How Technology is Reshaping Home-Based Care

THL’s Healthcare in Action, Episode 3

[00:00:00] Adrian You do have this theme of health systems trying to get more care delivered at home. One of the things that really got exacerbated during COVID was caregiver shortages. And so literally every one of my customers, everywhere in the world, nobody has a demand problem. Everyone has a supply problem. And you can’t wave a magic wand and produce half a million more care workers overnight.

[00:00:24] Josh That’s Adrian Schauer, co-founder and CEO of AlayaCare. And I’m Josh Nelson, head of healthcare at THL. And this is Healthcare in Action, a podcast that explores the latest developments and innovations transforming the U.S. healthcare sector, from cutting edge technology to thoughtful approaches to patient care. I’m here today with my colleague, Jon Lange, who is going to lead us in a conversation about home-based care and the technology that powers it. Specifically, why the trend toward home-base care is so powerful, how it’s helping reduce the strain on an already stressed healthcare system, and how technology is helping caregivers provide better and more efficient care. Jon, take it away. 

[00:01:07] Jon Thank, Josh. And that’s exactly right. With an aging population and ever-growing demand for care, the U.S. health care system is straining to make limited resources go further. Not just dollars, but also capacity. Physicians, nurses, and other healthcare professionals are under increased strain, and the acute care settings where many of them work have only so many beds. Often, these facilities are the most costly setting for patient care, and as technology and consumer preferences have evolved, patients increasingly get better experience and better outcomes being cared for at home. That’s where Adrian Shauer is making a big impact. In 2014, Adrian founded AlayaCare, a next-generation practice management and EMR software platform for home-based care providers, which has very quickly become one of the leading platforms in the space. AlayaCare helps providers drive efficiency and access to care with innovative technology, which will be increasingly important as the aging population drives demand and the supply of caregivers faces further pressure. In addition to founding AlayaCare, Adrian is a very successful serial entrepreneur and also an angel investor, and he’s been a real thought leader not only in healthcare technology, but also in how to build enduring cultures and technology organizations at scale. I was so pleased to have the chance to speak with Adrian about home-based care, how technology can continue to drive efficiency and better outcomes, the opportunities and challenges ahead. Adrian, thank you so much for joining me.

[00:02:32] Adrian Jon, thanks for having me.

[00:02:34] Jon For those who aren’t familiar with AlayaCare, would you just start off by telling us a bit about the company?

[00:02:39] Adrian Absolutely. We’re a vertical market software solution focused on home-based care. So we operate across the U.S., Canada, and Australia, and we are really the operating system for providers that deliver care in the home. Personal care, skilled care, so nursing and therapy. We also have a nice franchise in the Home Infusion Segment, and it’s been a great journey today.

[00:03:03] Jon And for those who aren’t super familiar with the home-based care landscape, can you just help set the stage? COVID, of course, had a big impact, but how has the landscape evolved in the past few years and where are we today?

[00:03:16] Adrian So home as a place to deliver care has been growing for a long time and it’s been growing for a number of reasons. First, you have patient preference. So many people would prefer to receive care in their home and for the elderly population that becomes especially true. So you’ve had kind of a demand pull towards home care. It’s much cheaper to deliver care to a patient in their home than a hospital stay or even than a stay in SNF or long-term care. There’s a big push for health systems as well from a cost point of view to keep people in their home. It’s better for the patient, better from a cost point of view, but also very supply constrained. There just are not enough care workers to deliver all the home care that the health system would want. And so that was the case pre-COVID. Now, what happened when COVID hit? Well, First thing was absolute panic. Okay, our customers were nervous to send their care workers into patients home, patients were nervous to receive care workers, into their home. And so you had this immediate, like in some cases, 70 percent drop in care volumes on the platform, literally from one week to the next. But then what we saw is a real V shaped recovery. And again, here, this is measured in in weeks in maybe months. And very quickly, care volumes came back. People figured out where to get their PPE and the whole safety side of delivering care in the home got figured out. And for us, it meant things like adding virtual care tools into the software. In a matter of days, it mean things like COVID tracking, contact tracing within the software, all sorts of other capabilities. So it was a very, very busy time in the early days of COVID. And we take a lot of pride in how we helped our customers.

