Daniel Petkevich is an American entrepreneur pursuing the American dream following his father or mother’s immigration from the previous Soviet Union. However, whereas his entrepreneurial story may form as much as be the quintessential expertise that each immigrant household hopes for, sadly for his dad and mom, they’re additionally getting the quintessential expertise that comes with the U.S. healthcare system.
His mom, who just lately wanted a knee-replacement surgical procedure, couldn’t discover ample supplier high quality knowledge on-line and delayed her process. His father slipped a disc and let it go months with out getting an MRI after a health care provider suggested him to attend “to see if it didn’t enhance in a month.” And, as for both of them discovering usable data on prices for principally any healthcare service, worth transparency communicated in a significant method for shoppers stays elusive.
These irritating experiences outline the U.S. healthcare system, particularly for older Individuals who want extra care, however the issue runs deeper than simply the companies themselves. Points navigating healthcare extend to even finding the right coverage – one thing that each of Petkevich’s dad and mom additionally encountered. It’s an intimidating hurdle for seniors – how the hell to make sense of something associated to Medicare as somebody approaches their golden years.
Individuals reaching Medicare eligibility are already going through a big shift of their lives, however first should confront the vital query of whether or not to proceed paying massive premiums for personal medical insurance or enroll in a government-run Medicare plan.
For people who do enroll in Medicare, which proper now contains greater than 44 million Americans (15 % of the entire inhabitants), that’s when the actual daunting problem begins, as they quickly discover out that Medicare protection isn’t what they had been used to when on industrial medical insurance. They have to decide which, if any, further profit plan suits their threat profile, coming into a labyrinth of Medicare Benefit and Supplemental choices, desperately attempting to make heads or tails of the handfuls accessible.
Navigating the healthcare system generally is a nightmare for everyone, particularly for newly eligible … [+]
It’s sufficient to overwhelm the common individual, which is why most depend on insurance coverage brokerages for assist. And it’s an enormous market. Greater than 10,000 seniors turn 65 every day, and with Child Boomers persevering with to age, that quantity will solely develop larger. The market is so massive that some brokerages have ridden the Medicare market wave to go public.
Nevertheless, a typical drawback with brokerages which might be accountable to shareholders is that incentives are misaligned and, consequently, many seniors annually find yourself sad, overpaying for Medicare protection that doesn’t finest meet their wants. After watching his dad and mom expertise it firsthand, Petkevich got down to change the system.
Dan Petkevich is Founder and CEO of Honest Sq. Medicare
“I needed to construct the brokerage that I want my dad and mom had – a customer-obsessed, tech-enabled agency that makes plan suggestions no matter fee,” stated Petkevich.
So, in 2019, he based Fair Square Medicare with the mantra that doing what’s proper for somebody will at all times be good enterprise, even if you happen to don’t make as a lot cash off of it.
A YCombinator (YC) alum, Honest Sq. Medicare is a technology-driven, senior care-navigation firm that began as a Medicare brokerage agency. It combines algorithmic intelligence and concierge help to assist seniors discover the suitable Medicare protection even when the corporate makes much less cash. So, if a senior doesn’t want as a lot protection, Honest Sq. Medicare will enroll them in a Medicare Supplemental plan that comes with much less fee.
“Most brokers reside off fee and infrequently will steer individuals to the unsuitable Medicare Benefit plan that doesn’t match their threat choice or doesn’t cowl their physician or prescriptions,” stated Petkevich. “So a yr or two down the street, they understand their plan sucks and need a completely different one. Typically they’ll change simply, however generally they’ll have bother switching with out being screened for pre-existing circumstances.”
Petkevich’s level about pre-existing circumstances is especially notable. Whereas the 2010 Inexpensive Care Act (ACA) did away with most pre-existing situation clauses that allowed insurers to cost extra or deny protection, 2018 Kaiser Household Basis analysis discovered that, in all however 4 states, insurance coverage corporations can deny personal Medigap insurance coverage insurance policies to seniors after their preliminary enrollment in Medicare due to a pre-existing medical situation – besides below restricted, qualifying circumstances.
