CANADA: Demographic Shift Creates Business Opportunity In Seniors' Care

MONTREAL (Montreal Gazette), September 29, 2007: When his 88-year-old mother-in-law broke her hip and later suffered complications, Tim Thomas found himself scrambling to find help for her. "We didn't know where to look," to arrange home care so she could return to her apartment in Hudson, Que., west of Montreal, Thomas said. "There's no McDonald's of home care." Thomas initially turned to the non-profit Victorian Order of Nurses (now called NOVA Montreal), and his local CLSC. But these groups couldn't provide enough hours, so Thomas hired private caregivers. Trying to find "quality people," to provide private help was "frustrating," he said. The experience convinced Thomas there was a pressing and growing need for assistance for the elderly. After researching the market, he decided to fill part of the gap himself. Last May, he became the first Canadian franchisee of Home Care Assistance, a California-based provider of home care services ranging from bathing and dressing to light-meal preparation and running errands. Close to a million seniors living in private homes already receive informal or formal help for a long-term health problem or physical condition, according to Statistics Canada. That includes such services as household work, shopping, transportation and personal care. The older the senior, the more likely it is they get that help from a formal source -- government, private or non-profit. What's more, the numbers of Canadians aged 65 to 74, and above 85, are projected to double in the next 20 years. Thomas, who spent most of his career in sales and marketing for Gillette and other companies, has set up shop in a storefront location in Westmount, Que. He runs the office with help from one employee and his wife, Suzanne Thomas. They already have 50 caregivers on contract, and hope to convert the best of them into full-time employees. When he was contemplating a leap into the home-care business, Thomas scouted his competition and potential market. A number of private providers operate in Canada. These include Comfort Keepers, Home Instead, Visiting Angels and We Care, founded in 1984, which claims to be the largest independently owned home-care service provider in the country. Still, Thomas felt the seismic demographic shift underway was making room for more market entrants. "There is a huge wad of baby boomers getting older," said Thomas, neatly turned out in a crisp white shirt and black corduroy blazer. "That's combined with the habit of a generation that wanted it a certain way; there's a defiance: 'I'm not going to an institution.'" After marketing consumer products, Thomas found the prospect of working in a helping business attractive. "Making a bottle of shampoo is OK, but here there's a little bit more," he said. Founded in Palo Alto, Calif. in 2001, Home Care Assistance caught Thomas' attention for a few reasons. "A lot of agencies cultivate referrals, from (seniors) residences, CLSCs, employers," he said. "This company had more of a branding approach, which was what I was used to working with." The "branding" approach requires that franchisees have high visibility, storefront locations and spend minimum amounts on advertising. "We are trying to go direct to consumers," Thomas said. At the same time, he is trying to develop contacts with CLSCs, hospital-discharge personnel and social workers. Home Care Assistance's policy of granting a relatively small number of franchises covering large territories also appealed to Thomas. Some advocacy groups for seniors, however, don't think private companies such as Home Care Assistance are the answer to the challenge posed by Canada's aging population. They worry that a growing private industry will undercut efforts to strengthen public programs. CARP, a Canadian association for the 50-plus, wants more federal funding and a national strategy for home and community care. Private insurance is expensive, and can run out for those with chronic conditions, said Judith Cutler, director of government relations for CARP. "Not everybody has the money" for private care, and family-care givers sometimes "get burned out." Private-care givers "tend not to be trained very well," she said, "and they aren't paid well," so often they don't stay. At the same time, CARP supports the goal of favouring home care over institutional care. "Aging in place is a lot more cost-effective and provides a better quality of life for most," Cutler said. "It saves on nursing homes, it saves on multiple re-entry to hospital, it saves on visits to emergencies." The rate of institutionalization among Canadian seniors has declined since the 1990s. Some 93 per cent of Canadians 65 and over live in private households; but 32 per cent of those 85 and over live in institutions. Women in this age group are much more likely to live in an institution than men, according to government data. Home Care currently has 15 franchisees and three corporate locations in the U.S. Thomas' current territory covers greater Montreal, but he has options for the rest of Quebec and elsewhere in Canada. Last May, Thomas and his wife headed down to Palo Alto for a one-week training program. They learned company policies and procedures, how to talk to clients and do assessments of needs, run ad campaigns and other skills. The company also provides computer programs and a corporate website. Materials are being translated into French for the Quebec market. Back in Montreal, they set up the office and started hiring staff. Many franchisees have trouble finding good caregivers, Thomas said. He says he has not run into that problem. Potential candidates must submit to background checks and a psychological test. Once hired, they are also bonded and insured. "We are looking for conscientiousness and honesty," Thomas said. Most of his workers are trained as nursing aides but others just have extensive experience. The focus of Home Care Assistance services is 24-hour, live-in care, but the company also provides hourly help for everything from driving and light housekeeping to range of motion exercises and personal hygiene; it also has a 24-hour, on-call service for emergencies. It does not provide medical services. Caregivers can go into seniors' homes to help residents and occasionally work with younger people needing care at home. One of the biggest challenges is convincing the elderly to accept help, Thomas said. "The parents are usually very resistant," he said. "It's the kids who call. ... But when it starts, it is life changing." Of course, all of this service doesn't come cheaply, as Thomas acknowledged. (It is no accident he set up his first office in affluent Westmount.) Hourly rates run from $18 to $20 per hour. Live-in rates range from $180 to $200 a day. Thomas pays the care givers between $9 and $10 an hour. The Quebec government gives a tax credit for home-support services for seniors 70 and over, but the maximum credit is $3,750. Private insurance sometimes picks up part of the tab for home care, but many can't afford or can't get coverage. Lily Sarafan, chief operating officer for Home Care Assistance, agrees that many can't afford private home care. Only five per cent of the company's clients get help with the bills from government subsidies or insurance, she said. "We are trying to educate people so they plan for this, for example by getting insurance," Sarafan said in a phone interview from her Palo Alto office. "We hope it becomes more accessible." The company hopes to blanket U.S. metropolitan areas with either franchisees or corporate-owned locations and expand internationally, according to Sarafan. Only a few states in the U.S. regulate home care or require licensing, she said. Quebec has no licensing requirement, according to Thomas. The average start-up costs for franchisees, including franchise fee, runs from $100,000 to $150,000 US, Sarafan said. Franchisees must also pay ongoing royalty fees, based on a percentage of revenues collected. In assessing potential franchisees, "we look for someone who is business savvy," Sarafan said. "They have to be outgoing and personable, because this is really a people business." While not everyone can afford his services, Thomas says he's certain he's filling an urgent need: "You don't know how many times we get a call from someone saying 'I need help now!'" By Sarah Dougherty © CanWest News Service 2007