A North Carolina startup company launched by a former senior housing executive is trying to move the for-profit continuing care retirement community (CCRC) model into the home.
Launched at the beginning of February by CEO Katie Davis, CarePods groups older adults looking to age in place into relatively small, 25-member “pods,” with seniors typically living within a 15-mile radius of one another. Each pod is overseen by a dedicated registered nurse (RN) case manager who helps coordinate members’ clinical needs, including medication education and scheduling trips to the doctor, in addition to providing other services.
For a monthly subscription fee of $1,595, CarePods members also gain access to a virtual assistant whose duties include arranging transportation through ride-hailing platform Lyft and finding qualified handymen for any potential household fixes, as well as a geriatric pharmacist and wellness trainer.
The average monthly cost for assisted-living housing and services, in comparison, is more than $4,000, according to the latest Genworth Financial cost-of-care survey.
“We’re taking the for-profit CCRC model, with some combination of services you would traditionally receive in assisted living, and delivering that into an individual’s home for less than half the price,” Davis told Home Health Care News. “We take the economies of scale approach. Members are all close to each other, which gives them opportunities to socialize and builds a sense of community around aging in place, but also helps us manage costs and retain staff because they can have a more regular schedule.”
In addition to being tended to by a team of well-being professionals, CarePods members receive meals prepared by a local chef, delivered two times a week in bulk.
A 24/7 urgent care response line — powered by wholly owned Best Buy (NYSE: BBY) subsidiary GreatCall — is likewise rolled into the monthly package.
While Davis broadly compares CarePods to the CCRC model, it’s not entirely dissimilar to the more grassroots, community-driven senior villages concept that has slowly gained steam over the past few decades. There are nearly 240 active villages and 150 in development across 45 states and Washington, D.C., according to the national support organization Village to Village Network.
CarePods currently has one active community in Winston-Salem, North Carolina. But the startup has nationwide ambitions and has already seen plenty of interest from potential investors, Davis said.
“We’re self-funding at this point, though we have had what I would qualify as pretty broad interest from private equity as well as angel investors,” she said. “The goal right now is to prove the model. I don’t want to take anybody’s money until we can prove the model, and the way we’re structured is to be lean and cost-efficient. If we prove the model and consumers sign up — and we have a great deal of success — then absolutely we will be evaluating regional and national expansion.”
Goodbye to senior housing
After graduating from college in 2008, Davis spent a couple of years working for marketing and PR agencies, then got a job with Maxwell Group, a company that develops, owns and manages luxury retirement communities, as well as other related senior living care entities across a handful of states.
Davis worked her way up to the operations side of the business, ultimately landing a role as Maxwell Group’s chief operating officer. She left the company in 2016 to serve as chief strategy officer at Sherpa, which provides an interactive CRM sales solution for the senior living industry.
“After working for Sherpa through May of 2018, I moved back to North Carolina and started playing around with the idea of CarePods,” Davis said. “I wanted to take a shot at founding my own company, so I started putting the business plan together in August of last year.”
In general, building CarePods on a monthly-subscription-fee basis reflects Davis’ CRM background.
The benefits of a set monthly cost structure, she said, include more price transparency for consumers — and more predictable, higher-paying jobs for CarePods employees.
“I love flat fee because I think it makes the most sense for the customer and is transparent to the client,” Davis said. “Certainly it allows us to normalize revenues so we can guarantee people jobs.”
CarePods’ entry-level position — the virtual assistant — pays $20 per hour.
“I’m really passionate about caregiver wages,” Davis said. “I don’t think we have a labor shortage. I think we have a customer cap on price. I’m all for innovative models that can help improve that.”
CarePods’ big plans
CarePods may be a young business, but it’s starting to gain the attention of other industry players for its innovative framework.
In October 2018, Bain Capital Double Impact acquired and combined two regional health care companies — Arosa and LivHome — to create a new national in-home care provider. The combined enterprise is branded as Arosa+LivHome and led by CEO Ari Medoff.
From a big-picture perspective, CarePods stands a shot, Medoff told HHCN, because it is providing a multi-disciplinary team-based service at a reasonable cost.
“In terms of innovation in home care and aging in place, significant money and energy has flowed to technology startups,” he said. “Traditional business models need to be changed to meet changing customer needs. For example, changing the pricing model to go from an hourly cost to a monthly subscription may not be as sexy as the newest gadget, but it could have more meaningful benefits for our industry and the clients we serve.”
Winston-Salem was an ideal place to launch CarePods due to its proximity to top medical schools and research centers, according to Davis. Eventually, she said, the plan is to secure about 10 pods in the city of about 250,000 total people.
CarePods needs to capture roughly 2.5% of the age-and-income qualified market to outperform or meet its financial benchmarks, according to Davis. The startup’s approximate margins “are in the 30% range,” she said.
As CarePods expands, Davis hopes to one day team up with more traditional home-based care providers.
“Some of the first visits I’ve made in this market have been to home care and home health providers,” Davis said. “I’m telling them, ‘I really want to bring you in on these cases and on these clients where you may not be a good fit short-term because they don’t meet your minimum.’”
Some home care companies have hourly service minimums that leave clients shut out. Connecting them to a group of 25 older adults living in the same area would allow providers to potentially bypass those minimums by drastically reducing travel requirements.
Instead of visiting two clients who live miles away from one another for eight hours each, for example, the provider in a CarePods relationship could visit with eight neighboring clients for two hours apiece.
“I think the future of aging is in the home,” Davis said. “The reason I stepped away from a lucrative career in senior housing was because I was inspired by people thinking about models differently, even if they failed. I think we need to continue encouraging that type of innovation.”