Here is a little history of how Keep Save Care came into existence from an idea about changing the way care is delivered in America by Jeffrey Fry
The current caregiving market in America
First, I need to set the stage for the private duty, private pay in-home care services marketplace. In the US, Private Duty / Private Pay Home Health Care is a 125 billion-dollar per-year industry, with 8.1 million people hiring a private duty agency and receiving on average 20 hours per week of care at a rate of $27 per hour. In addition, the fastest growing segment of this industry is franchise sales. At present, franchises represent only 15% of the private duty market share, but that has doubled in the last five years and is expected to reach 30% in the next five years. Even with this explosive growth, the private duty industry has two pervasive and chronic problems: Truancy (where a caregiver does not show up on a scheduled day), which stands at 25% on any one day; and turnover, which has reached a historic high of 83%, according to the 2020 Home Care Benchmarking Study by market research and education firm Home Care Pulse. There are a myriad of reasons for why both of these issues persist which I highlight below.
Another factor pushing the private duty industry is the fact that 64,000 Americans are retiring everyday (4 million per year) and that will continue for the next 20 years as the baby-boomers continue to turn 65. In addition, life expectancy has increased from 67 years to 83 years over the past 50 years, adding an increased demand for caregiving, with an expected increase of 1.7 million people needing care per year. Forecasts estimate that as early as 2050, one quarter of the US population will be over 65 years of age, creating a silver-tsunami. Add to the fact that due to the dramatic increase in costs of assisted living and retirement communities, more and more people are seeing aging-in-place as the most affordable option when taking care of their aging parents.
What happened before Keep Safe Care and why we started Well Beyond Care
With all these demographics in play, why did we start Well Beyond Care? First, it was because I had to take care of my late mother. After doing so, I saw that there was a pressing need to disintermediate the private duty space due in part to the depressed salaries caregivers receive and the huge markup private duty agencies can charge clients. On average, as of 2016 a personal health aide made $8.25 per hour, and clients are charged $25 per hour with a minimum of 20 hours of care per week. Of course, in more expense areas like San Francisco and New York City, the caregiver wage approaches $15 per hour, but then again, clients are charged $35 to $45 per hour for care by private duty agencies. In all locals across the US, Well Beyond Care was able to not only increase wages for caregivers by 25% to 40%, but also save families purchasing care between $10,000 to $30,000 per year in care costs.
Phase 1: Direct to consumers
In our first rendition of the company, we partnered with two private duty agencies (which were franchises in Austin) and developed software that was able to reduce their overhead costs by 50% and almost double their capacity to recruit and retain caregivers. At this point, we thought that one of these two franchisors would welcome this new service, but incredibly, both told us that they were under contracts from other software vendors and could not bring in any new vendors in to compete. While the door was shut to us partnering with large private duty agencies, we still knew that partnership with other groups, such as non-profits, assisted living facilities, and skilled nursing facilities would be a possibility, but we first had to prove our software was robust and reliable prior to delving into those partnerships.
With these developments, we had to go another route, and that was direct to consumers. This was our first line of attack for finding paying customers. We knew this would be a riskier venture as our target audience was older, less computer savvy, and weary of hiring individuals through a new internet service. Still, in order to get to the next phase of this process, we had to prove that 1) our software was a robust and integrated system; 2) that we could indeed attract caregivers into our system; 3) that when a caregiving match was made, that we could manage all the hiring, contracting, messaging, scheduling, billing, and payroll requirements; and 4) that we could scale on a nation-wide level. We also needed to prove that our careseeker-caregiver matching process and the ability for caregiver administrators such as adult children not living in the same location as loved ones, combined with nurse curators to guide users, would provide the basis of a successful business.
Since launching the Well Beyond Care site in February 2018, we now have over 78,000 caregivers and 8,250 Careseekers in our system scattered throughout 49 States and in over 500 cities, and have proven that the minimal viable product of our software is robust and can scale. While these numbers are somewhat impressive, we knew in order to grow rapidly, the company would either have to spend millions on advertising, partner with some caregiving organizations, or develop a better way to add careseekers, and therefore revenues, into our system. As the inventor of the department store John Wannamaker once said, “I know half of my advertising is wasted, I just do not know which half,” we felt that raising money to just advertise would not be the best use of funds.
The non-franchise franchise model: Licensing
Private duty is currently the primary way in-home, non-skilled care is delivered in the US and we know at some time we would have to revisit servicing this market. With the software system tested and well established, Well Beyond Care is in a strong position to offer a disruptive solution addressing the private duty franchise market. Furthermore, the private duty industry is ripe for a disruption on how services are delivered and that there is a need for improving the cost inefficiencies in running an agency. Our third line of attack for finding paying customers was to create what we call a non-franchise franchise, Keep Safe Care. Keep Safe Care will disrupt the private duty franchise model in two ways.
First, a Keep Safe Care license will cost significantly less than purchasing a traditional franchise. The traditional franchising model presently involves paying a franchise fee of between $100,000 and $250,000 per location, and a monthly royalty of between 4% to 6% of gross revenues, along with additional advertising fee assessed of between 2% to 4% of a franchisee’s gross revenues. Across the 97 franchisors in the US, these fees are 8% of gross revenues on average. As an alternative, the Keep Safe Care model instead sells a software license for $7,500 and then charges a small monthly fee of $1,000 to $3,500. Essentially, a Keep Safe Care licensee receive the same service as with another other franchisor, but with substantially lower startup costs and lower recurring royalty payments. In addition to reducing costs associated with purchasing a private duty franchise, operational cost savings generated using the Well Beyond Care system will also apply for Keep Safe Care affiliates. These affiliates will be able to differentiate themselves in the marketplace by paying their caregivers more, matching careseeker’s needs with caregiver’s abilities and location, and operating a private duty agency with one half the overhead of a traditional franchised agency, undercutting their competition by $2 to $5 per hour. On top of that, these affiliates will be able to operate with fewer employees and be able to make 25% to 50% more in profits in comparison with traditional franchises. The number one difficulty in running a private duty agency: caregiver recruitment, curation, management, scheduling, and payroll, will be offloaded and automated by the Well Beyond Care software. This will allow Keep Safe Care affiliates to focus more on marketing for new careseekers and less on chasing caregivers.
Putting it altogether
How can Well Beyond Care and Keep Safe Care disrupt an industry? We looked at the whole infrastructure in private duty care and created a system that addresses and rectifies the major issues in this industry. We have reduced truancy and turnover to levels approaching 1%. In addition, we have discovered how to more effectively and efficiently run a private duty agency, adding capacity while lowering overhead costs. Together, these factors play into our three-pronged attack in this space. When we go direct to consumers, we save families $10K and $30K per year in caregiving costs. When we manage caregivers for non-profits and other organizations, we lower costs and add capacity. When we go head to head with private duty franchises through licensing our software, we let people start the own companies at a fraction of the cost of the existing franchising model. While in the short term, Keep Safe Care will most likely be our growth engine in adding revenues to Well Beyond Care, in the long term we expect the vast majority of people will use Well Beyond Care’s as direct consumers, allowing them to find and receive better care at a much more affordable price. Between Well Beyond Care and Keep Safe Care, our goal is to own 50% to 70% of this industry with this disruptive new technology and methodology.