In 2013, Mayor Greg Fischer announced “aging care” would be one of the city’s main economic drivers, a pillar around which the city would build its marketing, networking and economic development muscle.
It’s little wonder why. Louisville is, in fact, the world’s largest center for aging care business, with yearly revenues of $50 billion in this sector alone, employing 21,000 Louisvillians and on track to reach Louisville Forward’s goal of bringing 5,500 additional new high-paying, healthcare-related jobs to the area by 2018.
Home to corporate headquarters of major long-term and senior living companies such as Kindred Healthcare, Trilogy Health Services, Elmcroft Senior Living, ResCare, Signature HealthCARE and others, Louisville has reached critical mass in aging care. And as the sector grows, it’s not just the senior-care companies that make ongoing cross-pollination of talent, investment and innovative ideas possible.
There is an industry-reinforcing density of healthcare supply companies, such as UPS Healthcare at UPS Worldport, CVS/RXCrossroads and PharMerica, as well as Louisville’s corporate expertise in the payer end of healthcare through Humana, Delta Dental of Kentucky, Blue Cross and Blue Shield, Passport Health, and ZirMed. Combine all this with the engineering and academic expertise at the University of Louisville, and Louisville’s economic development officials believe that they have created a “Silicon Valley effect” for aging care in the city.
Their next step is marketing Louisville as an aging care epicenter, so the business world comes here first when they want to innovate in the sector, economic development officials say.
“Aging care has become cool as more and more companies are starting to see the tremendous business opportunity that comes when you can improve the quality of life for seniors,” said Keisha Deonarine, economic development manager, Louisville Forward. “Now we have big data, biosensors, population health management, new models for senior-care communities, apps and wearables, as a start. Each one of these things has the potential to make healthcare cheaper, more effective, easier to access, and easier to understand for seniors and their caregivers. There’s tremendous market potential for that. And that’s what we’re harnessing here,” she added.
The market for senior services will only be going up. Demographers refer to the encroaching graying of America as the “silver tsunami,” with the population of those 65-plus set to double between now and 2060. For comparison, consider these statistics from AARP: In 1900, those over 65 comprised 4.1 percent of the overall U.S. population. In 2040, this demographic will be 21.7 of the population, at 82.3 million people. Of that number, 14.6 million will be over age 85 – about triple the number of octogenarians we have now. The impact this will have on the elderly population cohort, and the healthcare system itself, is game changing.
In 2005, a person turning 65 had a 69 percent chance of needing long-term care for an average of three years, sometime in their lifetime – at a national average cost of $81,000 to $90,000 a year for nursing home stays, and $58,400 for in-home care, by AARP’s estimates. Because of these staggering expenses, many don’t receive the care they need, or they are cared for through a patchwork of friends and relatives. Today, more than 18 million Americans report that they care for an elderly friend or family member, and over half report this care takes more than 40 hours of their time every week.
“In the next 15 years, the 65-plus population is projected to grow 36 percent, while chronic disease related to aging and lifestyle is on the rise. These dynamics are driving a dramatic increase in the consumption of healthcare services,” said Bruce Broussard, president and CEO of Humana. “As the needs of the population change, the healthcare system must also change.
“Today’s (treatment) system is largely episodic-based, yet with more people managing chronic conditions, we need a system that focuses on health in a more holistic way. Bringing healthcare leaders together to address this growing societal problem by finding innovative ways to make it easier for people to achieve their best health is critical to evolving the current system,” Broussard said.
Innovation Summit attracts hundreds
Expectations are that the myriad problems the aging-care industry faces – containing skyrocketing costs, reducing disability and chronic disease, improving healthcare delivery and education – won’t be solved either by startups alone or by large established companies such as Humana or Signature HealthCARE alone. Thus, helping small innovators collaborate with major corporations is one of the main purposes of the Louisville Innovation Summit; that mission makes the event more than just another aging-care conference, organizers say.
Now in its third year, the conference will attract hundreds of C-suite executives, healthcare startups and investors to the city. This year’s program will feature dozens of speakers, on topics as diverse as “senior cyborgs,” the effectiveness of healthcare apps, population health management, workforce talent attraction/ongoing education and much more.
Founding partner sponsors Delta Dental of Kentucky, Humana, Kindred, PharMerica, Signature HealthCARE, and Trilogy Health Services LLC are making it possible.
