7/21/16 – This post is part 2 in a series written by Shorouk, Nick, and Labeat as they search for opportunities to innovate in the antiquated, elderly home health care industry. Read their first post here.
Innovation in San Francisco
After our initial contact went radio silent the day we landed in San Francisco, and after several phone interviews with company executives that resulted in a lot of the same information we had discovered in our secondary research, we found Sue Kwon. Sue Kwon is the director of communications at Honor, a home health care company founded in 2015 that has raised more than $20M in venture capital funding. She is also an Emmy-award winning journalist, and you may recognize her from her time at NBC, ABC and CNN during her 15 years in the industry. Sue was generous enough to meet with us, even after repeated e-mails and phone calls that bordered on harassment, for a coffee just outside Honor’s headquarters in downtown San Francisco.
Sue told us Honor’s story and, although short in timeline, provided us everything we needed to know for our venture’s direction moving forward. Honor’s emergence as one of the top providers of home health care in the Bay Area is simple and profound, yet bold and unorthodox, to say the least. Sue told us the story of how Honor is executing something so obvious it has almost become a cliché in business textbooks, yet something no agency in this industry has been able to accomplish. This idea is almost so obvious that is has become largely forgotten, and industry leaders have developed ingrained responses that have become such a part of our human nature that we might actually believe it. The story Sue told us was how Honor has eradicated the single most destructive force in home health care: employee turnover. She told us that there are several issues relating to senior health, but none are more important to home health care than having the ability to retain service providers to provide consistent results to people in need. All the other issues are a direct result of employee turnover.
Honor has “put its money where its mouth is” and taken this issue of turnover into its own hands. Instead of providing the industry average $9/hour to its nurses with no benefits or guaranteed hours, Honor has empowered its employees by offering better wages and comprehensive benefits to all workers, regardless of title. Wow. There is such a huge gap between what Honor offers its employees compared to the competition that it doesn’t seem to make sense. How can this add up to a positive bottom line or, how is it even close? Her answer was simple (of course): It is a long-term strategy. Honor is tech-enabled, which means it is one of few agencies that have been able to scale its operations, and we’re not talking about opening franchises. By nearly eliminating employee turnover, Honor can achieve efficiencies that no other company of its kind can manage. The employees care about the company because they truly have a stake in the game, and Honor offers training to its employees, even if the training allows an employee to be over-qualified for the services Honor offers. After talking with Sue, it is difficult to imagine starting a company that did not provide a similar offering to its employees, even if you don’t have Silicon Valley technology and major VC funding. It just makes sense. Treating your employees better is no longer taboo at Honor.
Sue also went into great detail about the company we had previously studied so rigorously, and why its referral model had failed despite its vast resources. Regulation in the state of California, and most other states (including Colorado), place restrictions on these types of companies by not allowing the third party to perform background checks on hired contractors, as well as restricting the training employees can receive if employed under another employer. In other words, this company could connect a senior to another agency’s nurse, but it also had no control over these nurses and, therefore, no control over its reputation. The result was these nurse contractors failed to do a good job, or even care about the work they were performing on behalf of the company and the connection it facilitated. So, this company pivoted to a traditional model in just under two years of existence.
Next Steps for our Team
We are looking into the future. Now that we have officially chosen a direction after pivoting, we will continue with expert interviews and focus groups. True to the nature of entrepreneurship, we look forward to continue building momentum, innovating, and eventually, generating lasting impact.