Sector to Support Older-Adults Portion of $648 Billion Care Economy
This summer, The Holding Co.—in partnership with Pivotal Ventures—released their first-of-its-kind report, The Investor's Guide to the Care Economy: Four Dynamic Areas of Growth. The report puts the size of the care economy at $648 billion, making it larger than the US hotel, car manufacturing, and social networking industries combined. The report finds significant growth opportunities in the four key areas it explored: household management, child care, employer benefits, and aging-in-place.
The report says of the care economy, “It sits at the intersection of several macro-forces—the future of work, social determinants of health, our aging population, the sandwich generation—and at the intersection of some of the biggest trends—consumer tech, family tech, and home health care, to name a few.”
Aging in Place and the Home-Based Care Market
The aging-in-place market totals $151 billion, and as of 2019, was expected to grow at a compound annual growth rate of 13%, with meals, home, and personal care (being the largest segments. The report identified two key drivers: 1) insurers who are enabling independence for aging adults, and 2) emerging solutions that facilitate shared decision-making between aging adults and their children, such as care-coordination apps or safety monitoring tech.
The report breaks down the market into two primary categories: aging-in-place services and home care provision, and home-based care for older adults and people with disabilities.
These two categories are then further broken down into subsegments, representing daily essential activities for non-disabled older adults, and specialized healthcare and ancillary services for older adults and people with disabilities.
Aging-in-place services ($60B in 2019) include the following service categories:
Daily essential activities
Care coordination
Caregiver quality of life
Health & safety awareness
Transition support
Social well-being
Home care provision for older adults and people with disabilities ($91B in 2019) includes the following service categories:
Traditional home healthcare and nursing care
Home hospice
Home therapy services
Other services
Not surprisingly, the study shows the aging U.S. population is in need of more eldercare options.
Family Caregivers Make Buying Decisions
The report confirmed what senior living operators already know—the importance that family caregivers play in buying decisions regarding eldercare. “When older adults gather information to help them with the decision-making process regarding new purchases to support aging-at-home, they most often utilize word-of-mouth from friends and family and advice from doctors.” Adult children are most likely to help older adults with technology purchases that are complex or critical.
Health and safety are rated as the most important considerations for both family caregivers and older adults when considering past purchases to enable aging in place. These products include home medical devices, virtual fitness programs, and wearables to detect medical emergencies.
When family caregivers are involved in purchases, they report “being significantly involved with each step of the purchase decision journey.” Such steps include:
Identifying the need
Researching the purchase
Choosing the final purchase
Paying initial cost for the purchase
Paying ongoing product/ service fees
“This research proves that caregivers need to be involved in the design and sales process for new products and services,” Keren Ektin told SeniorTrade. The Israeli gerontologist is founder of TheGerontechnologist and author of upcoming book The Age-Tech Revolution (to be released in December 2021).
The “dual” sales process also makes the marketing of aging products and services challenging. “There are always two buyers involved in caregiving decisions—the caregiver and the older adult,” says Jody Holtzman, Senior Managing Partner of Longevity Venture Advisors in a recent Glowing Older podcast. “This makes it more difficult for an AgeTech product or aging service to penetrate the market. Essentially, the product must be sold twice.”
Biden Supports Aging in Place
Government funding will unlock private-sector opportunity. The White House Fact Sheet: The American Jobs Plan outlines the administration’s goal to “solidify the infrastructure of our care economy by creating jobs and raising wages and benefits for essential home care workers.” To support aging in place, Biden has committed to investing $400 billion to expand access to home and community-based services (HCBS) under Medicaid.
The $400 billion will be used to do the following:
Extend the longstanding Money Follows the Person program that supports innovations in the delivery of long-term care.
Support well-paying caregiving jobs that include benefits and the ability to collectively bargain (form unions).
$180 billion in R&D and $100 billion to build high-speed broadband infrastructure
The Future is Bright
"Care is not only a large and rapidly growing industry, but a dynamic and investable market," said Renee Wittemyer (Director, Program Strategy and Investment, Pivotal Ventures) in a press release. "Given care's importance to the economy and to families, this is the moment for investors and entrepreneurs to step up, help solve care challenges, and seize the incredible market opportunities."
Growth in the aging services market will bring much-needed innovation. Despite the opportunity, many companies will not succeed because they do not truly understand the true needs of the dual market—older adults and their adult children.
“The steady increase in the percentage of Medicare beneficiaries enrolled in Medicare Advantage, together with the increase in states’ willingness to cover SDOH-related benefits through Medicaid and the Biden administration’s plan to allocate an extra $400 billion to support elder care, are great news for age tech startups in many of the market’s subcategories. The chances to get many tech-enabled products and services either covered or reimbursed have never seemed brighter,” says Etkin.
Download The Investor's Guide to the Care Economy here.
Comments