When San Francisco-based startup Honor was launched in 2015, the need for innovation in the home care industry was clear – and it has only grown starker since.
The country’s demographic data shows the issue. By 2035, there will be 78 million people 65 and older in the country and by 2050 it’s estimated that Americans over 65 will make up 20 percent of the population. These trends, in conjunction with a growing shortage of home care workers, are leaving many people unsure how to care for their aging family members.
Transforming Patient Care: The Role of AI-Powered Assistants
The progress in artificial intelligence (AI) is reshaping patient care, across various dimensions, from facilitating faster discharge to curating treatment plans and suggesting lifestyle changes.
Honor was one of a host of companies founded to address that issue. Boosted by by $115 million in funding from investors, the company initially started as a direct-to-consumer platform for families to find home care aids, but has now redirected the bulk of its business towards an enterprise solution called the Honor Care Network.
The Honor Care Network essentially signs on smaller independent home care organizations as partners and handles much of the back end administrative, legal and compliance functions in exchange for a share of revenue. The home care industry is made of a constellation of small independent operators who typically lack the technology capabilities for more streamlined workforce management and the staff to keep up with regulatory advancements.
“If you are an agency that wants to grow and expand your footprint, it’s incredibly hard to do so across states because the rules and regulations vary so widely. The biggest issues we’ve seen for small agencies is increasing prevalence of more stringent licensing rules, changes in labor laws and increasing minimum wage,” Honor President Nita Sommers said in an email.
“Currently most small agencies are not keeping up with all these changes and are at meaningful risk for litigation, audit failures or losing their licenses.”
Market Trends to Watch for Health Systems and Their Specialty Pharmacies
The future looks bright for the integrated specialty pharmacy model – for health systems, providers, and most importantly, for patients.
With the new business model, the company has been able to expand services to more than 600 municipalities across its markets in California, New Mexico and Texas and hopes to jump into a new state early next year. Over the past year Honor said they’ve been able to triple the hours spent serving clients.
One of the company’s new partners has been Indecare, a home care agency based in Sacramento which said that Honor’s operational expertise allowed the agency to focus on their primary responsibility of caring for clients.
Sommers said the company’s $50 million Series C financing round earlier this year is mainly being directed at growth into new markets supported by a recently opened operations center in Austin, Texas, implying a major focus in the Southwest.
“We’ve nearly doubled our market coverage in about 4 months, and we see huge potential across the country. We’ve signed 6 new California partners in the past 6 months, and we see continued strong growth opportunity across all the markets we currently operate in. At the same time, we’ve received inbound agency interest from over 20 states around the country, so the Honor Care Network model seems to resonate in a variety of markets,” Sommers said.
While Honor initially started its network by partnering with agencies earning around $1 or $2 million in revenue, Sommers said that the company is increasingly starting to work with agencies in the $3 to 6 million revenue range who want to utilize the company’s technology and scale, along with medical care providers who are looking to easily provide non-medical home care services.
Sommers said Honor’s increasing scale and alignment of the traditionally fractured home care industry could lend itself to the development of a national set of standards for home care, as well as the development of contracts with national insurance carriers or major health systems.
“It is currently not possible for a national insurance company or hospital chain to work with one single home care provider across markets to provide a consistent experience. We believe Honor can change that – with our technology and operational capabilities, it’s extremely do-able for us to provide a consistent, high-quality service across all markets we serve,” Sommers said. “We have been experimenting with many of these types of partnerships and we’re encouraged at the early results.”
The pivot in Honor’s business model is, in part, to follow the money and take advantage of regulatory shifts that allow in-home care to be covered as a benefit by Medicare Advantage plans starting next year. But it also speaks to a larger trend across healthtech pushing companies away from direct-to-consumer businesses and toward B2B models.
Among home care industry innovators specifically, many of Honor’s competitors found themselves needing to adapt to new business models. Los Angeles-based HomeHero folded last year after a failed pivot and New York-based HomeTeam booted their top leadership before refocusing primarily on Medicare-Medicaid dual eligible patients and working with managed care organizations.
As for Honor’s own efforts in direct-to-consumer care? Sommers said the company still operates its internal home care agency which is centered in the San Francisco Bay Area, but is not looking to expand that model to new markets.
Instead the company is using that side of the business as a test lab for new features and operational improvements.
“We do see great benefit in keeping our current Honor-operated agencies as it allows us to explore innovative ways to find clients, work with provider systems and improve care. Once proven successful, we then scale these innovations to our network,” Sommers said.
Picture: Getty Images, asiseei