So, basically, except grandma and grandpa are health-insurance savants, they could discover themselves caught with a plan that forces them to search out new docs or pay increased out-of-pocket prices for prescriptions – all whereas on a set revenue – as a result of an organization prioritized earnings over preferences.
These points are partly what Petkevich says contributes to the insurance coverage brokerage business’s low net promoter score (NPS) common, which he contrasts in opposition to Honest Sq. Medicare’s 95 NPS. He additionally believes it’s a motive why some massive public brokerages have reported buyer churn charges above 40 % in comparison with Honest Sq. Medicare’s 94 % buyer retention.
Petkevich’s idea is that making much less cash in yr one pays dividends if you happen to can preserve them round for a few years. Key to the corporate’s technique is its customized help for seniors that helps them perceive and maximize their advantages, together with a laser concentrate on training versus promoting.
“We don’t incentivize our brokers to spend much less time with our prospects, so we normally work with them over two calls, the primary of which is only academic to reply any burning questions,” stated Petkevich
Honest Sq. Medicare has a buyer depend “within the excessive 1000’s with plans to quadruple within the subsequent yr,” based on Petkevich, working in 49 states and D.C. The platform’s proprietary agent-facing expertise will assist the corporate scale to a whole lot of brokers whereas nonetheless sustaining the identical degree of help. Its consumer-facing expertise ensures that seniors expertise much less friction when enrolling of their plan and permits them to have interaction in different digital companies to remain wholesome.
A Honest & Sq. Funding
Whereas it’s nonetheless too early to inform if Honest Sq. Medicare can preserve its 90+ % buyer retention fee over time, the corporate is rising quick, which is why buyers have an interest.
Right now, the corporate introduced a $15 million collection A spherical led by Define Ventures. Slow Ventures, YC and a bunch of angel buyers additionally participated in at this time’s spherical, which introduced its complete funding thus far to $19 million (Amplo is also an investor).
With the brand new funding, Honest Sq. Medicare plans to double down in digital well being, capitalizing on buyer loyalty to construct a extra complete senior care-navigation platform. The imaginative and prescient is that it may possibly translate the belief constructed with seniors into demand for extra concierge healthcare companies, which can embrace every little thing from scheduling appointments with most popular suppliers, to serving to seniors discover lower-cost prescriptions, to supporting seniors dwelling with continual circumstances, to even coordinating dental care. It additionally desires to attach seniors nearly with suppliers on demand, when wanted, amongst a listing of different companies.
Honest Sq. Medicare’s method to constructing a digital well being platform enterprise is assuredly extra distinctive than others, which can be why tech VCs who may not usually think about investing in an insurance coverage brokerage have an interest. By participating and constructing excessive ranges of belief with a fast-growing client section (seniors) on the vital life-transition level (i.e. Medicare eligibility), you might have a longtime and highly effective lever to have interaction them in different components of their healthcare journey. It’s much more highly effective when that vital transition level is a traditionally irritating expertise that was already ripe for disruption.
“The B2B2C channel doesn’t actually exist round this inhabitants as a result of most of them are retired, so we would have liked a very compelling use case to reveal to seniors that we will help them,” Petkevich stated.
Because the platform provides new companies, Honest Sq. Medicare plans to create new income streams along with the commissions the brokerage generates. Petkevich additionally stated he plans to launch retention presents for health-insurance carriers, which can give them perception into what behaviors are making members stick round.
Chirag Shah is Associate at Outline VC
Chirag Shah, the Outline Ventures accomplice who led the Sequence A spherical, sees large alternative for Honest Sq. Medicare transferring ahead.
“Numerous the healthcare journey for seniors begins with plan choice,” stated Shah. “There’s loads of potential progress on the brokerage facet alone, and no different participant thinks concerning the client and their expertise like Honest Sq. Medicare.”
Shah, who met Petkevich in 2020 when Honest Sq. Medicare graduated from YC, stated he was instantly drawn to how a lot Dan appeared to care concerning the issues seniors face.
“I used to be notably struck by how a lot of his focus was on the person, in all probability greater than another founder I talked to. That’s what drove him to create a greater mannequin,” he stated.
