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Episode 16

Family Resource Home Care & Senior Solutions home care

Jeff Howell (00:01):

Welcome to home health, 360 a podcast presented by AllCare. I’m your host, Jeff Howell. And this is the show about learning from the best in home healthcare from around the globe.

Erin Valier (00:19):

Hi folks, and welcome to another episode of the home health 360 podcast, where we talk to home health professionals from around the globe. I’m your guest host Erin Valier director of sales for like your software. And today I am joined by two very well known and a highly respected home care professionals. Jeff Weiberg and Kunu Kaushal to talk about home care more in general and a few exit strategies from SUD market in case you’re thinking in that direction. Jeff is the CEO of family resource home care, overseeing strategy, culture, and vision for the independently owned home care agency with over 20 locations across Washington, Oregon, and Idaho. Jeff has over a decade of experience in the healthcare continuum and is a nationally recognized thought leader in the home care industry. Welcome Jeff.

Jeff Weiberg (01:10):

Thank you very much. Glad to be here.

Erin Valier (01:12):

Glad to have you. And Kunu is the founder and CEO of senior solutions home care with over 20 locations in the greater Nashville area and Georgia and the founder of the independent home care Alliance. He is an entrepreneurial motivated and personable business professional with vision and experience in leadership, operations, and consulting at the district regional and corporate levels. He’s also been a certified senior advisor since 2010. Welcome to the show Kunu.

Kunu Kaushal (01:41):

Thanks for having me glad to be here.

Erin Valier (01:44):

Wow. I’m super excited for this conversation. Before we dive right into the topic at hand, I’m wondering if you can give our listeners a cliff notes of versions each of you of how you ended up in home care in the first place, because I know you’ve got some interesting stories. Speaker 3 (01:59): Yeah. I, I I’m happy to share the stories. So for, for me, I had been working in the public trade sphere for, for a long time and ended up leaving a hospital and looking for a new role at the time I was ahead of HR and I was looking for a new role that that, that would take me into a smaller organization. One that one that I did didn’t have to feel some of that corporate culture problem. And I found an ad for a company in Spokane, Washington called family home care and interviewed and, and got an offer to, to join the team. And at the time I was gonna be their very first HR professional. And we did home health, hospice home care, and even in in-house physician services and joined the company, kind of started building HR systems and processes.

Jeff Weiberg (02:53):

And in particular because of the, the labor needs in, in the home care division you know, I gravitated a lot of my energy and, and, and expertise over there. The, at the time that I interviewed from the very first interview, the, the owner of the company had told me that he had a five year horizon before he wanted to sell out. And over the course of those five years entertained a few offers here and there. And interestingly, all of the suitors were, were home health agencies that wanted the home health and hospice divisions, but they didn’t want anything to do with the home care cause they just didn’t understand it. And so each, each iteration I, I said, well, you know, Hey, if it works out and this is what you wanna do I could tell you I’ll, I gladly take the home care division off your hands.

Jeff Weiberg (03:39):

And so ultimately at roughly the five year mark, that’s exactly what happened. And a large home health agency came in and, and purchased the home health hospice divisions. And I ended up with the home care division. So all all told I’m pushing 15 years here. And my family has been owners of, of the agency quite some time at, at that point we were a single site but I had big aspirations towards scaling up the company and becoming a, a, a larger platform organization. And that’s exactly what we’ve done since.

Erin Valier (04:13):

Awesome. So you’re definitely the guy we need to be talking about, you know, mergers, acquisitions and all, all that jive. That’s how you entered. So happy to have you here. Kunu, what about you? How did you end up here?

Kunu Kaushal (04:26):

Oh my gosh. I, I would like to say I was lost and someone found me, but I’m not sure that that’s quite accurate. I’ve been chasing, I guess, you know my passion all this time. So the, the Clifton version is that my, my father’s a physician. My mother is a critical care nurse. And back in the nineties, my dad was, you know, an entrepreneur of his own making. And my mother was as well in two totally different polarized models. My mother found her passion inside of a very boutique and, and small assisted living facility. And she enjoyed the small business aspect of it. And the geriatric model. And, you know, I, I affectionately say I grew up with about 40 grandparents at any given time. During that time, then my father was on the far other end, right.

