Forecasting the Personal Home Care Industry’s ‘Netflix-Blockbuster’ Moment

The personal care industry in the United States is full of wonder.

Where its home health counterparts are generally built similarly, mostly tied predominantly to Medicare as a payer, the personal care market is full of companies with vastly different strategies.

There are franchises, non-franchises, those that lean toward private-pay and those that lean toward government pay. It’s also a less regulated industry – but still fragmented – so the strategies being deployed around the country tend to be wide-ranging and fascinating.

For instance, the home care provider Arosa – which has has 28 locations across 8 states, and is backed by the private equity firm Bain Capital – is “incredibly bullish” on its care management service line, according to its CEO, Ari Medoff.

“The families that get care management and the clients that receive care management are incredibly satisfied with it,” Arosa CEO Ari Medoff said on a panel last week at Lincoln Healthcare’s Home Care Innovation and Investment Conference. “I recognize that it’s seen as a luxury service, because it can cost between $100 and $200 an hour. … But if you get one or two hours a week of care management on an ongoing basis, that is transformative to your life… and it really should be accessible to a broader spectrum of the population than even personal care.”

Care management and home care services together are not a new – or necessarily rare – pairing. But it is one example of the different approaches that home care companies are taking to their business strategies.

Peter Ross, the CEO of the home care franchise Senior Helpers, was also on the panel. And he was intrigued by the idea of diving further into care management in the future.

“I think there’s just a lot of runway for us, and we’ve got to be looking at this holistically,” Ross said. “I think the care management you’re doing, [Ari], is a really good thing to do. Obviously, I think that’s something going forward that we might take a more active role in.”

Advocate Aurora Health acquired Senior Helpers last year as a part of its strategy to fill out the entire continuum of care.

Government pay for personal care

On Senior Helpers end, Ross has led his company further into government pay of late.

Despite still being a predominantly private-pay provider, he sees the value in working with government payers, given all of their power.

“My whole focus used to be 100% private,” Ross said. “But now we have a very large revenue base – probably 25% to 30% – that is now government funded. The government pays 55% of all health care costs in this country. So it’s like, you’ve got to either beat them or join them, in some ways.”

On one end, private pay allows an operator to not be completely beholden to payers. But at the same time, in order to get into more value- and risk-based contracts – as many in the industry are – you have to play the game with the payers.

“The payers rule the world here,” Ross said. “Unless you’re in that private pay, which is why I loved private pay for so long, because we didn’t have to deal with the payers and the government. So if you can pull that off – and grow – that’s awesome. But if you’re dealing with payers and partnerships, which is where the risks are, that’s where you have to play in this.”

But that doesn’t mean Senior Helpers is all in just yet. Both Medoff and Ross expressed some of their struggles with the evolving relationships between Medicare Advantage (MA) plans and home care providers.

“I was excited to hear three years ago that we were a part of MA, until I actually found out what that meant,” Ross said.

For instance, in the MA relationships that Senior Helpers has, the paid hours range from 70 to 124 hours per year, which is just not likely enough to make a difference – both for the company’s bottom line or the patient.

But Ross did acknowledge that he thinks that Medicare will eventually reimburse for personal care services.

“I think someday Medicare will reimburse for what we do here on personal care, but I think we’ll have to have the data to get there,” Ross said. “To me, that’s exciting. But you have to be careful what you ask for. Yet I do think that the future is bright if we can actually justify our our existence and come up with some really creative care platforms and care and delivery models for them.”

The pros and cons 

The freedom that private pay affords providers is immense compared to their government-pay peers.

Having said that, there is also innovation that comes with government pay. An example would be the Chicago-based Help at Home’s staffing model, which allows caregivers to trade shifts.

“If you have a 20-hour per week care plan, that’s not really a full-time job from caregivers,” Alan Germano, the VP of corporate development at Help at Home, also said on the panel. “And so how do you fully utilize their time? We’ve got some neat scheduling systems that text out open shifts or allow caregivers to trade shifts through the through a technology platform. That really helps fill in open shifts that we have, but also to use caregiver time more efficiently.”

Help at Home has over 50,000 caregivers and 65,000 clients in 11 markets across the U.S. The company’s revenue is almost 100% government pay.

Private-pay organizations in the room thought the shift swaps were a great idea, but admitted they could not use them.

That’s because, more often than not, clients paying for private-pay caregiving generally expect the same worker – or the same group of workers – on a visit-to-visit basis.

‘A Netflix-Blockbuster Type Moment’

Medoff wants to change the way personal care is paid for. Not by involving the government more or less, but instead by changing the period of time the pay is based off of.

That change, he believes, could be a Netflix-Blockbuster type moment, in which an old way of doing things is phased out and a new and more successful one is ushered in.

“I think that we do ourselves a disservice at this point by all selling home care by the hour,” Medoff said. “A dream of mine, and something we are working towards, is thinking about selling a daily rate or weekly rate that could be based upon outcomes.”

Those outcomes, he said, would not be just hospital readmissions or blood pressure measures. Instead, they’d be based on quality of life, happiness, connectivity, and in general, the ability to age in place successfully.

That could be hard to measure, as benchmarks like greater happiness and connectivity can’t be quantified, but Medoff believes it could be done. It could be done so with better technology, more case managers involved and unique data, specifically.

“I couldn’t agree more,” Ross said. “I think that’s something we have to change – that messaging. That you are getting this, this and this – which may cost you $1,000 per month – but you’re getting access to all of that, plus technology and other health care coverage. And it’s 24 hours per day. So that’s where I think we may have to go.”