HomeHero, along with several other new startups, aims to help a demographic that’s often ignored in the relentlessly young-skewing Silicon Valley: aging baby boomers. These companies send caregivers to look after older adults in their homes, with the help of techy bells and whistles like apps and data collection.
But so far, these startups — which also include Honor and CareLinx — haven’t provided medical care beyond, say, reminding people to take their meds or driving them to doctor’s appointments. Now HomeHero is stepping closer to this heavily regulated arena with a new program aimed at curbing high hospital readmission rates.
When a patient is released from a hospital in the United States, chances are they won’t be out for long. In 2010, 1 in 6 Medicare patients returned to the hospital within a month of leaving, according to one estimate. That high percentage suggests that patients aren’t being taken care of well enough the first time, and drives up health care costs.
In partnership with hospitals, HomeHero plans to keep tabs on newly discharged patients by assigning caregivers to take notes on an app about any problems they might have, like if they lose weight or fall down. The caregivers won’t be acting as nurses, but their observed warning signs will be shared with the company, which can refer the patient to third-party services, as well as the hospital and the patient's family.
To beef up its workforce to take on these new tasks, HomeHero is doing something that a growing number of gig-economy startups are doing: It’s converting its fleet of independent contractors (currently numbering 1,500) to full-time, W-2 employees. Its rival Honor, which operates in the Bay Area and Los Angeles, made the same move in January, and Hometeam also has W-2 caregivers in New York, New Jersey, and Philadelphia.
"[With] Uber or Postmates or Instacart, you interact with that 1099 worker for an hour at most and then they’re out of their life,” CEO and co-founder Kyle Hill told BuzzFeed News. With HomeHero, “this is somebody as intimately involved in your life as a babysitter or a nanny. These are people that may be with your mom or dad for the rest of their life. We felt that empowering our caregivers, giving them health and vision and 401(k) plans and benefits and workers’ comp, just allows us to really invest long-term in these relationships.” That argument has been also made by on-demand companies in other fields, like food delivery service Munchery and office maintenance provider Q.
Founded in 2013, HomeHero started its service in January 2014 and serves Los Angeles, Orange County, San Diego, and the Bay Area. Customers go online to schedule visits from caregivers, and HomeHero says its special algorithm matches seniors with employees based on their care needs, skills, schedules, and hobbies. It’s raised $23 million in venture capital.
HomeHero’s idea to team up with hospitals was sparked by the Affordable Care Act. The law financially penalizes hospitals that fail to keep their patient readmission rates below a certain threshold within a monthly period. “Hospitals more than ever before have been looking for partners in home care to provide low-cost management to keep their patients out of hospitals,” Hill said.
Still, HomeHero hasn’t sketched in many of the details that will determine whether its new effort will work. No hospitals have signed on yet, and the startup is still figuring out how payments will work: Some hospitals may subsidize the entire service, while others may provide a discount. HomeHero will have to set itself apart from an already existing federally funded program that pairs discharged patients with caregivers. Last month, another company, Hometeam, announced an investment from Kaiser Permanente Ventures and hinted to Fortune that its service could soon integrate into Kaiser’s health care system. Hometeam told BuzzFeed News that since last year it has had a program that helps patients transition out of hospitals. It declined to name the facilities it partners with, and has not publicly announced this program.
To help it win hospitals, HomeHero also announced Tuesday that it will be hiring a chief medical officer and a chief nursing officer. “This is a pretty big shift for us in mindset, and going forward, we will be a lot more of an enterprise company than we ever have been before,” Hill said.
In addition, HomeHero will have to see if the W-2 reclassification improves business as expected. Hill said the startup is offering W-2 positions to all of its caregivers in a conversion process that’s expected to take three months. Right now, customers pay out of pocket about $19 an hour, and caregivers make $14 to $15 an hour; Hill says he doesn’t anticipate rates will significantly change.
“The 1099 model has helped us get to 1 million hours of home care over the last two and a half years,” he said. “To be successful for the next 10 years plus, having full-time employees on our team is the way to go.”
This story has been updated to reflect that Hometeam told BuzzFeed News it has a program that helps patients transition out of hospitals. It declined to name its partners and has not publicly announced this program.
Stephanie Lee is a senior technology reporter for BuzzFeed News and is based in San Francisco.
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