Kunu Kaushal (05:17):

He, he was doing things working with publicly traded companies, private equity, backed organizations home health, hospice, large platform type of models, regional players. And I saw, you know, that other side of life, right. It was that how many thousands of employees do you have? You know, how many thousands of individuals do you have on census and so on? So I grew up around that I’ve dabbled in home health and hospice in the field. I have been the administrator for a private duty nursing company, worked in consulting with home health and hospice marketing and whatnot. So one day the thought was, I’ll just do personal care. That seems easy. And you know, it smacks you in the face because there’s no part of this that’s been easy by any means. You know, I always say simplicity actually brings the most complexity.

Kunu Kaushal (06:12):

It seems like it would be easy to find elderly folks that need and find people who want to work with them. And as we all know, even pre COVID, right. And it’ll be post COVID, if that will be one of the greatest challenges, but started with a laptop cell phone, couple of caregivers, my grandparents needed help and over time have had the opportunity to do a couple of acquisitions that I would say were learning that math elementary, math does not work with corporate math where, you know, two plus two equals one and a half. There are a lot of lessons in that mix. And so we’ve done everything from Denovo growth to, you know, slight acquisitions to just learn some, you know, lessons along the way. And ultimately we continue just to try to find ways to serve people and find value for our organization and the people that are part of our team. I’m glad to be here. Erin, it’s been good to meet you recently, but have been proud to call Jeff a colleague in the industry and, and a fellow trailblazer, affectionately you know, on the other side of the country. And yet we, we often travel the same road, which is fascinating how that happens

Erin Valier (07:26):

For sure. It’s been great to meet you recently as well. And let’s start by talking a little bit about the industry in general right now. So there was a lot of conversations about home care prior to the Panda. They were focused around the need to leverage data. We need to focus on outcomes and value to healthcare systems and the payers. How has the pandemic impacted the progress of that conversation?

Jeff Weiberg (07:52):

So I’ll jump in here. I think there there’s been some positives and there’s been some negatives, so I’ll start with some positive. So I think that one of the things that the pandemic gave us is a lot of attention that may have not have occurred at least in the short period of time in which we got the attention that the, the idea that so much very disastrous outcomes came in the senior living world because of code would in, in concrete living facilities. I mean, you had some facilities where 75% of the residents were dying and it was making national news, and it was a huge black eye on overall the long term care space. And yet out of that came a lot of stories and, and, and positive feedback around the, the one-on-one care that we provided the home care space and how, how it was safer.

Jeff Weiberg (08:40):

The transmission rate was so significantly less and that we were able to keep people safe and in their home during the course of this pandemic and of, of course, people being at home is certainly their preferred venue in which to receive care. But during the pandemic that even became more exacerbated by virtue of the fact that these facilities were, you know, lockdown. In some cases, people were not leaving the room for as many as, as six months at a time. And that’s that, that’s not a, that’s not living, that’s surviving, but it’s not living. And, and I think that a lot of families really woke up to the idea, Hey, there are other options out there other than the, the, the well known retirement home concepts. And I think that home care had an opportunity to be able to really show some of our wears in, in a very different way because of the conversation differences brought on by the pandemic.

Jeff Weiberg (09:37):

That being said the negative is that the pandemic took up all the oxygen. And so the conversations with referral sources with payer sources, with even, even within our own industry about what are, what are the data and outcomes based evidence that we need to be developing and demonstrating consistently from, from agency to agency and from state to state in order to be able to show wholesale payers and institutional entities, the value that we bring to the population that they are trying to manage, if we were attempting to have that conversation and may in 2020 people would say, oh, yeah, yeah, that’s, that’s very nice, but you know, what am I gonna do about PPE? And what am I gonna do about keeping my employees safe and my clients safe and so forth. So the pandemic removed so much of the momentum that we had begun to build as an industry and as an association and such around some of this data. Now I will, I once say it’s dead. I think it just got delayed because we are certainly reengaging those conversations now, but I feel like the pandemic served to be a bit of a distraction from, from that kind of driven strategy.

