Honor: the next “Uber for elderly care”

Honor wants to disrupt the elderly care market by providing quality, efficient and convenience elderly care services to the home.

What is Honor?

 

The advent of Uber started the trend of online marketplaces disrupting traditional industries anywhere from transportation (Uber) to hotels (AirBnb).  Honor is one of the latest online platform technologies looking to disrupt specifically in the healthcare market of in-home and elderly care.

 

Honor provide users with an online platform to connect professional caregivers to patients and their loved ones. Started by ex-Googler – Seth Sternberg, the company founded in 2015 has already raised over $62M in series funding and boasts partnerships with organizations like Alzheimer’s Association for caregiver training. [1]

 

 

Elderly Care Market

The number of people hitting 65+ Medicare age is currently over $46 million and projected to more than double to $98 million by 2050. [2]

With the baby boomer population reaching elderly age,  the projected demand for home health agencies and in-home care is also set to increase. Most in-home care is run by brick and mortar agencies but a number of technology platforms have entered to disrupt the market – Honor among one of them.

 

Competitive Differentiation on Value Creation and Capture

So how does Honor differentiate itself as a platform technology from the rise of similar elderly care platform companies as well as incumbent home health brick and mortar agencies?

 

 

Value Creation: On-Demand vs. Recurring Elderly Services

One of the differentiating factors with Honor is they provide both on-demand and recurring services. [3]  The on-demand model works best for services that can be commoditized – e.g. transportation, delivery. While the majority of Honor’s services cater towards on-demand services, the company also has a personal 1:1 session follow-up after every booking. Honor also provides recurring elderly services such as medical services and bathing.  Honor’s step to cater towards on-demand has a deep advantage over brick and mortar agencies that aren’t able to provide the type of fast, convenient service. Honor is taking the strategy to create value in both types.

 

Scalability: Automation vs. Personalization

On the on-demand side, Honor automate all aspects of their business including an automated match between the caregiver and patient and set platform prices. Honor’s focus on automation enables it to scale more easily than competitors including incumbent brick and mortar agencies.  It also provides a higher level of efficiency and convenience than other companies. On the other hand, Carelinx has no automated matches and no set prices – everything is set by the caregivers. While this autonomy for caregivers might be an advantage, I think long term sustainability and scalability will require a more automated platform [4]

 

Network Quality: Employees vs. Contractors

As a mechanism to improve the network of caregivers, Honor actually employs it’s caregivers that work directly with the customers, giving them more control over the quality of the marketplace compared to companies like Carelinx and Care.com that only service as a marketplace for third-party caregivers. The latter is subject to higher multihoming effects since caregivers can apply to either program and aren’t employed. Honor has an advantage to creating greater indirect network effects with higher quality, trained caregivers that build a differentiating brand with Honor.  The founder boasts over 85% retention rates among their employers.  Thus, Honor’s high retention rates and employment of it’s caregivers serves to lower multihoming effects compared to the more open third party market place of competitors like Carelinx and Care.com.

 

 

How will Honor stay ahead?

Whoever is able to develop stronger indirect network effects between caregivers and patients while being a sustainable scalable model is likely to win in the marketplace.  To do so, companies like Honor will need to understand the greatest value for patients and the patient’s loved one  – whether it be through on-demand or more recurring type services. I also don’t believe brick and mortar agencies will go away and as complementary players to Honor’s business it will be important for them to continue to think about how best to work with or provide services that can only be down in a brick and mortar setting. While automation is key to scalability the balance between creating an automated but also customized and personalized service of quality caregivers with also be important.

 

 

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Student comments on Honor: the next “Uber for elderly care”

  1. Thanks for the post! I’m curious how the platform actually works – is the expectation that the patient will request the one-time or recurring services through the app? If so, how is the company thinking about training “patients” to use the app — and to teach them a new behavior (in general) for them? I think about my grandmother, for instance, who has a pretty basic cellphone — not even a smartphone. She can’t believe (and nearly always forgets) there’s an on/off switch on her phone. Even with more tech-savvy baby boomers, many of them struggle to use relatively “simple” apps like Uber. It would be intriguing to hear how the firm is thinking about UX and UI. Also, in the elderly care market, there are instances of abuse and neglect. Having employees (vs. contractors) helps to combat potential experience issues, but I wonder what other mechanisms there are in place to strengthen the platform.

    1. Hi,

      You’re right – oftentimes the market user of the platform are caregiver’s loved ones rather than the caregiver herself/himself that purchases the services. Honor prides itself on a rigorous application process where the current acceptance rate of caregivers is 5%. Screening criteria include clean courthouse and criminal database records going back 7 years, 60 min interviews including competency and in-person screening as well as registered drug testing. One of the key drivers for the company will be retaining top caregiver talent in a way that preserves quality but that is also scalable.

  2. I really enjoyed reading this post – thanks for sharing! Home care is a fascinating high-growth market – and a lot of room for innovation. I think it’s smart of Honor to retain their caregivers as (full-time?) employees. From what I understand, caregiver quality and retention is one of the biggest challenges for home care agencies. While I believe demand will be high for platforms like this (especially as, to Lauren’s point above, the aging population becomes more tech savvy), I wonder if the company will be able to scale the supply side at the same rate. What are the qualifications for caregivers? Does Honor conduct all of the training themselves, or do caregivers need higher-level (ie nursing) certifications?

    1. As mentioned above – but caregivers on the Honor platform are not only employed but go through a rigorous screening process. In term Honor prides itself on a rigorous application process where the current acceptance rate of caregivers is 5% (see above). In terms of scalability, Honor is differentiated from other similar technology based elderly care platforms with an automated match and pricing service to limit SG&A costs of additional HR / staff to coordinate care. I definitely scalability will be a key challenge to developing a platform that is sustainable.

  3. Great post! I agree that automation is key to building scalable platforms. One thing I would be curious to understand is how big is the elderly care market in terms of $$, and is it enough for this to become a massive medical platform? I also wonder what other markets Honor might be able to tap into for on-demand services that are complimentary to the ones it currently serves?

  4. Thanks Brandon! The elderly care market is expected to grow to $319 billion by 2016. So in terms of a low capital investment market with historically large margins from Medicare reimbursement there a huge opportunity here to improve quality and efficiency from traditional brick and mortar home health agencies. Research has shown that one of the biggest elderly care costs is from in-home care – with costs ranging from $3-$6K a month. https://www.forbes.com/sites/michaelwolf/2014/04/24/heres-why-elder-care-may-be-the-next-billion-dollar-technology-opportunity/#3a6c945b52d9.

    Companies like Honor who can create a scalable and quality tech platform will be key to success in this new disruptive tech approach to elderly care.

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