The gap between senior living nursing homes (with monthly costs of $7k-10k per month) and 'aging-in-place' is wide enough to drive a truck through.
Sure, the aging-in-place movement is picking up steam, and for good reason. But there is a large amount of 'blue ocean' between souped-up PCs connected to pill dispensers and weigh scales, and the full service model of residential care. This is where MedCottage comes in. They can literally drive a flat-bed truck with a house on top through this gap - they make portable 'granny flats' (as us Brits call them), or the more 2.0 equivalent 'elder pods' - self-contained, portable living residential units designed to be placed primarily in the gardens of their adult children. They have sophisticated medical equipment but are primary staffed by family members rather than professional care givers. Call them what you will, it's an interesting approach that meets a very real need, and they're just about to hit the market - the first install happens next month. I caught up with Founder and CEO Ken Dupin for a chat and we discussed his motivations for getting into this market, how they work, and his thoughts for the future.
America's uniquely negative approach to aging
Ken's been a minister for many years, is working on a PhD in international relations and spent a lot of time visiting other countries and seeing how they do things. One point that he makes forcefully is that most other countries treat their senior citizens much better than we do here in the US. There is a general expectation that seniors are wise and respected and receive a warmer welcome if they move back in with their children. It's quite common in Europe for example to have multiple generations living together in the same house (in fact chances are the next 30 year-old Italian man you meet lives with his mum; this doesn't apply in New Jersey). Anyway, Ken makes an interesting point that people think nothing of turning their home upside down, remodeling and installing security gadgets when kids arrive, yet many seem reluctant to care for their elder relatives.
An answer to the biggest challenges facing seniors - loneliness and poverty
Ken developed the concept based on two premises. First, that one of the biggest concerns for older people is being alone. He pointed out that 17% of people in nursing homes get ZERO visits in any given year. That's a tragic statistic. He says, not unsurprisingly, the number of visits is inversely related to the distance that the family lives from the care home. Having one in the backyard virtually guarantees more regular visits from family members, even if they're not around in the day. The second major driver, on the minds of many, is the thought that they'll have to spend all of their savings on care homes, and this option comes at a much lower price tag.
A disruptive value proposition - shifting the burden of care to the family
At Aging2.0 we love disruptive businesses - those that deliver a solution that is less fully featured than the existing default approach, but a lot cheaper. The value proposition here is two-fold, not only is the senior close to their family, but the family saves money by doing the basic caregiving themselves - cleaning, food and basic care - rather than paying a caregiver and associated overhead. Ken calls this 'family managed care'. MedCottages are not cheap - around $85k to buy, but there's also a buy back system where a developer will buy them back for $38k after 2 years. So, that results in an annual cost of around $23k to the family or individual; Ken estimates the total cost to be around 10% of the cost of a nursing home. On top of this cost, Ken recommends that families have 20 hours of professional care-giving support, but that amount is anyway generally provided by Medicare. The idea is that this does not replace going into a skilled nursing facility, but may delay it for 2-3 years.
Integrated medical hardware and software
MedCottage is more than just a 288sq foot box with a bed, kitchen and bathroom. It has some fairly sophisticated clinical and technology equipment. For a start, the room has air filters and is pressurized (a solution they came up with to reduce smells), keeping airborne pathogens away and helping those with poor immune systems. It has hospital grade bed, sensors, vital sign monitors, a Boeing-made floor that reduces fall impact by 40%, and an electronic pill box dispenser. Web and mobile remote controls can be used for most features - lighting, monitoring cameras, door locks and air conditioning, and medical information is stored in the cloud.
Surely, this can't work in cities, right?
I can imagine this working in rural areas, perhaps on farms, but was sceptical that it would work in suburbs, when the adult children would generally be away all day, making it fairly isolating. Also, clearly it wouldn't work in a city (by perry), given the lack of space. However, most enquiries have been from large metropolitan areas - the first install is going up in Fairfax, VA, ten miles from the White House. I can see there being a problem with neighbors complaining about what is a relatively large structure appearing on people's lawns. In a smart move, Ken said they were able to change the law in Virginia so that local planners couldn't bar people from installing these, although currently that requires a doctor's prescription.
A surprising market - senior care homes
Ken hopes to sell about 100 of these homes this year. One of the most surprising customer segments that he's had interest from apparently is senior care facilities themselves. One of them is interested in making a village out of them to act as additional capacity for independent living. This shows why such an approach doesn't need to be seen as competitive to the existing solutions - as the numbers needing care inexorably rise, and state budgets don't allow for additional senior homes to be built, I can see this happening more often.
The future - scaling with integrated software solution
Ken and I discussed scaling the business, and a natural question was whether there's a way to move forward with just the 'intelligence' from the house, rather than the house itself. And this is indeed what they're preparing to do - provide a technology and service solution called 'Medcottage Mind'. This will allow people to retrofit existing senior flats with this technology. There are a number of solution providers already in the market here, but few probably have as much integration with building systems or familiarity with fairly advanced medical devices.
This seems to be the cusp of a trend - fully featured, service-rich experiences that make life easier and cheaper for their family and their elderly relatives. It'll be fascinating to see the reactions from families, their neighbors and the mainstream senior housing industry.
- New approach to eldercare puts mobile medical rooms in caregivers' yards (medcitynews.com)