Erin Valier (10:51):

Yeah. That makes sense. It did. Yeah, it did consume all of our energy you in, in thought process for a while, but

Kunu Kaushal (10:59):

I, I was just going to jump in and just say one thing, which I, you know, I don’t think gets enough. Attention is what Jeff’s pointing out here is there were, you know, maybe some good things, but the massive myths that happen along the way is really to support what home home care business really is, right. Representative in the solution that it really is from an entire healthcare system. I’ll give you just a poor analogy, but I will say this because COVID, O’s been so, so devastating and such a large loss of life. And then, you know, the economic burdens have been incredible as well, but, you know, there’s a, there was a lesson that I learned a long time ago, which is you can have, have a small little fire in your kitchen and you might be able to manage that it’s the smoke damage that is causes the real problem.

Kunu Kaushal (11:48):

And in some ways I feel not to, you know, minimize the effects of this, but, you know, COVID, and, and managing, I think between vaccinations and all the challenges, it’s the smoke damage. That is probably the most difficult to think about here. I’ll give you some prime examples. We have uncovered the fact that for governmental pay systems, that we cannot move fast enough to address enact equities in the model and to support our workers, right, with rates of pay and challenges. And one of the things that we’re seeing that, you know, Jeff is pointing out so accurately too, is home care has also just in the last, you know, year or two has become even more a service that is available to the elite essentially, right? And so the haves and haves nots are, are starting to get figured out pretty quickly.

Kunu Kaushal (12:39):

And it all comes down to one thing. It wasn’t that the care being provided needs to be different. It is who is gonna be paying for it and how much, and only for one reason, you know, you have all the burdens of doing business, but it was what the, what the labor force really demands from us all and what the labor force needs from us. And yet, you know, we, we went from a situation in which people were in nursing homes and they were dying and they were seeing neglect. And I think the, the smoke damage that we’re about to see become a greater part of the conversation is that we’re gonna have people that we’re all feeling neglect in the community. Now it’s, they were, they’re being neglected in the com you know, in nursing homes and in the community, you know, people are, are aging is even scarier within the system.

Kunu Kaushal (13:27):

And, and I think in that way, we have a, we have a much bigger post COVID conversation that needs to happen if we are really going to try to focus on the workforce, which is so critical. And yet, you know, private pay as an option knows what to do is they wake up tomorrow and they say, okay, I need to raise my rates, you know, as much as a third or 50%, or, you know, a hundred percent and they can, but the user base and the individuals that are getting care is the biggest thing at risk, in my opinion.

Erin Valier (13:59):

Yeah. That all makes sense. And I’m just gonna piggyback on, on Jeff. Like, I, I agree with you, like about the highlighting, the need for home care and the benefit of home care throughout the pandemic. And I’m just curious, it’s like we got 15 minutes of fame, right? Like, how are we gonna use the fact that we are keeping people safe in their home now? And like, how are we going to use that data to influence those future conversations and continue to drive the value creation of home care over the, over the next few years?

Kunu Kaushal (14:34):

I, I think that it’s, we’re really kind of getting back to the playbook that we established before the pandemic. And the reason why I say that is I’ve had more conversations in the last 30 days around the, the, the ACO value based care partnerships

Jeff Weiberg (14:52):

Preferred provider agreements, payer contracts, which were what we were pursuing before. So that that’s telling me that the doors are starting to open again, and people are really starting to think through, okay, this COVID thing is gonna be here to stay. We’re just gonna be dealing with it for, for forever. And eventually we gotta get back to just doing what what we were doing beforehand. And, and there was still the financial pressure on organizations throughout healthcare to really try to manage the cost and manage the exposure of, of a population. So now that now that the, the primary economic driver of the pandemic of are starting to wane executives are getting back into that realm. So they’re deploying their resources to, to, to kind of seek that out. And I feel that getting getting back into those conversations with the data that we were talking about just two years ago, I is still the right move because it’s still done demonstrating the incredible value that we bring on the front end.

Jeff Weiberg (15:56):

I really think of home care is not really being, post acute like so much of the long-term care industry titles, ourselves. It’s pre-ACE, it’s prophylactic nature. We’re our job is so they keep people from consuming the incredible amount of dollars that they do in the healthcare system. I mean, it’s widely known that 80% of the healthcare dollars that are spent in this country are in the last six months of life. And when home care is involved, the frequency of hospitalizations and falls and medication errors and all those things that lead to that exacerbation that, that, that drives those costs, those go away or at least are mitigated to a significant degree because our rehospitalization rates are significantly better than any other service provider in the long term space. And the, the reason why is because we are in the home, we are, there are constantly, so we’re actually aware of what’s going on, we’re aware of the discharge notes or the, or the conditions or the diseases that this person is facing.

