For Chicago-based home care provider BrightStar Care, 2016 was a milestone year. A decade after the company began franchising, its 300th franchise location opened in the Chicagoland area.
The franchise system now stretches across 38 states and Canada, has recorded over a billion dollars in total revenue, and employed more than 100,000 nurses and caregivers, according to figures provided by the company. Going into 2017, the company plans to keep growing, though at a carefully calibrated pace, says founder and CEO Shelly Sun.
In addition to BrightStar’s future expansion, Sun recently spoke with Home Health Care News about other pressing topics, including the company’s investments in technology, meeting the top challenge to the industry, and her concerns about home care startups that resemble dating sites.
HHCN: What was BrightStar’s signature accomplishment in 2016?
Sun: We made large investments in a mobile strategy, so that all our caregivers and nurses are equipped to take information and seamlessly enter it at the point-of-care, so we can see trends on how we’re impacting the quality of care and, ultimately, the cost. We’ve begun with some pretty substantial investments—about $4 million—into the mobile strategy.
Heading into 2017, we see another $3 million to $5 million of investment in the mobile strategy, building in BI [business intelligence] systems and skilled care capabilities, so we can share our outcomes on readmissions and other quality metrics with health systems and other payers, showing them how we can bend their cost curve to hopefully get our unfair share of their patients.
HHCN: Is that homegrown technology or are you working with vendors?
Sun: All the tech is proprietary to BrightStar, to ensure that our franchisees continue to have the highest unit economics in the industry. On average, we perform about three-times the volume at our franchise locations in the first through third years, compared to most of our competitors as disclosed in their franchise filings.
If we used an off-the-shelf software, as we come up with innovations, we’d have to give those to the software provider, and then our competitors would have access as well. I still own 100% of the [BrightStar] stock, so I can take the long view. We don’t want our tech to be used by our franchise competitors.
For our business intelligence platform, we did pick one of the best in the industry, from the Gartner Quadrant. Sisense.
HHCN: What hardware is BrightStar using?
Sun: We’re generally on a Microsoft platform and programming language, but the devices are somewhat agnostic. So, [caregivers] can choose the smartphone or tablet that they might be using on the local level.
HHCN: What are the major challenges that you anticipate for 2017?
Sun: The continued labor shortage for home care workers, at the CNA [certified nursing assistant] and aide level, and RNs [registered nurses]. I think it will continue to probably be the largest issue for the industry over the next three to five years. Having an aging workforce and newer workers not coming in as quickly [means] the labor population is shrinking while you have an increased need for care with an aging population.
HHCN: Is BrightStar taking steps to meet the challenge?
Sun: We are trying to differentiate based on higher pay and benefits and variety of assignments, and having Joint Commission accreditation in place. We’ve implemented a position dedicated to getting out on roadshows to franchisees, helping them with how to recruit and ways to train, with a focus on ongoing education. We recruit less because we retain better. Looking at the three to five year time horizon, I think we have to start thinking about how to get involved in the education system to create a BrightStar-certified nursing assistant and nurses. It’s probably a tuition reimbursement program with national education platforms.
I think you’re going to have to look at integrating telehealth as a complement to the person providing care, to make things more affordable for the family in the event minimum wage [keeps rising]. I’m an advocate for $15-an-hour for the person doing the hard work, but the reality is moving them up 40% in pay means a consumer on a fixed income is seeing a 40% increase in what they’re paying. It must be a combination of direct care in the home and integrated telehealth and remote monitoring, to trigger an employee to go in and deliver care.
I think you’ll also see families evolving. Their more acute family members who need more care, especially around dementia, Alzheimer’s, [may move] to small-format assisted living where labor can be spread over more people, so that labor costs don’t drastically increase.
Raising [pay] rates might actually attract more people to the care field, because it’s a very feel-good field, but people need to earn a living. But as you see rates [rising] $1, $2, $3, $4 an hour, you’ll see a combination of families who can’t afford [care] looking at a combination of one-on-one care and tech able to monitor and have someone respond to a trigger event like a fall. It’s not ideal from a safety standpoint, but economics may make it necessary.
HHCN: What will BrightStar’s growth look like in 2017?
Sun: We’ll look to add 30-40 new franchisees. That’s a reasonable, 5%-10% level of growth. We are not trying to scale quickly at the sake of the quality of our franchisees. I know I could tell my team we want to grow faster and we would, but we wouldn’t be happy with the quality.
We’ll be putting a lot of time and effort into our BrightStar Senior Living brand. [Our first franchisees] just bought their second BrightStar Senior Living, and we’ve got a few others under site review now. In next 24 months, we’ll look to open another 10 and then have a 5 to 10 community growth rate per year after that.
HHCN: What about the competitive landscape? We’ve seen some well-funded startups enter the space in the last few years.
Sun: I would separate the competition into two categories: Those that are in the marketplace that are properly licensed and all employees are W-2 and operating in keeping with local, state, and federal guidelines. We’ll continue to fight each other for the workers, and there will be an increased demand for care.
I think a lot of startups are operating in this model. They see the demographics, but they are getting into the business for the right reasons. Maybe they had a family experience with care.
And then there are those that see the dollar signs of the increasing demographics. I think those that get into it for the right reason but want to make money, that’s fine. But [in other cases] the referral sources will see through it. They don’t mind if someone wants to make money, but they need to make sure the caregivers will do the right thing by the patients they are discharging.
I think it’s still an underserved industry, even though there are many startups. But the cost of compliance is difficult, so you need scale to succeed.
The startups that are hugely funded, I think fundraising was the easy part. The matchmaking [between client and caregiver] online is a good technology play, [although] I personally wouldn’t choose to find care for my mother, who I love, and not have met the caregiver and not have someone I can call who is an overseeing nurse, who can intercede if there’s a changing condition. These companies resemble dating sites, but two consenting adults agreeing to go on a date is very different than a caregiver caring for someone in a vulnerable condition.
But the tech is causing us to look at some of our technology. Do our families want to see the face and background of our caregivers before they start care? We are exploring and are capable of providing that, but we want to make sure there’s not a discriminatory element as well. Companies are going to have to watch and make sure they’re not causing or enabling a shift to where a customer base is able to pick 80% to 90% of one demographic and not the other. I would think that’s discriminatory in placement if not hiring. We have to manage unintended consequences.
I think there’s a lot of liability in care events that will go wrong, and I would think and hope that they’re telling people where to go and what duties to perform. There’s regulatory licensing that [some] haven’t begun doing. Even though they’re matching someone for care, they haven’t gotten licensed as a caregiving organization. It’ll be interesting to watch from a consumer protection standpoint. [Getting that licensing] depletes a lot of the margin they’re passing on to the customer.
Written by Tim Mullaney
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