[00:05:10] Jon And take me back to that period because, of course, I’m sure it was very scary for the patients, for the providers, I am sure there is a lot of confusion at AlayaCare as well. How as an organization did you approach that? And of course technology was a big part of the solution. How did you deliver that so quickly?

[00:05:28] Adrian Our team was very engaged and fired up by the fact that they could actually make a difference. So, you know, I think viewers, listeners of this podcast will remember those early days. And there was a lot of paralysis out there. It’s like something crazy is happening in the world and it’s happening to me. And the fact that our folks could actually put their head down, code a new feature, make a difference. It was empowering, it was quite an empowering time. Also, we’re a tech company, everyone had their laptop. Everyone was already living on Slack and Zoom and so we didn’t really miss a beat in terms of how the work could be done. So it was quite an empowering time for our team.

[00:06:14] Jon And could you frame up for us the challenge and the opportunity going forward for home-based care? So, you know, a number of the trends you mentioned, consumer preferences, aging population, those things aren’t going away. So how do you see the opportunity going forward and what does that mean for AlayaCare?

[00:06:33] Adrian So you do have this theme of health systems trying to get more care delivered at home. One of the things that really got exacerbated during COVID was caregiver shortages. And so literally every one of my customers, everywhere in the world, nobody has a demand problem. Everyone has a supply problem and you can’t wave a magic wand and produce half a million more care workers overnight. So the name of the game for many of our customers and so for us in consequence is that we have to deliver as much efficiency as possible in how care is delivered. That means more time for hands-on care and less time for documentation, less windscreen time kind of driving around instead of having efficient routes to visit your patients and then also from a caregiver attraction and retention point of view, just making sure that that experience on the job is as delightful as possible. Which means, you know, I have somewhat of a gamified experience. I’ve got all the information I need at my fingertips. I feel like I’m part of a community. I can message with the rest of the care team. while I’m out on the road, you know, and so we have a vector to impact all those three things, though of course always it’s a partnership with our customers.

[00:07:53] Jon Adrian, can you just talk a little bit about the impact of home based care on the cost to the healthcare system?

[00:07:59] Adrian When we talk about cost for the health system, it’s not in opposition to patient experience or patient outcome. In home care, you actually have the majority of patients or clients would prefer to receive care in their own home. And so this is really the health system finding a way to deliver on patient preference. And it’s actually a beneficial, it’s a doubly beneficial in that you don’t have to fund the physical infrastructure for where that care is delivered. The cost for a patient night in a hospital is thousands of dollars. In a long-term care facility, many hundreds of dollars, and in many cases, you can deliver home-based care for, you know, a hundred something dollars. And the reality is that actually the outcomes are often better when you’re able to keep the patient in their own home. Now, for every condition and every situation, but particularly for elder care, that’s the reality. And so it’s just a question of can we reorient our health system away from sick care and towards healthcare? And that is very effectively done in the patient’s own home if we can figure out how to bring the services to them.

[00:09:17] Jon AlayaCare is not your first startup. Why did you choose the home-based care industry? What was your mission? Why did you choose to found AlayaCare?

[00:09:25] Adrian So my last business was a mobile workforce management platform. So we’d had a chance to see a lot of verticals. And of course, over time, the softwares that can really focus on a problem set that’s, you know, as narrow as possible will deliver the best ultimate experience. And so enabling better care in the home was kind of percolating in my mind. But the purpose that we had at AlayaCare from day one was to try and enable the type of care that we want our loved ones to receive. And so that was kind of the emotional thrust of the business. And then the vision of the was as reimbursement started shifting more towards value-based, we foresaw a world where you’re gonna have multimodal care delivery and you’re gonna want the data and the insights that emerge out of all those touch points to help providers get the right intervention at the right place at the time to get the health outcome that we’re looking for. And so that was kind of the purpose and the mission and we saw a space that was really right for innovation.

[00:10:32] Jon There’s so much talk across healthcare about value-based care and technology will be a big part of that shift as well. Can you tell me about what you saw as the opportunity originally and then how has that evolved? How is AlayaCare addressing bringing technology to value-based care.