Jeff Weiberg (17:03):

And the mistakes, like the number one reason for hospitalization is a medication error. Those kinds of mistakes can be prevented when you have somebody who’s trained and able to assist in that regard. So ultimately I think that articulating our message about our value in what it is that we do, and, and also helping people to understand that we really are pre acute. And so we should be involved in grander population management type conversations, especially when we’re dealing with I’ll call it the, the, the holy grail of Medicare, which is that, that they’re trying to incentivize ma plans to, to innovate around, which is those who are functionally limited and have two or more comorbidities and folks, that’s our, that’s our entire world. That is where we live. That is all we do. And so you have all these providers and payers and, and so forth.

Jeff Weiberg (17:58):

That is like, Ugh, I want to take everybody. But that group, because that group is scary, they use up a ton of dollars, and I don’t wanna go at risk in that group, but we that’s, that’s where we live. And so given fact that we’ve not been covered by insurance before we don’t have the actuarial data necessary to be able to help these health plans, who only speak that language, understand our value. And so the, the data that we’re collecting and moving towards standardizing across the, the industry is really a along those lines, we’re trying to create the actua data. That is the language that payers speak. And when they read the value proposition that we are, that we are putting together, it’s, it’s gonna be an undeniable opportunity for the industry and also frankly for the, the whole healthcare system.

Kunu Kaushal (18:47):

And I, and, and I guess, let me walk it, it back a little bit, Jeff, cause you know, you are a hundred percent on point and to simplify it a little bit, I would say we’re at a really critical fork in the road that I think in the future, we’re going to have companies that are today, the far majority, which are sitter services and then we’re going to have right now, which are in the minority, certain companies that recognize that they’re, they need to be a healthcare organization and finding the difference between the two. Now I’m gonna use, you gotta get another analogy, but you know, I have young children, right? And it’s, I think if you have, when you think about when you have young children, you need to make a decision between, are you gonna say, send them to daycare or are you gonna send them to a preschool right?

Kunu Kaushal (19:34):

Or early childhood development center or whatever it is, the complexity, the tools, the, their approach you know, everything, the kind of employee they have there, the training that they do, which makes all the difference. Now, functionally you’re dropping your kids off someplace. But in results there’s a difference between, you know, the kids that were in a room grouped by age or whatever, versus the ones that are like, Hey, we’re trying to get ’em ready for kindergarten. You know, we, we are trying to get them to learn their ABCs and there’s a lot of things happening there now, you know, within home care itself today, I have to tell you a lot of measure happens today is like how many hours are you doing? What’s your revenue? And it, it, it essentially stops short there because we are preconditioned as an industry. We’re just we’re, we are so good at kind of diminishing our true potential of, you know, being the eyes and ears, being the data, collect, being the individuals that carry out a care plan.

Kunu Kaushal (20:36):

I think it’s absolutely asinine for some organizations that are spending energy, making care plans. And it’s really just to satisfy, you know, a state compliance and then they don’t ever visit it again. You know, it’s still, they they’re operating their schedules like, well, you know, 20 hours a week at, you know, X rate and that’s kind of their goals. I think there will come a time. And, and maybe through this workforce process to what Jeff is also talking about is that these payer are going to get past the idea of buying services from us at a rate per hour. And I think that is a, that is a massive change in the future. Whenever that comes in, where someone says, we need your help to reduce this right. Or to increase that I think reducing rehospitalization and risks or, or whatever that looks like. I wholeheartedly agree with Jeff. It shouldn’t be, you know, to keep them from going back to the hospitals, they shouldn’t have gone in the first place. Right. It’s like, that’s the real challenge is that based on things that we already know about them, there are certain tactics that we could all use to be reactive to what’s actually had happening. But it starts by saying we’re gonna do more than just show up and clock in.

Erin Valier (21:53):

Yeah. All, all good points. So I think what I’m hearing both of you say, in order to continue this value creation over time, we, we need to continue to collect the data and serve it up to these pair sources in a language that they can understand and then start to actually value what we do. And it sounds like you both believe that we might be on the cusp of something great in that area. Do you know something like what’s brewing behind the seams?

