CEO Interview: Why Honor is Donating $1 Million in Free Home Care

Home care startup Honor generated a lot of buzz by locking down $20 million from a group of high-profile investors in April. Now, the company that is seeking to disrupt the private duty industry is rolling out to a broader market and will be donating a total of $1 million in free home care across 10 cities.

The company’s founder and CEO, Seth Sternberg, is announcing Honor’s expansion and the plans to donate free care at today’s White House Conference on Aging—an event held once a decade to gather input on how the lives of seniors can be improved. Tomorrow, Sternberg will address the President’s Council of Advisors on Science and Technology, where he’ll discuss how technology can help seniors stay in their homes as they age.

While Honor is still in its early stages, having just completed a pilot phase in California’s Contra Costa County, Sternberg is no stranger to the media spotlight and to being tapped as an authority on technological innovation. That’s due largely to the success of Meebo, a social networking company he co-founded, which Google bought for a reported $100 million in 2012.

Sternberg recently sat down with HHCN to discuss how the Honor pilot went, what the plans for growth are, his thoughts about competing startups, and how the government can help foster further innovation in senior care and home health.

HHCN: Let’s start with the decision to donate $1 million in home care across 10 markets. What’s behind that?

Sternberg: Private duty home care right now is a classic American problem: The wealthy can afford it and there’s Medicaid, but the middle is squeezed. That’s also why we’re committed to offering a one-hour minimum per visit, while most agencies stick with three to four hours. To enable more people to afford it. You’ll see us do more, we’re not done trying to make care accessible to more people.

HHCN: You’ve announced that the Bay Area will be the first location to receive donated care. What are the other nine locations, and when will Honor enter these markets?

Sternberg: We haven’t chosen them yet. It’ll be based on our rollout. And I’m not sure how long it’ll take. Probably over the course of a year or two. But it’s hard to say sitting here now.

HHCN: Will Honor launch in other states in addition to California?

Sternberg: I think we’ll certainly work to get out of California. I want this to work as well in Des Moines as in San Francisco. It’s a really bit early for the exact specifics.

HHCN: Starting today, Honor will be available throughout the Bay Area. What does that encompass specifically?

Sternberg: We’re covering everything from Marin to San Jose, so about a 60-mile vertical, and through the East Bay as well. It’s about an 1,800 square-mile area.

HHCN: What were some of the key lessons from the beta in Contra Costa County?

Sternberg: The really big surprise is how many seniors are directly signing up with us. We expected it would mainly be family members. We’ve seen in the screening process for caregivers, only 5% are being accepted. Driving record turns out to be the main barrier for acceptance, and education is the No. 1 indicator for who ends up being a successful candidate.

Another surprise is how many seniors are asking, can my regular caregiver be the person I met with on the initial assessment? The reality of the way the industry works today is that the first assessment is really a sales meeting. We specifically said we’re not going to do this. It’s going to be a care professional who does the first meeting/assessment. I think that’s part of the reason we’re getting these requests. We have to assure people that all Honor’s people are amazing.

We’re learning a ton, and as we go into each new market, we’ll learn more. In a year, we’ll be dramatically better.

HHCN: You mentioned taking on some industry norms. Honor’s trying to really shake things up through technology, for instance by giving people more on-demand access to care, enabling shorter visits, and increasing information sharing with family members about visits. Have you encountered pushback or skepticism from the industry?

Sternberg: I hear from the industry, how would you deal with this case or that case? People who are trying to prove we can’t do this. I say that’s a nice problem you just described, and when we encounter it, we’ll figure out how to handle it. If it’s a people thing, we can change a process in a day. If it’s a tech thing we can fix that in a week. You constantly encounter problems and you fix them. I want to create an amazing experience for my mom when she needs this type of care. I’m saying I have five years. Problems are there to be solved.

If you think about it, technology tends to work in such a way that it comes to a given problem area and then it sweeps that area. Taxis are really not that good. In San Francisco, it was terrible. You couldn’t get a car. Now I can get it in two minutes, because tech got applied to that problem. When tech goes into an area, if it’s actually a solution that will work, it will create such a better experience for participants.

HHCN: You’ll be addressing policymakers in Washington, D.C. this week. What do you think the federal government can do to help improve home health care?

Sternberg: I think we can make private duty care dramatically better. I think it would be great if Medicare helped reduce the financial burden on folks.

HHCN: You think Medicare should start reimbursing for private duty home care? Do you think that’s realistic?

Sternberg: I think it would be fantastic if Medicare figured out how to fund some level of private duty home care. And I think CMS [the Centers for Medicare & Medicaid Services] is actually very innovative.

HHCN: I think some people would disagree.

Sternberg: I’m sure people say everything about every government agency. But I’ve seen them do a couple programs that are innovative. They’re doing all sorts of stuff. One example is the bundling program, placing direct [payment] incentives on health systems to fundamentally make people healthier. That’s a big deal. Another example is the Million Hearts: Cardiovascular Disease Risk Reduction Model, around providing a financial incentive for providers to decrease people’s risk of heart attack and stroke .

HHCN: Other things the government should focus on?

Sternberg: There are 40 million people who report as unpaid caregivers. Let’s help figure out how to support our caregivers, I think that’s a really big deal. There was just a bill introduced. Studies show that as people care for seniors over time, their own health deteriorates. If the government pays for something, there should be savings down the line. If the government can relieve some of the burden on caregivers, I think that’s a really good idea.

The other peice of this all is that government can highlight that investing in innovation for seniors is a massive opportunity. That the President’s Council of Advisors is shining a light is going to help, because it’s driving awareness that this is a big problem with a big opportunity.

HHCN: It seems that investors already are seeing an opportunity here. You raised $20 million, and Home Hero, another disruptive home care company, also recently announced a $20 million raise.

Sternberg: Yes, we raised $20 million for Honor, and because that happened, I think you’re very likely to see other fundings happen. I think that it’s probably not coincidental that it was $20 million [for HomeHero], right? I think it’s awesome in a way.

HHCN: So you’re glad to see this type of action in the sector, even if it means money flowing to a potential competitor like HomeHero?

Sternberg: Yes, I think I said that I hoped that would happen. I think that’s cool.

Written by Tim Mullaney



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