Outline Ventures, which solely invests in digital well being and focuses on early-stage corporations, additionally understood the chance in senior care and felt Honest Sq. Medicare match into the agency’s bigger funding ethos. Shah famous that the founders in Outline Ventures’ portfolio all “have a deep understanding and empathy for what shoppers need.” For Honest Sq. Medicare, he thinks the corporate has a ton of runway.
“A lot of the method is damaged, so when you create loads of belief with seniors, you will be the connection level that works with seniors’ suppliers and insurers extra broadly.”
Whereas Honest Sq. Medicare does seem to have the constructing blocks in place to develop and defend its market, its mannequin may entice extra competitors. There are different digital care-navigation corporations with a number of expertise that would pivot by including related companies. However, regardless, Honest Sq. Medicare has loads of room to thrive, particularly with 1000’s of potential new prospects coming into the market day-after-day.
Honorable Senior Care
Honest Sq. Medicare is a part of a rising record of digital well being platform corporations trying to help an getting older America.
One of many well-established gamers is Honor Technology, Inc. (Honor), which connects seniors with in-home care help through its platform, dealing with issues like companionship, private hygiene, supplier check-in visits and transportation. Amongst different companies, it additionally gives useful resource guides to allow caregivers to assist seniors who’re dwelling with quite a lot of continual circumstances. The corporate has raised a whopping $625 million since founding in 2014, attaining a reported $1.25 valuation after its collection E spherical final October.
Honor CEO Seth Sternberg
Honor’s journey began when Co-founder and CEO Seth Sternberg noticed his mother begin to decelerate. Collectively along with his co-founders, they constructed a nationwide community of companies and developed the platform to strengthen the bond between the care skilled and buyer (seniors and their caregivers).
The historic drawback with the home-care business, based on Sternberg, was that the community of dwelling care companies and suppliers was so fragmented, which made selecting the best help troublesome.
“There was no model that stood for caring on your dad and mom, and that left individuals with nowhere to show. They might ask their pals what to do, however typically it was onerous for individuals to speak about,” stated Sternberg. “We began in dwelling care due to the good want. From there, we will help with a lot extra, in the end helping them navigate their complete healthcare journey.”
Right now, Honor touts itself because the “largest dwelling care firm within the U.S.” whereas additionally having the “largest community on this planet,” following its 2021 acquisition of House As a substitute.
For franchises within the House As a substitute community, the Honor platform permits them to scale their enterprise, which is generally logistically and operationally onerous for past a sure level. “Our infrastructure can not deal with the expansion within the getting older inhabitants, and all these companies get to a spot the place they simply can’t serve anymore seniors. It turns into too difficult. So we constructed a expertise stack that permits companies to develop past that vital level.”
Sternberg stated Honor’s prime motive is to in the end develop society’s entry to senior care, which is shaping as much as be a big drawback. Whereas the over-60 inhabitants is anticipated to double by 2050, the proportion of people over 80 globally will triple in that very same interval.
One other drawback that Honor works to resolve is matching households with the proper of dwelling care help. A senior dwelling with dementia has completely different wants from a senior who’s mobility-challenged, so the platform’s expertise ensures that suppliers with the suitable talent units are in the suitable properties. The platform additionally contains matching for “softer” traits like personality-matching, as a result of, in contrast to some in-home senior care companies that will present much less hands-on help, Honor says its suppliers are sometimes in a senior’s dwelling for 25 to 30 hours per week.
As a result of a care skilled working by means of the Honor platform is so concerned, Sternberg stated one other massive focus for Honor’s expertise is to supply assets to make caregivers’ jobs simpler. “A happier care professional yields better-quality care,” he stated.
Honor additionally just lately launched a service known as Honor Knowledgeable, which goals to “demystify” the problem of correctly caring for getting older dad and mom. The service features a quantity and/or chat the place individuals can join with a social employee who gives steering about what companies or assets could be wanted for a senior in any given situation.
Sternberg stated that a part of the motivation for Honor Knowledgeable is the “ridiculously complicated and extremely fragmented” marketplace for senior care options that “all sound very related.”
“They’re truly very completely different companies which have completely different labor swimming pools, completely different payers and completely different regulators. It’s insane that we’re attempting to get shoppers to grasp all of it,” stated Sternberg.