Kunu Kaushal (22:21):

Yeah. I mean I can give you some insights. There’s a whole lot of people that need care and only so many caregivers. And I don’t think it’s necessarily a big secret and I would, you know, I’m not gonna put words in Jeff’s mouth here, but you know, I think he even said, when you even start to have a conversation with the MAs the, you know, health plans, the others that are playing in a space, give you a prime example, just watch the arc of another organization. That’s trying to impact healthcare somewhere. You know, people got excited about dispatch health because of, you know, maybe a thousand different reasons. But the, the reality was dispatch was bringing the healthcare services down to the people who needed it the most, the fastest in their home, you know, whenever they could get there and that’s over some buying their entire business model.

Kunu Kaushal (23:12):

And yet look who liked it the most, I think, you know, Humana, right. Or whoever ended up actually buying them. But I think that is, there’s no secret that this is where we wanna get to. And I think if you just watch the industry, there’s a reason sniff at home and hospital at home and everything at home. I get really frustrated with this whole concept of it’s new to do things in the home. That’s been home health and home care for, you know, a very long time, you know, three plus decades. And I’m sure there’s people with much more gray in their beer that could say, you know, how long it’s truly been, but nobody wants to be at the hospital. Everybody wants to be at home. I think the sophistication is what is truly just now, you know, being accessible and valued and, and a potential. There was a time where in skilled home health, everyone just assumed that those home health workers were you know, broken down nurses from the hospital. I mean, that is truly was the feeling back in the day. And then it got much more professionalized and I, and I’m not sure, you know, today where our workers would be categorized, but I think we’re gonna see professionalization not only in the agencies, but the workforce I, and that’s long overdue.

Erin Valier (24:27):

I totally agree with you there. So it sounds like home care is moving in the right direction. There’s gonna be some exciting opportunities in the future. But I also know that a lot of agency owners are, are burnt out right now. And there’s a lot of people thinking about exiting. I wanna hear your thoughts on that. So if I’m listening to this podcast and I’m thinking, Hmm, I’d love to retire, or I am really tired and disenfranchised right now, like, should I exit, should I stay? Should I go? Like, what are you, what are you thinking?

Jeff Weiberg (24:59):

Yeah. I, I actually have a, I have a lot, a lot of opinions on this front. I, I think that’s, first of all, let me, let me address that. What’s driving the volume. I is a, is a, a lot of things. The, the, the first thing you certainly may, may mention of the fact that people are getting tired and, and it’s, this business has gotten exponentially harder, especially over the past couple years. And I, I would say the labor crisis is by far more stressful than even COVID 19 was. So there’s definitely challenges that are causing people to say, boy, howdy. You know, I used to be able to just hang a shingle, have a couple caregivers and deploy them to these lovely old people that I just loved. And I, I made a few dollars on the side to be able to, to make this happen.

Jeff Weiberg (25:42):

Now they’re having to wear 18 different hats and they’re having to manage through all this liability. And it’s, it’s, it’s a nightmare. So certainly that is a driver. And I’ll, and I’ll come back to it here in just a minute, but the other thing that’s, that’s, that’s causing some of this angst is that there’s been a lot of talk about increasing the, the, the capital gains tax and so forth. And so that’s always gonna cause business owners to, to say, okay, do I get out now before I have to take a, a haircut? And if they, if they had any inclination of, of getting out, that was definitely going to be a motivating factor, especially to get it done before the end of this year, because we’re all expecting that, that that legislation is gonna come down the the pipe at some point, and that the capital gain tax is gonna get increased.

Jeff Weiberg (26:28):

But simultaneous to that occurring, there is also a lot of institutional money that has come into the space and said, boy, there is something pretty cool going on in home care, there’s opportunity for consolidation. And so there’s a lot of investment dollars that are going out, knocking on doors and offering up large checks to, to have people go away. And when they’re, when you combine the interest of the buyer with the fatigue of the seller that’s a pretty good combination for, for having a, an M and a world that’s, that’s pretty active, but coming back of the, the fatigue, cuz you said, Aaron, you know, what would you say to individuals watching this now wondering to themselves, boy, I’d like to retire? My response to that is you need to have a plan as to when you’re going to exit long before you do, because if you wait until it’s no longer fun, what that’s always going to be accompany a down cycle in your company and down cycles mean that the value will have been partially impacted to some level, to some degree as to what you’re gonna be able to take out of the business when, when you do sell.