[00:10:49] Adrian Well, I think we were a little bit too far ahead in our prediction. I think were directionally accurate. Everyone was talking about it. No one was doing it. Even though we’ve come a long way in the last decade, it’s still actually a very small percentage. That doesn’t diminish the opportunity. We have this unbelievable wealth of data. You know, there’ve been millions and millions of patients that have received care on our platform since inception. And we have visibility into the assessment, the medical history, the demographics of the patient. Then we see the care plan that’s developed on the basis of that. We see how effectively that care plan is executed. And then we see that health outcomes. And okay, we don’t have a full longitudinal view of the patient, but we know when they’ve been re-hospitalized, we know and they’ve had a fall, we know in health conditions have deteriorated. And so, in this era of AI, to kind of optimize the steps along the journey on the basis of all that data, you know, we had a vision for it, but now really becoming a reality.

[00:11:54] Jon It’s so interesting and we see this again across lots of different settings of care and different sub-sectors within healthcare. The importance of data and how there has been data available for what seems like a long time now, but how can you bring that to bear to improve outcomes, to reduce costs, to improve quality? And so can you give maybe a couple of examples of how you are using the data, how you are leveraging the data to actually make an impact for the providers and the payers?

[00:12:21] Adrian So we use this kind of framing of system of record, system of intelligence and system of action. And if you can be all three or at least deliver an integrated experience, you have a real capability to shape how care gets transformed. So I’ll give you a specific example. We have what we call the patient risk dashboard. And so the idea is machine learning script runs on that data. And every time a vital is captured, every time the form is completed, every time we get an update to medical history or something like that, a risk score for that patient is recalculated. And so the case managers or nurse supervisors, right? They’re different names for these roles that are our customers. They might have a caseload of 100, 120 clients that they’re responsible for. And that means in any given day there might be a thousand narrative notes that come in and the thousands of data points, and how do I understand where to focus my attention? So you have the patient risk dashboard that shows you not only a computed risk score for adverse events, but you can see what is the thing that changed that risk score. And maybe, you know, I’ll focus on the deltas in any given day, because your most frail at risk patient today is probably going to be your most frail, at risk, patient tomorrow. So I want to see the deltas. And I wanna see why the system has made that recommendation. And so one of the really exciting things in this era of large language models and an NLP is that the system reads through all the narrative notes, flags the high risk notes, it categorizes the risk in that note. And then if you’re a nurse supervisor, you can sit on a single screen. You can see your patients that the system thinks is an elevated risk today versus yesterday. I can read those 10 notes that have a real kind of clinical impact today versus, I mean, let’s be honest, in the old days, you know, maybe it was a binder sitting in the patient’s home. You know, Maybe I eventually got that note, but no, nobody could read through the volume of it. And so a lot of that intelligence was lost.

[00:14:37] Jon Such an interesting example, because, of course, we hear a lot about provider burnout. We hear a a lot the administrative burden. And then we also hear a about there just being too much data to sort through to make good decisions. And this is an example where, using technology, you’re able to take away some administrative burden, hopefully reduce burnout from trying to dig through all this data, and bring the data to a person at the right time to make a better clinical decision.

[00:15:04] Adrian That’s it. And we’re not replacing the clinical decision. We’re empowering the clinician to just have to focus on the things that really matter.

[00:15:15] Jon Yeah, it’s really interesting. And maybe taking a step back, you’ve hit on pieces of this already, but one thing at THL and as an investor, we think about a lot is how to build businesses with sustainable competitive advantages. And you have become one of the market leaders in a relatively short time and have been really thoughtful about some of these components that help differentiate you and help. give you that competitive advantage hopefully over a very long period of time. Can you talk about that approach and what were sort of the key elements of that? What was part of the strategy? Maybe what did you stumble upon that actually turned out well? Talk bit about that.

