Livhome has pursued a dual approach to home health care, hoping to gain a toehold in the $100 billion market for care of the aged
Even by the heady financing standards of 1998, Mike Nicholson and Steve Barlam found themselves in a unique situation venture capitalists were coming to them, asking them to start a business.
The concept they were approached with was a new home care company for the elderly, and given their personal and professional experience, along with a booming market, it was an opportunity they could not pass up.
Barlam was running Senior Care Management in Beverly Hills, Nicholson Western Medical Services in Walnut Creek, Calif. Both knew that one of the greatest challenges in the field was finding quality home care workers to fill orders from families that found themselves caught in the emotional and financial wringer that comes with aging and frail parents.
The company they formed, LivHome Corp., was financed with $2 million in seed money from BOA Ventures, the venture capital arm of Bank of America, and is trying to establish a beachhead in the estimated $100 billion home health care market.
The company’s para-professional home health care workers assist clients with daily tasks like transportation, assistance in dressing and preparation of meals, as well as other quotidian tasks. But they do not provide medical assistance.
The twist that Nicholson and Barlam employed to differentiate LivHome was employing both professional care managers and home care workers functions usually handled by two separate companies or agencies.
The result, so far, has been explosive growth, with the Los Angeles-based company projecting $9 million in revenues this year, 10 times greater than when it started two years ago.
“I said when this started, ‘Let’s address getting the employees and then we will address getting the clients,'” said CEO Nicholson, 50, who was convinced to sell his own home health agency to start the new company. “If we win the recruiting war, we win the rest of the war.”
Winning the war could prove to be remarkably lucrative.
Aging parents everywhere
With the population of people aged 85 and older the fastest growing demographic a trend that will continue as baby boomers move into old age the market is expected to hit $150 billion in the next 30 years, according to Nicholson. Moreover, studies have shown that a quarter of all households care for aging parents, with half of adult children living more than 100 miles away from their parents.
Playing to those statistics, the company has moved to establish a Web presence that allows far-off family members to keep close tabs on and interact with aging relatives. The CareMonitor service assigns family members a private password-protected Web page through which they receive updates on the condition of the client, company services and other information. They also can use the Web to communicate with the care manager and with each other.
Another distinction of the company is that, in addition to its training program, its home care workers are full-time employees with a full slate of benefits, not temp or contract workers, as is the industry norm.
Nicholson’s training program adds a layer of cost to LivHome’s service, and the company acknowledges that the premium is not for everyone. With monthly fees ranging from $3,000 to $3,500 for 40 hours of weekly assistance, the charges approach those of high-end assisted living communities.
The pitch is that, along with better-trained staff, a care manager with a professional degree assigned to the family will handle everything for a family and client.
Monika White, president and CEO of the Center for Healthy Aging, a nonprofit agency that provides care management, said that while there are good home care agencies in the region, LivHome stands out for its approach.
“The truth is, when you employ your own home care workers, you have a better chance of controlling quality,” said White, who sits on the company’s advisory board. “They take the time to train and supervise their people, but they are expensive.”
When the company opened for business in February 1999, its nucleus was Senior Care Management, a five-person care management firm operated by Barlam.
After quickly ramping up to about 30 administrative and professional staff with about 100 home care workers, it was ready to expand in early 2000. That February it purchased a small care management firm in Santa Barbara with offices in Camarillo, and later opened a Newport Beach office.
The company secured $10 million in a second round of funding through BOA Ventures and Tullis-Dickerson & Co. Inc. in March 2000.
Tim Buono, a partner at Greenwich, Conn.-based Tullis-Dickerson, said his company decided to come in after seeing how far the company had come since its inception.
“Probably the No. 1 through No. 3 factors were management,” Buono said. “Now let’s talk about the market. It’s huge. I don’t need to tell you about the aging of America.”
Still, profitability remains elusive for the company.
Focused spending
While the company reports that its main office is profitable, the business as a whole is not. With the availability of VC money tightening all over, LivHome has cut expenses but is still spending heavily on an advertising campaign that involves placement of full-page ads in regional editions of national magazines.
Both men believe their business model will be proven, and they are projecting the company will reach profitability in the second quarter of 2002, but are holding off any further expansion until that goal is reached.
