Eldercare Is the New Frontier in Healthcare
Eldercare is receiving increasing levels of VC interest as a result of favorable demographic trends and growing number of dedicated technology offerings for senior care.
By: William Choi, Associate Intern
Aging Demographics Coupled by Growing Use of Technology
The U.S. population is aging rapidly. PRB projects that the number of Americans age 65 and older will more than double from 46 million in 2016 to more than 98 million by 2060. The 65-and-older age group’s share of the total population will climb from 15% today to 24%. By the year 2030, every single baby boomer will be over the age of 65. As the baby boomer and overall population ages, the market for senior care will grow heavily in the coming years. The AARP reports that the number of seniors requiring additional care due to chronic illness will increase from about 14% of the senior population in 2010 to 21% by 2050.
An intensifying shortage of US home health aides and physicians, a booming senior population, and the prevalence of chronic illnesses all point to a need for transformative solutions when it comes to senior care services. One such avenue is by leveraging the increasing digitization of healthcare services. Two-thirds of America’s 50 million seniors use the internet and more than 40% own a smartphone, according to a 2017 Pew study. Some groups of seniors, such as those who are younger and more affluent, report owning and using different forms of technologies at rates similar to adults under the age of 65. Compared to early 2000 when just 14% of seniors were internet users, today approximately 67% of adults over the age of 65 and older say they use the internet in some form. While the adoption rates of technology among seniors trail those of the overall population, the share of adults ages 65 and up who own smartphones has increased from 18% to 40% since 2013.
However, there continues to be a noticeable digital divide between younger and older Americans. This gap is even more significant for seniors who are older, less affluent or with lower levels of education attainment. One key challenge facing older adults with respect to technology is the fact that many are simply not confident in their own ability to learn something completely new such as using the latest electronic devices. For example, only 26% of internet users aged 65 and older say they feel confident when using smartphones, computers, or other electronic devices. According to a 2015 Pew Research Center survey, only one-third of the senior population believe they are little (23%) or not at all (11%) confident in their ability to use electronic devices.
Regardless of the gap in digital adoption, senior care is a quickly expanding industry. This shows up in industries such as home care, where a nurse or other aides either live full time in a senior’s home or spends a portion of the day in the home tending to the senior. The U.S. home care market is expected to balloon from $100 billion in 2016 to $225 billion by 2024, driven by the quickly expanding senior population. Similarly, the assisted living facilities have become popular for seniors who cannot or choose not to live on their own. Although assisted living facilities include both seniors and other populations such as people with disabilities, the senior population makes up the majority. Senior care has a unique set of problems compared to younger populations such as prevalence of diseases such as arthritis and osteoporosis that make it difficult for seniors to support themselves and live alone. Moreover, mental conditions such as Alzheimer’s disease and dementia also necessitate more careful care of seniors with those conditions.
Flurry of VC Investments in Eldercare
Given the favorable demographic and macro trends, there has been increased investments from venture capital firms in the eldercare industry. According to Oxford Economics, the longevity economy (focused on increasing the quality and duration of life for seniors older than 50) is currently a $7.1 trillion market and composes 46% of the U.S. economy. The industry is forecasted to grow to more than $13.5 trillion by 2032 as more baby boomers age. Venture capital firms have been scouting the market for new digital healthcare technologies that can help bring down costs, improve care quality, and create a more sustainable business model for senior care.
One of the fastest growing technologies in the space is the increasing adoption of tele-health in the assisted living and home care settings. In response to this trend, technology has started to adapt to the needs of seniors by incorporating usability changes such as adding large buttons and displays designed for easier senior use on computers or smartphones. Moreover, a growing number of tele-health platforms are remotely connecting seniors to their entire care team, allowing them to access anyone ranging from their primary care physician to family members without having to leave their homes.
Certain assisted living and home care facilities are also leveraging the latest smart technology to turn their facilities into smart homes dedicated to improving accessibility for seniors. Voice assistants such as Alexa and Google Home are helping seniors remember their daily schedules such as when to eat, take medicine, or attend regular check-ups with their physicians. Certain apps are even dedicated to optimizing a senior’s eating, exercising and sleeping schedules.
Wearables dedicated to seniors is another quickly expanding sector. Some smart clothing are designed to help doctors monitor their patients’ movements to check for irregular signals or to alert them if a senior falls. Other technologies such as motion detectors, smart mattresses and personal robots also improve the assisted living and home care experience for many seniors. There are also dedicated personal emergency response service (PERS) tools that are used in emergency situations when a senior patient falls or has an irregular health condition.
Leading venture capital firms have increased their bet on eldercare. For example, Andreessen Horowitz recently backed the online caregiving marketplace Honor that sends workers to seniors’ homes to help them with various tasks such as eating and cleaning all the way to caring for complex medical conditions. The next area of focus is the trend of leveraging artificial intelligence for senior care, which will eventually be able to predict patterns in seniors’ behavior and prevent falls and other medical emergencies before they take place. Seniors will also be able to access a personalized wellness and nutrition regimen based on algorithms using the latest machine learning technologies.
Kli Capital Portfolio Company Spotlight: Village Plan
Kli Capital portfolio company Village Plan aims to serve the elderly population by providing a technology-enabled platform with family caregiving support, engagement tools, trained caregivers and expert medical insight. Founded in 2014 by the team that created Best Doctors, an expert medical consultation company which was sold to Teladoc Health, Village Plan helps families make the best decisions around their aging loved ones. Most engagements with Village Plan start with a call to its “Experts-On-Call”. From there, an accredited expert will assess families’ current caregiving situation telephonically or help actively manage urgent issues. The Company has recently seen a surge in demand due to the Covid-19 pandemic as more seniors were relocated from nursing facilities into home care settings.
Kli Capital is a New York/Montreal-based family office started by former business operators focused on backing ambitious founders. Formerly known as BNSG Capital, the Kli Capital team has been active in the early stage investment/startup ecosystem since 2014. We have spent the majority of the past 6 years sourcing, conducting diligence, investing, and providing portfolio support for our 60+ companies.
