Two companies promoting technology-first approaches to home care have closed this year, leading some to question if this business model is viable. 

Home Health Care News (HHCN) recently reported that Respect has closed after only six months in Chicago and that California-based HomeHero closed in the spring of 2017. Both offered technology solutions in the home care industry.

Respect used an app with a proprietary matching algorithm that let families select and schedule caregivers and receive updates about their loved one's care. HomeHero was similar, allowing clients to choose a "HomeHero" from a video interview to provide home-based non-medical services such as personal care, companionship, meal preparation, and assistance with activities of daily living.

Unfortunately, Respect was not able to attract business at a fast enough rate. “By building a mobile platform, we thought we would improve quality of service and be able to grow faster [than traditional companies],” Respect CEO Bruce Masterson told HHCN. “While it did improve service, it did not improve conversion rates to getting clients through the door.”

With $20 million in investments, HomeHero pointed to its employee model, switching from contractors to W-2 employees, as the reason for its financial struggles.

“It’s not a market that, as of today, is very open to anything other than a high-touch referral model,” Respect’s Masterson said to HHCN. “We thought there would be more room, more of a market—particularly with adult children—for using the app for finding caregivers. They use it for tracking caregivers, but not for the upfront part of becoming a client.” He predicted that a caregiver shortage would make the market more ripe for caregiving technology tools.

“It is not surprising!” said Majd Alwan, senior vice president of technology at LeadingAge and executive director of the LeadingAge Center for Aging Services Technologies (CAST). “We have seen this happen to telemonitoring technology companies that burned through millions of venture capital on marketing in attempts to penetrate the direct-to-consumer senior market. This approach diminishes the role of care providers and forgets that, unlike transportation, home care is a high-touch human service that requires high accountability. Home care builds on years, if not decades, of established trust and reputation in the targeted markets,” he added. 

“The technology is a tool that can help established providers build upon their track records and reputation in local markets, expand their markets, maximize caregiver efficiency, and improve responsiveness to clients,” explained Alwan. 

“I believe these technology entrepreneurs could have succeeded and made a difference in this sector if they chose to strategically partner with and sell their technology tools to care providers, instead of trying to disrupt the dynamics by connecting seniors and families with care needs to a caregivers. Unknown caregivers may seem a risk to seniors especially, despite online reviews, testimonials, and similar assurances,” he concluded.