Previous summits have attracted world-renown keynote speakers. This year’s Innovation Summit scheduled for Oct. 9-11 at the Louisville Downtown Marriott features: Esther Dyson, a journalist, author, businesswoman, investor, commentator and philanthropist; Alexandra Drane, co-founder and chair of the board at Eliza Corp.; and Mark Ganz, president/CEO of Cambia Health Solutions.
More than 100 aging-care entrepreneurs have signed up for the summit’s National Startup Pitch Event to attending investors (visit lisummit.com). Winners will receive cash prizes and the chance to pilot their product or service through a conference sponsor.
Cross-industry collaboration among different company types and sizes make the summit unique, according to Dr. Cliff Maesaka, president and CEO of Delta Dental of Kentucky.
“As the baby boomers retire and age, the host of issues facing this generation wouldn’t even have been dreamt of as the boomers reached the age to vote,” Maesaka said. “The entire healthcare provider and payer industry needs to step up, together, to address these issues. Whether they are speaking or attending, the thought leaders at Louisville Innovation Summit teach me something new every year … that’s why I attend.”
With research increasingly finding links between oral health and overall health, he said, “being a part of the conversation of how to improve both is important. The Summit allows me to contribute to my community, the aging population and my business.”
XLerating investment in innovation
Louisville-based nonprofit XLerateHealth aims to address an industry complaint about a relative lack of venture capital in aging care. It was designed to help healthcare entrepreneurs get proper commercialization coaching and mentorship to accelerate their path to market and successfully raise early stage capital.
XLerateHealth accepts six to eight companies per cohort to participate in a 13-week “lean startup boot camp.” Since it began in 2013, approximately 27 companies have gone through its boot camp program, said Bob Saunders, its chairman and an experienced venture capitalist. And 80 percent of those have continued to the next step in their evolution, collectively raising millions of dollars to grow their young businesses.
One of only two healthcare-focused accelerators nationally to win recognition from the Small Business Administration, XLerateHealth features 100-plus mentors and coaches from across the United States whose experience includes teaching hundreds of fledgling companies to apply lean startup techniques to their emerging businesses.
“Most accelerators don’t like to work with companies focusing on medical devices, diagnostics, long-term care or Medicaid populations,” Saunders said. “But we’ve leaned into this space, proving that the lean startup method can very effectively be applied to these types of healthcare startup businesses.
“We help them use agile engineering to create a minimum viable product that can then be used to very effectively accomplish ‘customer discovery’ – thereby homing in on underserved market pain points that present business opportunity. Rather than spending years in development before a product is shown to a payer, a provider, a patient or a caregiver, this approach allows the entrepreneur to rapidly iterate through product development with continuous feedback from potential customers,” he said.
Building an aging-care ecosystem
Mark Fauci, CEO of Louisville digital health startup Gen9, sees endless potential for the future of aging-care products. His company is working on developing “wearables” – digital devices patients use continuously – and software algorithms that help caregivers stay connected, even at great distances.
One product monitors a senior’s heart rate, location, activity level and more, then reports whether the senior had a “green,” “yellow” or “red” day to the designated caregivers and medical team, who use the information to help prevent falls and other avoidable emergencies.
It is a concept, Fauci said, that would have been much harder for him to develop in areas like Silicon Valley, specifically citing the difficulty of competing for talent and venture dollars in an overcrowded environment.
“After trying to get things done in New York and California, I was shocked, really, at how energized the Louisville economic development organizations were to help me here,” he said.
Kentucky Science and Technology Corp., a nonprofit that administers a state program, helped Fauci obtain a Small Business Innovation Research/Small Business Technology Transfer Matching Grant from the commonwealth that expanded his Phase I SBIR/STTR grant from the National Institutes of Health. This boost helped Gen9 obtain an NIH Phase II award.
KSTC then also provided a Phase II Matching Grant that is helping him commercialize the technology. And the University of Louisville Foundation provided an additional grant to help offset Gen9’s rent costs at the Nucleus Innovation Center, a part of the UofL Research Park.
Fauci expects this rich combination of support resources will allow him to proceed with other new products now in early development stages: one to help with the safe, effective management of medications in the home and the other to bring virtual exercise and physical therapy sessions into the home.
Mark Crane, chief operating officer of Edumedics, a healthcare company employing 20 full-time and eight part-time workers, said his company owes its existence to the support it found in the Louisville aging-care ecosystem. In fact, the company was able to show proof of concept thanks to a partnership with the UofL Foundation and assistance early on from GLI’s EnterpriseCorp.