[00:15:56] Adrian I’m gonna go a little esoteric in my answer because I think we’re also at an inflection point for software companies where what got us here will not get us there. LLMs are making coding a heck of a lot easier and we are in the infancy. And so I think a business whose moat is feature depth that is not gonna get it done in the future. So as a software CEO who wants to run a 100 year business here, we need to think about competitive differentiation, even in the workflow kind of vertical SaaS market, very differently to thrive for the next 10 years than how we thought about it over the last 10 years. And so if the barrier to entry deliver software with features becomes low, if that’s all you bring to the table, I think, you know, there will be price pressure in the future and it’ll be a red ocean world. So we’re looking at where we can add value in a more ecosystem, maybe network effect type of play. And so, you know, here I’ll pick on the example of the home infusion space. The specialty pharmas, a lot of them will subcontract a lot of the nursing services. We have a big footprint in the specialty pharma side of things. We have big footprint and subcontacted nursing agencies. We’ve got marketplace and well, look at that. We can deliver, we can solve problems that go beyond the four walls of our customer and we can do it in an ecosystem type play. And I think that type of structure is gonna create sustainable competitive advantage. So we’re looking for more and more opportunities where we can solve bigger problems through our technology. And sometimes it’s doing things on the employee or HR side, sometimes it doing things on the referral or reimbursement side. But this is, we’re really looking for opportunities where we get to significant market share in a market and where that gives us the ability to solve a set of problems that could not be solved otherwise and that go beyond the feature function depth of our software.

[00:18:13] Jon You mentioned AI, you mentioned NLP. Of course, that’s another very hot topic across healthcare. Are there other ways or other impacts you see that AI will address some of the key pain points in home-based care in the next, call it, three, five, 10 years?

[00:18:30] Adrian So at our user conference last year, we launched Layla, and Layla is our in-app chat bot, and we’ve been adding skills to Layla over the past year. One of the things that’s really nice about natural language as an interface, is that it can be way more flexible than what you might be able to show on a screen. So again, I’ll give you a specific example. Clinician or care worker about to walk into a visit. This is a patient maybe they haven’t seen before, maybe they hadn’t seen them in a couple of weeks. First thing you might wanna know is what’s changed with this patient since I was last year. Summarizing in text a bunch of data is one of the things that LLMs are exceptionally good at. So I can get a two paragraph narrative on the doorstep before I ring the doorbell of what’s changed with this patient. Then I can have a full chat conversation with Layla about things in that patient file. So we have API coverage of all the data entities in our software. We have the supervisor and sub-agent model to Layla so I can interrogate what’s going on with the patient or even my schedule or how much I’m going to get paid. Layla can then translate that into the appropriate API calls, get the data, return it to me in a summarized format. So that’s like the one class of use case is interacting with data in a Livecare software. Then you also have what’s called the RAG use case, which is maybe I want to know what best practice to deal with this type of scenario, and I’ve got my documented clinical best practices, I can do retrieval augmented generation on that. And so you’ve got like what the system knows, what a specific knowledge store knows and then what the model trained on the internet knows and you put those things together and you put that in the pocket of the clinician who’s about to walk into the home and you’ve got a real killer app there.

[00:20:29] Jon So how have you been able to bring recent technology, best-in-class technology, to bear as a relatively young company when many other solutions just haven’t really kept up with the times?

[00:20:42] Adrian Technology always represents the era in which it was created. And I think it’s quite rare to find a 25-year-old piece of software that looks like a five-year old piece of software or acts like a 5-year piece of software. Obviously, in the best case, there’s a continuous rejuvenation. But in practice, you don’t see that that often. So we were born in the Cloud First era in the era of open APIs. And I think that’s set us up pretty well to interface with kind of the modern technology world. That’s an advantage, but that’s not enough. You also need kind of a culture of experimentation. You need an ambitious culture that really wants to drive new technology forward to business impact. And so I think we’ve managed to keep that, you know, even though we’re a scale up or, you know, whatever you would call a 600 person company, I still call us a startup. And I still like to keep that vibe internally at AlayaCare. So I think you put those together and it gives us an opportunity to push the envelope.

[00:21:45] Jon Another really interesting thing you’ve done and where you’ve approached the strategy of AlayaCare is that you are a global company. You operate across many different regions and also reimbursement regimes. And in my experience, that has been difficult for software companies to be that applicable across all different regulatory environments and provider types. And so how have you been able to build a company that delivers great software to each of these different segments in a cost-effective way in a way that really resonates with customers.

