The thought that 79 million baby boomers are crossing or preparing to cross the threshold into senior citizenship poses quite a challenge in the world of healthcare. But it also creates a market that’s eager for innovation and projected to be worth $447 billion in 2014.
Startup company N2Care LLC is getting ready to launch its big idea that aims to make in-home care for seniors more affordable with the MedCottage, a portable medical home that can be temporarily placed on a caregiver’s property for someone needing rehabilitation or long-term care.
When Investment Rhymes with Canada
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The MedCottage is essentially a mobile hospital room with a small kitchen, a wheelchair-accessible bathroom and a bedroom equipped with medical and remote monitoring technology. That technology includes devices to measure vital signs, plus motion sensors to detect falls and a communication system for both monitoring and notification, according to Susan Conn, director of operations at N2Care.
Conn said the company has spent the last year redesigning the MedCottage unit for commercial sale and preparing to also launch a standalone version of the medical technology package for use in a home. In gearing up for the product launches, N2Care is raising a $2 million round.
It made its commercial debut in Salem, Virginia in May of last year, but the very first MedCottage unit will be rolled out to a customer in Fairfax, Virginia next month. N2Care will also be launching the mobile rooms in the New England market.
The 12-by-24-foot unit connects to a single-family house’s electrical and water supply, much like an RV. Although the company hopes to eventually offer a leasing option, it currently has distributors from Maryland down to northern Florida who sell the cottages for $85,000 with a buyback option, which Conn said is around $38,000 after two years.
Working around zoning codes that restrict the long-term parking of mobile homes on private property hasn’t been a problem for N2Care, at least yet. The state of Virginia passed special legislation in 2010 that allows the homes to be set up in yards without a permit, but Conn said the company believes that protection is already afforded within the Americans with Disabilities Act and has just never been applied in this way.
A 2010 Washington Post article brought up another potential barrier to the MedCottage’s success when it referenced opponents who dubbed the MedCottage the “granny pod” and predicted that it could cause conflict among neighbors who find the homes unsightly.
Then comes the question of reimbursement. At the time of launch, customers will have to pay out-of-pocket for the homes. “We believe there are certain parts that are covered by Medicare and long-term healthcare coverage, but we haven’t been able to break that out there,” Conn said. “We also believe it could be covered by the VA Aid and Attendance financial assistance, but until we have a veteran step up, we won’t be able to make that application.”
Will people be willing to pay that much up front? Conn pegged the price of assisted living at $211,000 annually and said the cottages are a more affordable option at $47,000 after buyback. But the up-front price of the homes doesn’t include the cost of utilities, or the time and cost of a caretaker or medical aide that’s usually included with assisted-living packages. Plus, other estimates of the cost of assisted living, including Genworth’s 2011 Cost of Care Survey’s calculation, are more conservative. Genworth tagged the cost around $39,000 annually.
Despite all these questions, it seems N2Care hasn’t had trouble garnering local and national support. In 2010, the company already had 20 investors and had won $100,000 in public grants .
Ken Dupin, the pastor at Salem Wesleyan Church, founded N2Care in 2008 after numerous humanitarian trips abroad and years of observing how other cultures take care of elderly relatives.