Edumedics’ founders could see that 10 to 20 percent of the patients in any healthcare insurance pool were responsible for much of the cost overruns and risk, mainly due to poor management of chronic health conditions. After creating an education and outreach program that was proven to have positive outcomes, the concept was successful enough that 20 investors put up a $4.2 million Series A round of funding for the company in November 2015. Edumedics is projected to turn its first profit in 2017.
Louisville’s aging-care cluster played a crucial role.
“The difference for us, at least, was the access to thought leaders in healthcare we were able to find here,” Crane said. “Our lead investors, people like Bruce Lunsford, Mike Stigler and many others, have tremendous industry perspective. They have helped us every step of the way, getting connected to the right people, the right sales prospects and the right vendors. It has been invaluable.”
That experience helped the company expand strongly into the management of Medicare Advantage coverage groups’ costs. Today, one of Edumedics’ best customers is the Teachers’ Retirement System of Kentucky, which runs its own Medicare Advantage Plan. Edumedics helps plan members navigate the difficult and confusing healthcare system, cut wasteful healthcare spending and develop better preventive self-care strategies.
Gyroskope, a technology company developing a communication platform to connect seniors to loved ones through their televisions, also has benefitted tremendously from the Louisville cosystem, said Todd Smith, founder and CEO.
“As an entrepreneur in the Aging Care space, I can’t imagine trying to do this anywhere else,” Smith said. “Louisville may not have the deepest talent pool in terms of engineering and design – yet – but what it does offer is access to collaborators, domain experts, test populations and customers, which is invaluable for a startup. We have been able to refine our product by working directly with local companies to learn about their problems, which in turn drives our design strategy.”
Next for Louisville’s aging-care brand?
Louisville healthcare leaders are optimistic about the aging-care sector’s future, but say there’s much to be done to ensure the city’s legacy.
“A lot of great work has already been done, and the city and economic development officials continue to find new venues – like the Louisville Innovation Summit – that support the city’s aging-care community and attract top talent to relocate to the area,” said Benjamin Breier, president and CEO of Kindred Healthcare Inc.
“I think it’s important to highlight the fact that while we call Louisville an ‘aging-care’ market, it often takes a younger, entrepreneurial workforce to make innovation happen, and those folks are attracted to Louisville by things like trendy restaurants; a cool arts and crafts scene; great music, dance and drama; and natural beauty,” Breier said. “Louisville has all of that, and it makes this a vibrant place to live and work. That’s what will bring more business here in the near term.”
Lisa Bajorinas, executive director of EnterpriseCorp at GLI, agrees and says a business field of gravity has been
“Aging-care companies come to Louisville for two reasons: the density and number of aging-care companies we have here, and the low cost of living and quality of life we offer,” Bajorinas said. “We’ve made tremendous progress over the last few years, as we have seen companies pour in – in the medical device business, home healthcare, chronic disease management, hardware/software wearables, and even simple devices that improve a senior’s quality of life like a dog bowl that is more accessible and easier for seniors to fill.
“We’ve achieved critical mass here,” she said, “and, I would say, even staked out our reputation as a global leader. The question is, where do we take that leadership?”
Answering that question excites everyone from the members of the Louisville Innovation Summit Board, to the accelerator leaders, to Louisville’s Aging Care entrepreneurs. They see an opportunity to unite against problems that cut across disciplines, such as social isolation for the elderly, that can be only be solved with an interdisciplinary approach. To that end, LIS organizers already are at work to create one major theme for next year and will be working on new platforms to allow for global collaboration on the topic.
Additionally, Louisville as a city will have to keep working hard to overcome structural issues that are holding it back, leaders say.
“There are several things Louisville needs to continue the momentum we’ve started here,” said Joe Steier, CEO of Signature HealthCARE. “First, we are in a talent war for people. We need to be able to attract more of the right kind of talent here, people who understand engineering, rapid prototyping, informatics, gamification, the medical device industry and more.
“And second, we need to focus on supporting a continuum of services for our startups, through all their stages of development,” Steier said. “How many companies have spun out of places like Humana and Vencor, and then left to go to other cities?”
There is much still to be done to attract venture capital and the right talent for the city’s open jobs, but Steier believes Louisville is making many of the right moves by leading the conversation around aging care, making it only a matter of time before the rest of the world catches on.
“Louisville is to aging care like Austin is to technology,” Steier said. “We’re a small-city powerhouse – the industry’s best-kept secret. But not for long.” ■
Susan Gosselin is a correspondent for The Lane Report. She can be reached at [email protected]