Another Tech-Forward Home Care Startup Shuts Down
A Chicago-based home care startup has closed its doors after only being open in the city for roughly six months. The announcement adds doubt to whether technology-first approaches to the home care industry can be successful.
The company, Respect, underwent an arduous process to open in Illinois while the state was in the midst of a two-year budget battle. Despite its successful launch and ambitious goals to disrupt the home care market in Chicago, the company “comes to an end much sooner than we had imagined,” CEO Bruce Masterson told Home Health Care News.
The announcement comes in the wake of the spectacular flop of another home care company, California-based HomeHero, which had secured more than $20 million in investments. HomeHero ceased operations in early spring, citing significant challenges after the startup changed its model from contracting to a W-2 model.
A Slow-Growth Business
Respect was one company, like HomeHero, that took aim at the home care space with technology at the forefront. Instead of disrupting the industry, however, Respect discovered that technology wasn’t going to change the fundamental elements of home care operations.
When HHCN caught up with Respect earlier this year, the company had recently opened it doors in Chicago and had only retained six clients. At the time of closing—officially on July 14—the company had roughly 30 clients between its operations in Chicago and Milwaukee.
“By building a mobile platform, we thought we would improve quality of service and be able to grow faster [than traditional companies],” Respect CEO Bruce Masterson recently told Home Health Care News. “While it did improve service, it did not improve conversion rates to getting clients through the door.”
The company’s technology front-loaded a lot of information for those seeking care, including profiles of caregivers and short videos. However, even with an app that gave clients and their families access to this information easily, converting people into clients was work-laden, with Masterson often being personally involved with each family.
In other words, having the best technology didn’t equate to gaining business and market share at a fast enough pace.
“It’s not a market that, as of today, is very open to anything other than a high-touch referral model,” Masterson explained. “We thought there would be more room, more of a market—particularly with adult children—for using the app for finding caregivers. They use it for tracking caregivers, but not for the upfront part of becoming a client.”
In the future, home care may be more likely to embrace technology as a means to refer clients to providers, Masterson predicts. For now, the industry remains stuck in its ways, he said.
The catalyst over the next decade or so may be the growing need for caregivers.
“The biggest thing that will change [the industry] to adapt to technology is that caregivers will become harder to find,” he told HHCN. “It will force more use of tools in the market. Caregivers are very difficult to find these days, and as more of that continues it will push people toward using technology, and using it more intelligently.”
Written by Amy Baxter