A partnership with tech-forward home care startup Honor has enabled senior living nonprofit Eskaton to boost revenue and smoothed the organization’s expansion into new markets. But the partnership did not get off to an auspicious start.
Sacramento, California-based Eskaton completed its transition to the Honor platform in Dec. 2018, and issues emerged soon after.
“By mid-January 2019, it became apparent we needed to address some of the issues we were experiencing,” Tom Bollum, executive director of Eskaton’s Live Well at Home business, told Senior Housing News. “We felt the issues were critical to our success.”
The story of how Honor responded sheds light on the latest iteration of the San Francisco-based company’s business model and approach to operations, which have gone through shifts since the startup first made a splash in the industry by raising $20 million in venture capital in 2015. Through subsequent rounds, funding has now exceeded $115 million.
The backstory behind Live Well and the evolution of the partnership with Honor also highlights the challenges and benefits for senior living providers as they add a home care component to their offerings.
Major pain points
About three years ago, Live Well at Home was serving a three-country area in and around Eskaton’s market stronghold of Sacramento. Trying to maintain a staff of 120 caregivers, Live Well was facing serious challenges.
“We were losing caregivers faster than we could hire them,” Bollum said.
With labor markets tight and caregivers in short supply, the dilemma will sound familiar to many senior living and care companies.
Live Well at Home tried several initiatives to address the problem, including starting a caregiver academy, a caregiver recognition program, and paying above market rates. Despite these efforts, the organization was still not seeing improvements.
The Live Well at Home situation was creating a drag on Eskaton as a whole. The majority of the nonprofit’s services were being provided in the Sacramento area, where Eskaton operates about 15 independent living, assisted living or continuum of care communities, as well as several affordable housing properties. The strategic vision in 2017 was to build up Eskaton’s presence in other California markets, but Live Well was not in a position to support that growth.
Meanwhile, Honor was already on Eskaton’s radar. In addition to its large chest of venture capital, Honor had attracted attention due to the pedigree of its founder, Seth Sternberg. His previous venture, Meebo, went on to be acquired by Google for a reported $100 million.
“We had Seth over to our corporate board several times to speak about strategy and his vision of home care,” Eskaton Chief Strategy Officer Sheri Peifer told SHN.
At its founding, Honor’s model was to leverage a sophisticated tech platform to connect clients and caregivers more efficiently than a traditional home care company, and to use tech to also enhance the in-home care experience. It focused on private-pay, non-medical services such as assistance with activities of daily living.
That initial approach meant that Honor was a competitor to existing home care agencies, but the company has repositioned in the last few years. Shifts in employment law, challenges in client acquisition and other impediments have sunk some similar home care startups, but Honor has responded by focusing more on building partnerships with existing home care providers.
The idea is that many home care agencies are struggling with recruitment, retention and scheduling, but these are strengths of Honor, thanks to its scale, financial resources and technology. Honor’s tech facilitates more efficient workforce management in part because it captures a tremendous amount of data, which has led to scheduling practices that are effective but may seem counterintuitive.
So, Honor started to take over workforce management and other back-office responsibilities from some agencies, which continue to focus on the provision of high-quality care. Honor and its home care company partners share in revenues.
The exact parameters of these revenue-sharing partnerships gave rise to some concern with the home care industry, but the Honor Care Network gained traction to the point where Honor was present in more than 600 cities and towns across California, Texas and New Mexico as of late 2018. Arizona, Ohio and Michigan have since been added.
After studying this model and going through several rounds of meetings with Honor, Eskaton’s leaders decided in the third quarter of 2018 to move ahead with a partnership. Bollum had high hopes that Honor would be able to solve “our major pain points” related to hiring, training and growing the pipeline of caregivers.
A learning curve
The initial transition of the Live Well workforce to the Honor platform went smoothly, with about 99% of caregivers making the transition. Although it took some explaining, the caregivers came to understand the advantages that Honor presented, including easier scheduling via the Honor app and the availability of more hours, Bollum said.
Honor has a “pretty formal” transition process that caregivers go through as they transition, involving onboarding, training and evaluation, Honor President Nita Sommers told SHN.
Meanwhile, Eskaton did eliminate some back-office positions that were redundant with what Honor was nor providing, leading to cost savings.