Jeff Weiberg (27:41):

And so my, my cautionary retail is to say, have a point on the, on the map that says, this is where I’m going to exit and under these kinds of circumstances, and when the inevitable hiccups come along the way, like a pandemic or like a labor crisis, or what have you you’re, if you still maintain your focus on what you want, it will help drive your energy to get through the challenges that, that come along your path. Because the last thing I would encourage anyone to do who’s really wanting to get the value out of the, the company that they put their blood, sweat and tears in is to say, oh, have no plan say, oh, think about that later. And then when things really get you say, okay, I, this is just too much. I want, I want out. But then somebody says, yeah, your, your company’s now worth a million dollars less than it was even just 12 months ago.

Jeff Weiberg (28:36):

That, that is, that is worse than the haircut from capital gains tax. So in my feeling it’s have a plan and work the plan because you don’t wanna get into a scenario where I call it on the job retirement, where you really just kind of writing the wave down and then expecting that the value is gonna still be as high as your, your one time crest. There’s not a buyer in the world that is that dumb. So you, you really have to understand, you want to leave on the crescendo. You want to have the the systems, the processes, the health and welfare of the company be at its best, because then at, with that kind of Polish, it’s gonna drive the best value for you as a seller.

Kunu Kaushal (29:23):

Yeah. The only thing I would add to that is you and Jeff you’re, you’re writing so many ways. I also think that this is like the, you know, oh eight or whatever housing crisis is like, you know, when, when things are in the trough, then capital comes out and, you know, they’re, they’re looking for deals, right. And there’s a lot of other things around the motivations around what’s happening. I would agree. I think just being targeted at the idea of people being tired or burned out. I, I agree. I just think that you know, finding workforce and caregivers, if I had to describe the last maybe decade and a big summary was, you know, and this is just from the time I’ve been in it in 2010 it was constantly, you were looking for more clients, you could hire people, you know, all the time, all the way into even 2015 and 2016, you know, it was like how many thousand people did you hire this year, right?

Kunu Kaushal (30:20):

Or applicants did you get? And then people were actually showing up for hiring events. And so on the labor market, I, I even pre COVID, I think in 18 and 19 was already getting competitive. We were seeing everything from an economy that was doing well. You know companies that were growing generally, a demand for workforce lower labor per participation rates in general. And I think as it got tighter and tighter, the reality is, is we are in a high volume, low margin industry. And so for us labor workforce and efficiency, you know how big you are, what scale, what you’re very sensitive to the market in 2015 and 2016, you, you weren’t losing workforce to Amazon that was hiring people at X percent more than what you had to offer with benefits and so on. So I think also what’s competitive, the gig economy, you know, Uber wasn’t quite there.

Kunu Kaushal (31:14):

There was a lot happening and I think we’re seeing just the workforce change around this. It, I think it’s less of an indication and I was try to like, hold up people. I don’t think it’s home care owners that have done anything wrong because there’s a sense of, you know like what did I do wrong? Looking back, what else should I have done? It’s also at some point you’re, you’re operating in the environment that it is. So for those that are listening that are, you know, at all, you know, feeling a little rough or sensitive during this time, it’s you have, you’re not a total screw up. I’d say everybody has their motivations. But I, I would very much, you know, say that Jeff is saying the exact right thing of you want, you wanna sell from a position of strength if you’re gonna do that and entertain things from a position of strength.

Kunu Kaushal (32:01):

Obviously, that’s hard to say if things are looking for bleak and challenging, but I think that’s a part of leadership too. It’s not gonna be a bright and rosy day, right? It’s not gonna be every day as a win. And you’re just kind of turn on the shop lights and things happen. You have to innovate, you have to be willing to adjust and, and change your processes and systems. But you know, this part of the reason, that’s not why we’re are here. But part of the reason we created the independent home care Alliance is to take this very fragmented industry, take some of them, at least get them aligned around some industry standards. For the most part. There’s just people that don’t quite know how to operate. Right. When we say professionalizing, the industry, there there’s a lot of companies that candidly are, they don’t have anything to sell.