[00:22:21] Adrian It has not been easy. I won’t sugarcoat it. Building a piece of software that works in one reimbursement regulatory regime is relatively easy. Building one that feels like it was made for New York Medicaid as much as it was made for home infusion as much as it was made to serve the disability sector in Australia or the client-directed care space in New Zealand. This is not an easy challenge. We look at the degree of investment we’ve made in our technology platform. It’s been substantial. So we picked a hard challenge. But I think the way the world is going, it’s gonna be even a better investment than we could have hoped for. Because what you see, and I’ll focus on the US market for a second, you see a lot of consolidation that’s happening, right? There’s also a certain private equidization of the space that’s happening, which means that a lot of the winners are being assembled through acquisition. And when you build a company through acquisition and you get to scale, you’re gonna have multiple business lines. You’re gonna operate in multiple states, not necessarily multiple countries, but being able to run a business like that on a single platform, you’re actually gonna need a software partner that has thought about, thought very deliberately and maybe may have done some iterations around what varies from one context to another and has built engines that can support intake in multiple flavors, assessment to care plan, you know, in multiple modes, can figure out how to handle multiple types of reimbursement, how to get the right clinical documentation back to payers or referral sources. And so, even though it’s been a hard climb, and I still have the dirt under my fingernails to prove it, now that we’ve really gotten to the other side of being able to support the level of complexity we do on the platform, I think it’s a massive differentiator for us in the market.

[00:24:22] Jon One thing I wanted to ask you, you have such an interesting vantage point looking across lots of different countries and reimbursement regimes. Do you have any takeaways from that perspective, from being able to see each of them individually and all of the data around them, about what sorts of policies influence home-based care, maybe drive more care to the home in a way that patients like or payers like? And maybe some pitfalls, maybe some things some jurisdictions have done wrong and that could learn from other more successful areas.

[00:24:58] Adrian It’s not a one-line answer to that question, but there are definitely themes that have emerged and the segmented a little bit. So I’ll talk about maybe a few of the areas. So for long-term supportive services, whether that’s with frail elderly or in disability, I’m a big believer in client-directed care models that have the right framework around them. In episodic post-acute care, it’s different. They’re, I think, a good value-based regime where you can do risk sharing with the provider closest to the action is a very good idea, but it is kind of by definition less client directed and more clinically driven. So value based on the skilled episodic post-acute care, client directed on the more long-term supportive services, I think help health systems get some of the best results out of there and then of course each health system is different you know as a Canadian we’ve got 13 different health systems each province manages its care differently and I don’t want to be too controversial out there but I think if systems don’t figure out how to have some competition in service delivery. They can become sclerotic and what you hear about wait times and, you know, all the downsides of socialized medicine creep in. In the U.S. system, you have the ability to create incentives, whether that’s risk sharing or otherwise, and let a thousand flowers bloom to respond to those incentives. And so that drives a level of innovation. We don’t see in some of the commonwealth single payer markets. So that’s a major, major advantage you have in the U.S. On the flip side, there is a certain magic to universal coverage because then you can really be allocating resources in a health system where they can have the greatest impact on overall health. So I would say those are the two main trade-offs.

[00:26:59] Jon And of course, you have been a very successful serial entrepreneur. You’ve also been an investor. And so for someone coming out of school, maybe college or engineering school or business school, what advice would you give them if they want to become a successful entrepreneur?

[00:27:16] Adrian Number one thing is just do it. So if you have the ambition and you have an idea, do not get stuck in analysis paralysis. Basically, it’s a fiction to think. No matter how capable you are, you will design the perfect business plan without actually trying to do it. So I’m a big subscriber to the Lean Startup Methodology. I mean, you want to pick the space very deliberately, you wanna pick your team very deliberately but then just do it because you won’t know what’s important until you actually try and accomplish something with your team in an area. So I always say don’t get caught up in analysis paralysis. Go out and try and do it. And once you try and sell someone your product, you will very quickly realize the things that are important.

[00:28:06] Jon And of course, you’ve also been an active angel investor. And so, you know, you see entrepreneurs from that perspective. What qualities do you look for when you are deciding to invest behind an entrepreneur?