This initial transition was completed almost exactly one year ago. Then, the hard work began, as those critical issues swiftly popped up. These issues included:
— Having a more robust recruiting pipeline to have a bench of caregivers ready to staff new cases
— Better consistency of care from the beginning of a new client relationship
— Customer service issues related to care team availability when clients called with a need
Eskaton presented a particular need because the Live Well book of business included supplemental staffing for roughly 30 communities — operated by Eskaton as well as other providers — in the Sacramento area. So, workers had to be available at short-notice to pick up shifts.
Within 24 hours of these issues being brought to Honor’s attention, Sternberg and the management team were on their way to Sacramento. This responsiveness reassured Eskaton, as did the improvement plans that Honor presented.
Significantly, Honor committed to expediting a planned shift to a new management model. Previously, the company took a functional approach. This meant that certain staff members were responsible for overseeing particular functional areas across a wide variety of markets. In Sacramento, Honor accelerated a shift to a geographical-based model, meaning that there was now a dedicated team that would focus exclusively on this market.
“What that allows them to do is really customize, for example, recruiting approaches to unique aspects of the Sacramento market,” Sommers said. “It allows us to customize unique things we see on the wage and labor side, and it also allows us to really think about the individual partners we have in the market … how do their teams like to interact, and be able to work and interact with them in very tailored ways.”
Geographically focused teams are more knowledgeable about details that can make a big difference, such as how to pronounce the names of local facilities, Bollum pointed out. And then there are more significant market characteristics that make a major difference in being able to recruit and schedule staff effectively. In the Bay Area, for instance, caregivers may not want to drive across the bridge to work, even though a client would only be about two miles away, whereas in Sacramento it’s more commonplace to drive longer distances.
The shift to a geographically-based model included technological changes related to workflow, Sommers noted.
Within several weeks of that meeting between Honor and Eskaton leadership, Honor had started to make shifts on the ground to accelerate the new geographic model. Within about 30 days, improvements were seen.
“It makes me laugh because any strategic change or important initiative — at least in my experience in senior living — takes much longer than that,” Peifer said, adding that the speed of Honor’s response speaks to the company’s entrepreneurial spirit.
Now, a year in, the numbers paint a picture of success for the partnership. Live Well at Home’s top-line revenue is up 40%, whereas it had declined between 2017 and 2018, Bollum said. Eskaton is budgeting for 30% growth again for the next year.
Prior to the partnership, about 10% of available hours were not being staffed, but now the fulfillment rate is 99%.
Net promoter scores for both clients and care pros are also high, in the range of 60 to 70 out of 100, Sommers said. That is in line with some of the top-scoring companies nationally, such as JetBlue at 71 and Ritz-Carlton at 68, according to data from Satmetrix.
Also in the last year, Eskaton has expanded by taking on management of communities in new California markets: Stockton, in the Central Valley east of San Francisco; and Burlingame, an area just south of San Francisco International Airport.
The Honor partnership supported these expansions. Particularly in the case of Burlingame, this was a market that Honor already operated in, and so was able to bring valuable information and expertise to the table, including knowledge of pricing and effective recruitment methods.
And, for Honor’s part, the experience with Eskaton helped build out capabilities that will make it easier to partner with larger, more sophisticated organizations going forward, Sommers said.
Other senior living organizations may be encouraged to partner with Honor based on the strong numbers that Eskaton is producing, particularly because the challenges that Live Well was experiencing prior to the partnership are commonplace.
“Senior living providers have ventured into the non-medical home care arena and found that it’s challenging, and finding that the workforce element is too difficult to achieve excellence on our own,” Peifer observed.
Still, some providers may be reluctant to give up any measure of control over their home care business, believing that they can create a differentiated product versus partnering with a group like Honor that may be working with several local senior living or home care competitors as well. In addition, senior living and care companies could be reluctant to give up any share of home care revenue.
Ultimately, each organization needs to weigh the pros and cons and honestly assess their own strengths and weaknesses, Peifer advised.
“We’re willing to get messy, we’re willing to think differently, and we have to evaluate and hitch ourselves to each other’s wagons,” she said. “My message would be evaluate what part of the market you want to be in, evaluate what you do extraordinarily well and what you don’t, and identify the right partner.”