Kunu Kaushal (32:44):

I mean, these aren’t really what I would say. Acquisition targets for a lot of folks. I mean, you’ve got 20, 30 clients in some market, maybe, you know, there’s some opportunity at some consolidation, but for the most part, major capital and may major organizations are looking for you know, best of breed unless you’ve got maybe licensure or some other values into the mix. But I won’t speculate. I think the other is the ability to have technology and resources in the mix. You know, we offer a back office solution, that’s offering some services there and purely it’s gotten to a point now you have to make the same money go further. And so, you know, whether you use the independent home care Alliance or some of our services, or you use anyone else, I think it’s about time. We also think about does every company need to have a payroll manager?

Kunu Kaushal (33:35):

I mean, shouldn’t technology be helping you process payroll accurately and efficient where it’s a few clicks of a button versus an FTE. And that’s just one example. I think those are the kinds of things where if you’re an operator and you don’t, you know, look forward to solving some of those challenges, maybe yeah. You know, you start exploring making changes in your business or potentially selling, but the demand is very high. I definitely think that we’re going through a trough and there’s challenges ahead. I don’t think everyone will make it. I think the strong will survive. And you know, that’s just the harsh realities of the world, but Aaron, one statistic you used that I just wanna make sure I kind of, if I could be critical of the franchise conversation of, you know, the four franchises that made a transac, I, I hate when they’re included in the, that statistic.

Kunu Kaushal (34:24):

And the only reason is they’re in a different business, they’re in the business of selling franchises, right? So their value proposition to the market is the model of being a franchise and having a network and so on. I think if we’re looking at true transactions, you actually have to look at the you, you know, maybe franchisee level or even just at the branch level, individual home care agency, those transactions are much more telling of what’s happening in the industry. You know, whether you got brands like you know, Jeff’s brand who’s doing some acquisitions, you’ve got home care assistances out there. You’ve got Nova leap. I mean, you know, there’s some of these brands out there that are making traction. I think those are the ones to really look at and get a sense of what’s happening in the industry and what they find valuable.

Erin Valier (35:10):

Totally fair. Well, the common thread that I’m hearing between you two is you need to make sure that your company is valuable enough to sell. So even if you’re tired, maybe now is not the time to just execute because you’re, it’s like a fire sale or a clearance sale. You’re not gonna get what you want from a transaction right now. So I guess my question for you guys is how should owners approach creating value within their company right now to increase the value of their company when they wanna sell it in the future?

Kunu Kaushal (35:45):

Yeah, I’ll, I’ll take one to kick off and then we’ll pass it on. I, I think I’ll just take a part of it, cuz there’s so much that can be done. So it’s not gonna be comprehensive answer. I think one from a value perspective is really understand if you’re looking at value from a resale perspective, like, you know, you want to exit the business. That is a different component. I would say really focus on how much is the owner involved in what makes the business successful? And part of that step may be, if it’s a solopreneur type of operation, that’s gonna be really tough for a buyer to see that go forward. And I gotta tell you somebody who’s been involved in a couple of transactions already. You know, I love people and it’s all great, the transition and the likelihood of a former owner staying on for a long period of, of time. And it going just very smooth is a gamble. I, it has worked. It’s just not typically, I mean, let’s be honest, you’re selling for a reason and there’s some sense of like, I wanna drink a pina colada at the beach. You know, I don’t wanna go clock in for the, the buyer and go like Speaker 2 (36:54): Exit strategy means exit strategy, right.

Kunu Kaushal (36:57):

I think, you know, transition periods aside and, and some of the, the very like you know, soft touch and that kind of stuff. But I think the number one way to create value in, in set another way is to diminish the day in, day out operations of the owner. And that can look like hiring a right hand. It can look like, you know, assigning someone to be the administrator or, or whoever wants to do that. I think in Jeff’s story, which by the way, I think is great. You know, he was involved in an organization and he had leadership desires and, and wants, and he was a intrapreneur. Right. And, and I love that definition, which is you find somebody who has all, all of that you know, desire to do these things like an owner, but you know, give them the ability to transition in essentially over a period of time.

