narrow network. We like this backdrop where large incumbents have chosen to integrate.
Why We Are Excited
We first invested in Carrum as part of its Series B round in 2023, and the thesis was straightforward: specialty care is one of the largest, fastest-growing, and most poorly-aligned categories of employer healthcare spend, and a company that could build a genuinely differentiated, high-quality provider network — and prove out the savings with independent, third-party validation — would have a durable business on its hands. That thesis has played out, with clear growth across the business, network, and partner ecosystem.
Beyond the growth, we believe Carrum has an attractive business model. Customers renew at very high rates, reflecting genuine satisfaction rather than simple lock-in. The underlying network is deep and difficult to replicate, built over years of provider relationships and credentialing. And the business gets better as it gets bigger: a larger network is more valuable to both employers and providers, so growth compounds rather than merely accumulates.
Looking ahead, we expect COE-style models to keep taking share from traditional fee-for-service specialty benefits, particularly as more employers move past pilot programs and into broader specialty categories (cancer care, substance use, and beyond) where the same misaligned incentives and pricing opacity exist at even higher dollar amounts. We’re glad to have been early partners to Carrum on that journey, and we remain excited about where the category is headed.
Closing Thought
Healthcare cost containment often gets framed as a zero-sum tradeoff — lower costs mean lower quality, or savings for employers mean worse outcomes for patients. Carrum’s results, and the broader traction the Centers of Excellence category has seen, are a useful reminder that this doesn’t have to be true. When incentives are structured correctly, with providers paid for successful outcomes, not just procedures performed, better care and lower costs can be the same story rather than competing ones. We expect specialty care to be one of the more interesting areas of healthcare innovation over the next several years, and we’re glad to be invested in one of the category’s leaders.
Sources
[1] Business Group on Health. “2026 Employer Health Care Strategy Survey.” August 2025.
[2] Chhabra, Karan R., Kyle H. Sheetz, Users Nuliyalu, Mihir S. Dekhne, Andrew M. Ryan, and Justin B. Dimick. “Out-of-Network Bills for Privately Insured Patients Undergoing Elective Surgery With In-Network Primary Surgeons and Facilities.” JAMA 323, no. 6 (2020): 538–547. https://doi.org/10.1001/jama.2019.21463
[3] Carrum Health. Homepage. Accessed 2026. https://carrumhealth.com/
[4] Whaley, Christopher M., Christoph Dankert, Michael Richards, and Dena Bravata. “An Employer-Provider Direct Payment Program Is Associated With Lower Episode Costs.” Health Affairs 40, no. 3 (2021): 445–452. https://doi.org/10.1377/hlthaff.2020.01488
[5] Carrum Health. “Carrum Health Doubles Covered Lives as Employers Confront Record Healthcare Costs.” Press release, October 15, 2025. https://carrumhealth.com/news/carrum-health-doubles-covered-lives/
[6] Carrum Health. “Carrum Health’s Major Expansion Brings 90% of Americans Within 50 Miles of its Centers of Excellence Network, Built with C.A.R.E.” Press release, April 2, 2025. https://carrumhealth.com/news/carrum-health-network-expansion/
[7] Carrum Health and Lyra Health. “Carrum Health and Lyra Health Launch Integrated Specialty Care and Mental Health Solution.” Press release, January 27, 2026. https://carrumhealth.com/lyra-health-partnership/
[8] Carrum Health and Virta Health. “Carrum Health and Virta Health Partner to Deliver Seamless, Full-Spectrum Weight Management Solution for Self-Insured Employers.” Press release, March 10, 2026. https://carrumhealth.com/news/virta-health-partnership/
[9] Lantern. “Employer Direct Healthcare Rebrands as Lantern, Moves into Infusion Care Market.” Fierce Healthcare, September 17, 2024. https://www.fiercehealthcare.com/health-tech/employer-direct-healthcare-rebrands-lantern-moves-infusion-care-market
[10] Lantern. “About Us: Our Mission & Team.” Accessed 2026. https://lanterncare.com/about-us/
[11] Transcarent. “Transcarent Acquires BridgeHealth; Completes $40 Million Series A Funding.” Press release, October 22, 2020. https://transcarent.com/press-releases/transcarent-acquires-bridgehealth-completes-usd40-million-series-a-funding
[12] Transcarent. “One Place for Health and Care™.” Accessed 2026. https://transcarent.com/