A new technology-enabled home care company is breathing life back into HomeHero, the startup once heralded as an industry “disruptor” for its business model of directly matching consumers to caregivers.
After raising a total of $23 million, HomeHero was forced to cease its operations in late 2016.
The new tech-powered home care player is Family Directed, launched in mid-2018 with the help of former Almost Family CEO William Yarmuth. The Louisville, Kentucky-based company acquired “substantially all the assets of HomeHero” toward the end of last year, but officially announced the move Thursday to coincide with a takeover of the now-defunct startup’s website.
“As of midnight, the HomeHero website no longer exists. It all goes to Family Directed,” Kiel Dowlin, president of Family Directed, told Home Health Care News. “It was then we decided it was probably a good idea to say something more publicly about [the deal].”
Certainly, Family Directed’s acquisition of HomeHero’s technology was a tactical one, boosting its own capabilities as an up-and-coming company looking to shake up the home care game. But for Dowlin, who previously served as HomeHero’s vice president of strategy and development, the deal also carried personal significance.
“We put a lot of blood, sweat and tears into that company, so it’s fun to have another shot at rebuilding parts of it,” he said.
The Family Directed model
Unlike HomeHero, Family Directed operates through a two-pronged model focused on transparency, targeting both individual consumers and existing home care agencies in the space. So far, the company has nearly 10,000 professional caregivers in its network, including roughly 600 in the Chicago metro area alone.
In general, Family Directed’s direct-to-consumer offering uses an in-house advisor to pair older adults in need of non-medical home care services with qualified caregivers. Clients and caregivers work together to set their own rates, which typically range from $14 to $20 per hour.
Meanwhile, Family Directed receives a 10% administrative and payroll-processing fee on its end, according to Dowlin, who declined to comment on his company’s revenue or the number of clients it currently has.
“We are operating and do have clients, so we are generating revenue,” he said. “Unfortunately, I can’t give any additional details.”
Broadly, Family Directed’s direct-to-consumer product is for older adults and family members who want more control and insight into the services they’re paying for, Dowlin said. For example, the company’s tech platform lets consumers know who is coming into their home and when they’re on their way, as well as when they start and end a shift.
For home care agencies looking to bring that level of transparency to their own operations, Family Directed also plans to offer an enterprise product, paid for via subscription and licensing fees.
“I jokingly say that I know more about my Domino’s order than I do about anyone coming into my home,” Dowlin said. “I know when the pizza has gone into the oven and exactly when it’s on its way. But we lack that fundamental transparency in something so intimate as a person-to-person home care visit. Even in home health care, we lack that.”
The enterprise product — scheduled for a Q3 2019 launch — will be branded under the HomeHero name.
A different path
HomeHero was just one of the many technology-enabled home care companies to enter the market in the past several years.
Hometeam and Honor are among the other well-known entrants. Combined, the three companies rapidly raised upward of $200 million, though Honor and Hometeam have since had to make significant pivots — and HomeHero had to bow out.
In part, HomeHero was forced to cease its operations after regulatory changes necessitated a shift from its original 1099 employment structure to a W-2 model.
“Almost exactly one year ago, HomeHero lost its core identity when we were effectively forced to terminate our working relationships with 95% of our 1099 caregivers and required to adopt an inferior employment business model,” founder and CEO Kyle Hill wrote in a February 2017 blog published on Medium. “In the process, HomeHero also lost a majority of its competitive differentiators in price, speed and scalability that allowed us to be so disruptive in 2014 and 2015, and it had nothing to do with competition.”
Family Directed is hoping to avoid similar issues by putting employment decisions square on its clients.
“We actually enable consumers to choose the model they want [caregivers] to work under,” Dowlin said. “If a consumer wants to hire a caregiver as a 1099 contractor, we allow that. If the consumer wants to hire the caregiver as a household employee, we also allow that.”
Additionally, Family Directed hopes its history and ties to home care vet Yarmuth will likewise distinguish the company from its competitors.
Yarmuth served as chairman and CEO of Almost Family when it successfully merged with Lafayette, Louisiana-based home health giant LHC Group (Nasdaq: LHCG) in April 2018. The all-stock transaction had an implied value of $2.4 billion.
“One of the things I’m really most excited about is pairing with William’s 35-year history of building companies in this space,” Dowlin said. “I think one of the things that has historically been a challenge for a lot of tech-enabled home care companies is the lack of understanding of how and why things are the way they are.”
“We’re not focused on the Uberization of home care,” he added. “We’re not focused on creating the cheapest solution. We’re focused on creating the right solution for people where they’re at.”