[00:28:17] Adrian I think grit and determination, obviously like the earlier stage you’re investing, the more important that is, because it’s gonna be hard. There will be a thousand times where you feel like you should quit. And 998 of those times, like an actual analysis of the situation would lead to the conclusion that, okay, now it’s time to quit. And so having the passion and the drive and the determination to get through all those obstacles I think is a must. We celebrated our 10-year anniversary lately and so we got the team together and in my speech I said, look, we didn’t go into home care because it was going to be easy. And so some flavor of determination, but then also you have to be a little bit of a dreamer and naive in all the right ways I think is essential.

[00:29:13] Jon Adrian, thank you so much for joining us today. It’s been a pleasure as always, and I look forward to continuing the conversation soon.

[00:29:20] Adrian Thank you, Jon.

[00:29:23] Jon As we wrap this episode, I’m joined by my colleague Shahab Vagefi, head of healthcare IT at THL. Shahab, reflecting on the conversation with Adrian, are there any key themes that resonated with you as you think about the healthcare IT landscape more broadly?

[00:29:38] Shahab Absolutely. I thought Adrian did a great job laying out the opportunity for AlayaCare and in home-based care more broadly. The overarching trend toward care in the home continues to be very strong as the U.S. population ages, and there’s this combination of cost pressure, consumer preference, and technology that continues to drive care from higher cost facilities into the home. In addition to that backdrop, providers are increasingly demanding more advanced functionality from their technology vendors. So there’s this significant growth opportunity, not only from the macro backdrop, but also for runway from continued adoption. AlayaCare is a great example of a company we see benefiting from both of these dynamics in home-based care. And we see similar dynamics across many provider specialties, as well as in the payer, employer, and pharma and markets as well.

[00:30:25] Jon Adrian discussed incorporating more intelligent tools, and in particular AI, into AlayaCare. Is that something you’re seeing more broadly across EMRs and practice management systems?

[00:30:36] Shahab That’s an interesting question, Jon, and I think the industry is at an inflection point today where you’ve got some legacy systems that have historically basically just been data repositories, as opposed to value-added technologies that can really drive decision-making. We’re seeing the best healthcare IT companies be thoughtful about how they can incorporate AI to transform these legacy businesses and to truly value-add tools for their customers. I think of the companies that will emerge as market leaders in the next five to 10 years. will be the ones who not only successfully incorporate AI, but also focus on it early enough so that they can avoid disruption.

[00:31:12] Jon Adrian has a really interesting vantage point, given that AlayaCare serves customers in the US, in Canada, and in Australia, all of which, of course, have quite different regulatory and reimbursement regimes. How important is that aspect of a business when you’re evaluating investments in healthcare IT?

[00:31:30] Shahab The quick answer is the regulatory and reimbursement dynamics are incredibly important. One continued tailwind for healthcare technology companies is that in a lot of cases, they’re actually helping with regulatory reimbursement and other compliance matters, and we don’t see that trend slowing down. More broadly, regulatory reimbursements dynamics can create headwinds or tailwinds for HCIT as well as healthcare provider businesses. And that’s one reason, at THL, we think it’s so important for healthcare IT investors to be healthcare specialists. Really understanding end markets is crucial, and that’s true for regulatory and commercial dynamics. We believe that having end market expertise gives us a real advantage when we’re identifying and choosing great companies to partner with. Any other reflections in the conversation with Adrian? I think one thing that really struck me was Adrian’s focus on AlayaCare’s mission, which is really to enable the kind of care that their team would want for their family and friends. Some people may forget about the impact healthcare IT solutions have on patients and providers in their daily lives, but it’s something we always keep top of mind at THL. And we find the best healthcare IT companies are focused on that mission as their North Star.

[00:32:43] Jon Shahab. Thanks so much for joining me. I really appreciate your thoughts as always and I’m looking forward to continuing the conversation with you and Adrian very soon.

[00:32:50] Josh Thank you for listening to Healthcare in Action, brought to you by THL. To help Healthcare in Action reach more listeners like you, either share this episode with a colleague, subscribe to the show, or rate and review us on Apple podcasts. For more information on THL’s Healthcare franchise, visit THL.com/verticals/healthcare.

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