VC and entrepreneur John McKinley just launched OurParents.com. Here, he explains why.
Over the last few years, I have had a front row seat to the whole senior care experience. My mum, who had been an active and independent senior, fell ill, and my wife Cindy and I had to step in to take care of her.
As you might expect, we went to the web for help. What we found there was a surprisingly fragmented and dissatisfying experience. We saw lots of players trying to carve out their own niches in the senior care market, but each had their own agendas that were not necessarily aligned with their supposed customers (adult children with ageing parents).
Having painfully navigated ourselves to an eventual good outcome, I decided that my next investment thrust would be in the senior care marketplace, and commenced to spend a bunch of time late last year in figuring out where and how to play.
Fortunately for me, the DC area is actually a good location to begin the journey. There are multiple not-for-profit senior advocate organisations and commercial senior care businesses located around DC, due to their desire to interact with policy makers and agencies on a frequent basis. Being able to meet with a number of them helped jumpstart our efforts in framing the problems facing senior care today.
The other big learning that helped us was watching what was going on with Revolution Health. It was interesting to see their own plans to address the changing healthcare landscape. Observing their own journey, there was one huge epiphany I had: If you are going to go about changing a mature and malformed care ecosystem, you need to attack the fundamental provisioning of care. In the case of healthcare, to me that means things like the registered nurse-staffed healthcare facilities opening in supermarkets, drugstores, etc.. These care facilities were taking a whole set of high incident issues (e.g., the flu, strep throat, cuts, vaccinations, etc.) out of doctor’s offices and emergency rooms, and performing them in a lower operating cost, more focused facility. That’s what I mean about reinventing care. Of all the things that were championed by Revolution Health, this is the one concept that continues to really thrive.
There is no reason that same fundamental reinvention of care provisioning can’t be applied to the senior care market as well. Driving change is also critically important for all of us. In the future, what consumers have assumed as available senior care options for their parents (and themselves) won’t be viable in most cases. The senior care system is under extreme stress.
Here are the four main drivers of the need for fundamental change:
Demand is exploding (Those damned Baby Boomers…)! The demands for senior care will increase dramatically over the next two decades. Last year was the first year that the baby boomers starting retiring. As a group, they represent 71MM new retirees joining an already-stressed senior care infrastructure
Family is far away, and often have their own issues to deal with. The atomic family isn’t always in place to provide help – 7+MM seniors live a far distance from their adult children, and two-career families leave little capacity for daily care of ageing parents
The state of the US economy continues to weaken. The current economic environment is placing huge stress on the average person’s ability to pay for care
1. Retirement portfolios are down 36+% over the last 12 months
2. Returns on shorter-term, lower risk investments, like municipal bonds and treasuries, are down 70+% over the last years
3. Medicare is a trainwreck: It will pay out more in benefits than it collects this year, and will be totally insolvent by 2017
4. Social Security is following close behind: It will start paying out more in benefits than it collects in taxes in 2016, and the giant trust fund will be totally depleted by 2037
5. The Fed’s policies on the dollar (something few understand) will lead to material inflation in the next four to five years. Welcome to the land of the $1,000 Big Mac!
You have a placement industry that serves itself – not the consumer. behaviours of the current actors in the senior care placement space (the web-centric players) aren’t serving the consumer well:
1. Their business model and practices are geared towards pleasing the provider – not the consumer
a. Lead generation and CPA (cost per acquisition) businesses prevail
b. You deal with pressured commission sales forces with misaligned objectives – “Get low net worth folk off the phone!”
c. Limited inventory is discussed/displayed – those providers with a lead purchase deal in place get the business
2. Their online experiences are weak
a. There is very mixed quality of provider data onlne – lots of players just use a subset of the free Medicare database (Medicare provides a national database of nursing homes), and ignore the private homes
b. There’s no incentive to use web 2.0 tactics around user generated content (reviews and comments) – the care provider is their customer
c. You encounter bad 1990’s-era online experiences: I enter all sorts of data about myself, and expect that (having not been told anything to the contrary), at the end, I will get some form of immediate payback (search results and analysis). What I get more often than not is a page telling me they’ll “call me later” – incredibly frustrating, and more than a tad misleading!
The current players in the space are on the side of the seller – your parent (as a prospect) is the item for sale – and that dynamic results in suboptimal decisions about care for you and your loved one. What’s also interesting is that the care providers have very mixed feelings about the current actors in the space. What little capacity the providers have to support their own resident fit analysis and on-boarding starts breaking down when the quality of leads they receive isn’t great. That results in a lack of adequate time to spend with each interested family, and a suboptimal experience for both the families and the care provider.
Here is what needs to happen:
We need to provide much greater transparency about care providers. That means:
• Killing off the businesses selling reformatted Medicare data to unsuspecting people for $25-$95 a facility – to me, this is exploitation of people in a time of real need.