A Pal for Senior Care
Papa is one other digital well being platform “unicorn” ($1.4 billion valuation following its $150 million Sequence D) offering essential care companies to seniors. Based in 2017 by CEO Andrew Parker and his co-founders, Miami-based Papa addresses senior loneliness by offering companions to seniors. These “Papa Buddies” additionally deal with duties like purchasing, transportation and lightweight housekeeping, although they don’t present a number of the more-involved care companies like bathing or hygiene help.
Senior loneliness and isolation are main issues within the U.S. A 2021 research by UCSF discovered that just under half of the over-65 population expertise no less than average loneliness. Apart from simply the psychological well being issues, the National Academies of Sciences, Engineering and Medicine studies that each exacerbate threat elements for extra severe well being circumstances as properly. It’s a motive why CMS contains reimbursement codes for loneliness and isolation below its social determinants of well being umbrella, and when CMS makes a transfer like that, it creates a definable market for a corporation like Papa.
Like Petkevich and Sternberg, the entire concept for Papa germinated from Parker’s expertise along with his circle of relatives. He and his household had been struggling to steadiness the each day calls for of life with supporting his grandfather (the unique “papa”), so he posted on Fb, asking who’d be prepared to be a “pal to his Papa.”
To unravel the issue, the Papa platform works by offering members with on-demand entry to its nationwide community of 1000’s of friends who will go to a senior both in individual or nearly. Nevertheless, one of many some ways it is completely different from a service like Honor is that it’s solely accessible to members of an insurer or employer that’s partnered with Papa. The corporate counts greater than 70 well being plans, a lot of that are Medicare Benefit or Medicaid plans, as prospects.
In a randomized managed trial reported by Papa, roughly 70 % of Papa members skilled a “vital” discount in loneliness, and 45 % say they’ve a significant improve within the days they really feel bodily and mentally properly.
The service additionally gives a number of the similar concierge help because the others. Past simply companionship and fundamental help to assist seniors reside independently, Papa friends are additionally accessible to help seniors navigate the U.S. healthcare maze.
Andrew Parker is Founder and CEO of Papa
“The U.S. healthcare system is tough to navigate, interval. It’s geared towards sick care over well being care, and lacks the private and human touches wanted to deal with complete well being. This technique naturally places sure populations at a drawback, together with older adults” stated Parker. “Solely 3% of older adults are well being literate, that means nearly all of older adults wrestle to grasp their well being advantages and will not know the place to go for assist. When you think about that decrease literacy charges are related to increased emergency division utilization, fewer preventative care companies, increased well being care prices, and better mortality charges, it’s clear this can be a vital barrier that may affect a person’s general well being. Now we have to make the system simpler to grasp and simpler to navigate for everybody, however particularly for getting older adults.”
Parker additionally shared that one among its friends just lately labored with a member to resolve a $10,000 medical invoice. The pal escalated the difficulty to Papa’s care navigators, who coordinated between his insurer’s claims division, the hospital and billing firm, serving to the member keep away from the stress and anxiousness related to shock billing.
“Our friends function ‘boots on the bottom,’ spending time with members of their dwelling and of their communities—the place well being occurs. With this distinctive perspective, they’ll uncover limitations and care wants which might be typically unknown to well being plans and suppliers in conventional care settings,” stated Parker. “By figuring out, escalating, and assembly every members’ distinctive wants, we’re delivering actually customized care.”
Senior care as digital well being platforms’ boomtown
The senior care market will doubtless proceed to be a vivid spot amid an unsure future in digital well being. After document ranges of funding in the course of the pandemic, the broader market correction within the tech sector has not been overly kind to well being tech as properly.
Nevertheless, nobody can deny that the “silver tsunami” will proceed to crash on the U.S. healthcare system shores, so it’ll be attention-grabbing to see if and the way that wave mints new “unicorns” and impacts exits and M&A within the digital well being platform area. The one positive factor is that those that construct essentially the most belief with seniors and their caregivers – and may defend their companies from new entrepreneurs who additionally witnessed how the U.S. healthcare system handled their household – would be the ones that survive.
