Can the Uber-ization of Home Health Survive?

With the role of technology in health care ever expanding, new direct-to-consumer models that bring services to patients at home are piquing the interest of corporate venture capital (CVC) partners and other investors. But the question remains as to whether the influence of technology in care models and what some are calling the sudden “Uber-ization” of home health can last.

While startup home care providers and other businesses that offer similar transportation or care services are finding initial success in their fundraising, not all investors are seeing the same opportunities around these direct-to-consumer models. The expanded role of technology in home health care and home care is what some are referring to as the “Uber-ization” of health care, comparing new technology advances with the popular on-demad ride-hailing app that has exploded in popularity over the past several years.

With price points that are largely considered affordable for patients and consumers for home visits and other care services, some investors worry that these models are not likely to succeed in the long run. While the price range of home services can vary, higher price points are more viable and can offset the growing costs of labor, according to Robert Mittendorff, M.D., partner at Norwest Venture Partners.

“I’ve been very skeptical around the ‘summoned care’ market,” Mittendorff said during a panel discussion at MedCity Invest conference in Chicago in April. “Primarily, it’s because of  the price point that many consumers are willing to pay. You can’t make that up on volume because of the amount of labor involved. …Uber for health care only works at $500 per visit.”

Kaiser Permanent Ventures, the venture capital arm of California-based health care giant Kaiser Permanente, recently backed Hometeam, an in-home care provider, with a $5 million investment. Specifically, Hometeam uses technology and software to match caregivers with patients. The direct support of Kaiser is a prime example of the significant value major health care players are placing on innovative startup businesses.

Another home care startup that has been likened to Uber, California-based Honor, is one that investors also see as an exciting company working within the technology trends of where health care models are going.

“Like Honor, caring for people at home is sort of a direct-to-consumer play and is a big one to warrant potential [for success],” Skip Fleshman, managing partner at Asset Management Ventures, said during the MedCity Invest conference.

Corporate venture capital partners are also taking a hard look at where consumers want greater efficiency and accessibility. While some CVCs may be somewhat skeptical about investing directly in businesses that offer direct-to-consumer services, startups that incorporate telehealth and other in-demand components like scheduling and payment innovations are peaking interest.

“Consumers are asking for more transparency, more tools,” Mittendorff, M.D., partner at Norwest Venture Partners, said during the panel. “They’re looking for more scheduling. So, we think a lot about payments and how to make that part of the health care system more convenient and transparent.”

Written by Amy Baxter