• Providing as much collective intelligence about each provider as possible (their Medicare quality info, their financial condition, feedback from residents and families, etc.)
• Treating the decision on the care facility as a sacrosanct issue – It can’t be anything else but a free match-making of elderly customers and providers. Anything else inserts some inherent bias into the dialog. I do think some things are fine to do as lead-gen (e.g., home alarm systems, Medicare supplemental insurance, etc.). The quality variance between the major providers for products like there is a lot less, and the time and cost to correct a decision is a lot shorter/lower. Contrast that with the decision to move your parent into a care facility: It is already difficult enough to do once in a lifetime, and the associated emotional and financial switching costs are incredibly high. I have had dialogs with people who are dissatisfied with their chosen care provider, but just can’t face the prospect of another move for their parent.
• Finding a way to get post-decision feedback into the system. There are multiple senior sites that thought of user reviews, but the problem is that they contain almost zero content. When someone used a site to search for care options, they rarely if ever return, once the decision is made. That is a real shame. Their feedback regarding their interaction with a provider, whether they eventual chose to go with that provider or not, is a key missing piece of data today.
• Advocating more fundamental senior care innovation. For example, ageing in place (finding creative ways to allow your ageing parent to live in his or her apartment or house longer) can be a win on multiple fronts for a family. ageing in place has been shown not only to improve and extend the quality of life for a senior, under many circumstance it can also be much more cost effective as well. A recent report by Avalere Health has shown that home health service use saved $1.71 Billion for Medicare in 2005-2006. In addition, services ranging from adult day care to residential area-located micro communities are great alternatives to consider for healthier seniors. We need to create much broader awareness of these options by both the adult children and their ageing parents. Care innovation is the only path forward for the US, if we are going to deal with the upcoming explosion of demand over the next two decades.
For these reasons and more, I have decided to launch OurParents (available today at www.ourparents.com).
Here’s what we are doing at OurParents as advocates of change:
We have created a free “match.com” for connecting families seeking elder care and the care providers that can meet the family’s unique needs. No more charging for leads, no commissioned sales force driving CPA deals, no more placement of parents at less suitable facilities just to close a deal and maximise revenues, and no more ignoring of lower and middle income families in need. We want to provide a truly unbiased service that has the best interests of the family in mind.
When it comes to that pivotal care facility decision, we are and always will be 100% per cent on the side of the consumer. It is a fundamental founding principle for us. That means showing the good (e.g., Medicare honour role recognition) as well as bad (e.g., watch list facilities, facilities facing financial problems, etc.). It also means encouraging the full community’s input (e.g., better descriptive data supplied by providers as well as consumer and local senior care ombudsman input).
While that means finding other means of monetizing our relationships, there are enough other ways for us to do it without having to sacrifice our founding principles. We are declaring war on the Release 1.0 model of this industry! It may have had its place, but it has morphed into something fundamentally flawed.
This is what we are offering in our first release at www.ourparents.com:
1. A great database of provider information – descriptions, services, photos, quality ratings, price info, etc. for over 65,000 care providers
2. A simple and powerful search experience, modelled after best practices in the travel industry, allowing the consumer to trade off cost, quality, distance and special requirements quickly and easily as they look at available options
3. Understandable, jargon free analysis of options – this helps address a huge issue that has crept into the industry over the years, inhibiting the dialog that needs to occur
4. Free detailed reports about each facility (something other sites share $25-$90 apiece for) – This includes access to the Medicare star rating and detailed audit findings, community data, assessments of nearby healthcare options, and more to help a consumer make an informed choice
5. Tools to get help you started on the journey – The first of these is our Care Options Advisor™, a tool that lets a person quickly and easily describe the circumstances about their loved one (health, age, decision priorities, etc.) and be guided to the type of care options that make the most sense to consider. We’ve received really good initial feedback from care professionals about the tool, and we think it a great first step for a family just beginning the search for a care solution.
6. Automated follow-up tracking with the providers you are interested in – When you find a care provider you are interested in, you can use OurParents to help initial the request for contact, and we’ll serve as an automated follow-up tool with providers to help ensure you get a response in a timely manner.
7. Access to social media (e.g., blogs, etc.) and news related to the provider you are researching – There are lots of important things to know about a given provider, some good (e.g., real life stories about a family’s experience with a provider), and some bad (e.g., bankruptcy filings, nursing home abuse allegations, etc.). Leveraging sources like blogs and traditional news sources can be invaluable in painting a more complete picture of a facility.
8. Additional resources to aid you (articles, provider selection checklists, etc.) …
It is a big first step for us to help introduce change into the system, but only our first step to help drive all that’s required. We are really happy with the initial feedback from our beta program – it’s helped re-enforce that we are on the right path – and have used that feedback to further refine what we are now offering to the public.
It is high time for change. Both the adult children and the ageing parent need to much better served than they are today. We look forward to take on the challenge.