California-based Honor has raised another $50 million is a Series C funding, bringing the home care startup’s total funding to $115 million.
The funding comes as the company has pivoted its business, from operating as a private duty home care provider to becoming a technology and operations partner for a growing network of in-home care agencies.
“We started the Honor partner network a couple months ago, and the goal in doing that is to build the national network powered on the technology backbone,” Nita Sommers, Honor’s president, told Home Health Care News. “[We’re] making our technology and operational capabilities available to a limited set of partners in different markets so we can essentially pair our uniquely scaled technology and capabilities with the best of local providers.”
The Honor Partner Network, which launched in November 2017, enables other providers to utilize Honor’s technology, apps and back office operations.
The $50 million funding—which was led by Naspers Ventures, a global internet and entertainment group and tech investor, and existing investors—will go toward expanding this network, according to Sommers.
The shift to the network comes after Honor’s CEO, Seth Sternberg, learned “a critical lesson” that scaling out the company’s home care operations—from being the biggest provider in the San Francisco Bay area—to new markets was challenging and competitive.
“The locally-owned agency providers in Dallas, Los Angeles, and Albuquerque understood their communities better than we ever could,” Sternberg wrote in a blog post. “Not just cultural nuances, they knew the health and social support systems for older folks, who families turned to when looking for a caregiver, and the key institutions within the community who helped their patients and clients find quality home care. And they had spent years building real relationships and real trust, which is what this business is about.”
Sternberg said he thought Honor could help solve the problems of local agencies rather than running “local, home-grown businesses.” Honor would become a partner that could backfill a last-minute call-off with a high-quality, situation-qualified Care Pro; fulfill a late-night customer request for the next day; keeps tabs on service quality in real time; and handle legal and compliance issues systematically and efficiently, according to Sternberg.
Providers in the network, which includes the recent addition of seven home care agencies, have access to Honor’s caregiver pool. One such company, California-based CSS Home Care, has claimed 40% business growth by working with Honor.
Honor currently has partnerships in California, Texas and New Mexico in the “low single digits” and is looking to expand in Orange County, Sacramento, Santa Fe and Houston, “plus anywhere else we think it makes sense to expand in the future,” according to Sommers. The company is aiming to scale up to “hundreds” of partnerships, she said.
Managed care mission
Honor is among other home care startups with venture-backing that have shifted their business models. New York-based Hometeam recently named a new CEO and a pursuit of the Medicare-Medicaid dual-eligibles population. Hometeam, which has raised more than $43 million, also started as a private duty home care company before shifting its strategy.
Yet the pivots both appear to take aim at the managed care market.
Honor’s funding also comes just after the Centers for Medicare & Medicaid Services (CMS) announced in early April it would allow non-skilled in-home supports to be added as a supplemental benefit for Medicare Advantage (MA) plans in 2019. Honor hopes its network of connected providers will better enable payers, health systems and hospitals to reach home care agencies that have technology capabilities to take care of managed care patients.
Agencies in the network also work on a “shared set of standards” across the same technology that can better enable the care coordination necessary for managed care, according to Sommers.
“We are super excited the payers are beginning to think about this space differently,” Sommers said. “Non-medical home care should be a part of that care continuum for adults. Why it’s probably not happened much [is because] it’s a hard industry to work with right now, given how fragmented it is. If you’re one of the largest MA plans, it’s really hard to partner with anyone in this area—you’d have to work with thousands of providers. Our goal with the network is to make this easier.”
Honor is currently in a pilot with an undisclosed MA plan, both through Honor’s own home care agencies and the partnership network, Sommers said.
While the direction to managed care is clear, one of the company’s other expansion efforts has apparently dwindled. In 2016, Honor announced it had set up two pilot storefront locations inside Walmarts in in the Dallas-Forth Worth market in Texas. Honor is no longer operating those storefronts, according to Sommers.
With the partner network being the primary focus of the business going forward, Honor will use its own home care agencies as a test market for developing new technology and best practices before advancing them, Sommers said. The new funding will support Honor’s push to expand its partner network and capture more agencies that have a long-standing connection and presence to their market.
“When we started out as a company, [there was] a lot of looking at the current fragmentation as being not optimal,” Sommers said. “…Building the infrastructure would be hugely valuable. We had to do that through a series of our own agencies, but there’s no better way to do it than working with a series of local agencies since they know their markets so well.”
Written by Amy Baxter