Kunu Kaushal (37:49):

And that’s planning that takes planning, role clarity, organizational strength. So I think looking at the talent of your organization is a clear indication. And by the way, having a really good salesperson that knows how to bring in referrals is not like the only indication, right. It’s like that was from the yesterday years today, as we know the phone is kicking off and COVID proved, you know, a great salesperson, but if the mechanism of the organization doesn’t support it, that’s going to be an issue as well. Now, I love what you’re saying, Kunu, cause it’s absolutely accurate. I think that that’s probably one of the, the biggest problems that we see in organizations that are preparing themselves to sell us is that the, the owner in

Jeff Weiberg (38:34):

An effort to really try to drive value is putting forth an ex an explosive amount of energy. But from a buyer’s perspective, it’s not just the outcomes that we’re looking for, like a top line, bottom line type of a performance. We’re, we’re also looking about sustainability and that’s really what you’re talking about. Kunu is, is creating the sustainability of the organization to be successful in the exit of the owner. I’ll only add that even if, even if you don’t identify an internal person to be a good successor from a leadership perspective. What I, what I would add to that is, is that one of the biggest problems that we find as buyers is the personnel that are involved in running the day to day business, down to the scheduler and everybody in between the CEO on that they’re not prepared for the change that occurs when there’s a purchase.

Jeff Weiberg (39:29):

And so one of the things I really appreciated about my first experience in home care was from the interview. You, my, my boss at the time told me, yep, I’m thinking about five years. And we had frequent conversations about that over the course of those five years, such that when it occurred nobody was surprised nobody was taken by surprise. And we were proactive at helping people under understand that change will occur when that happens and you prepare them psychologically for it. So that when it, when it, when it will inevitably occur, you don’t have them running up against a brick wall and then not surviving the transaction. And it, it amazes me that almost always the owners say, well, I’m keeping this really close to the chest because, you know, I don’t wanna scare my people. And what, what they’re really saying is I don’t trust them to be mature about it.

Jeff Weiberg (40:24):

And secondly, I actually don’t care whether or not they survive, because if you really did, you would prepare them for the inevitable change and help prepare them to put their best foot forward with it, the new owners. But if you, if you just kind of plunk ’em down one day and say just, you know, I sold the company today that that is like a smack across the face for anybody who is even has a Motum of loyalty. They don’t have loyalty to necessarily the brand, they have the loyalty to the owner. And so the more you can work kinda prep and dilute some of that before a purchase. You, you are going to come out a little bit ahead. And then lastly, I’ll just mention Erin that focus on the fundamentals. And we could talk about the fact that your referral sources should be diverse and it, you shouldn’t have all of your business tied up into two cases that are just a huge number of hours and very profitable, but there are on the verge of death.

Jeff Weiberg (41:20):

You, you don’t want to have the inability to hire, you know, that, that, that over the course of the last 12 months, you’ve hired five caregivers, but the only reason you’re still afloat is because you’ve got some really loyal ones that have been able to maintain your volume. You, you wanna be able to demonstrate that the fundamentals of the flywheel within our, our industry are working and functioning and know that doesn’t mean that everything has to be perfect. I mean, we don’t expect it as buyers. We don’t expect everything to be perfect. In fact, we kind of want there to be a little bit of runway for us to be able to, in some opportunities and such what, what you don’t wanna do is have everything be just like hanging together by needle thread and prayer. That, that the moment you walk away, it’s gonna come down like a house of cards.

Jeff Weiberg (42:07):

You do want to have the organization be strong healthy, you know, think of it like a human body. You want the systems to be working together relatively well. Yeah, you might have, you know, your blood pressure just a little bit off, or your cholesterol is a little bit higher, something of the nature. But if you know that and you’ve taken some actions, you’ve put it into place to, to try to mitigate that. You could take that to market. You could say, Hey, we’ve been making some great progress. And I think that that progress is gonna be continued. Why? Because all the stakeholders are, are bought into that idea. And by the way, they’re fully aware that I was looking to exit at this point, because I prepared them for that fact. They’re, they’re acknowledging constantly the idea that a new owner’s gonna come in and maybe show ’em a different way to do things, man, if I ever had that conversation, cuz by the way I have not yet if I ever did, I’d be like, where’s my checkbook. That would be very attractive to me. So that’s, that’s a long answer to your short question, Erin, but that’s how I would, I would encourage people to think about creating value.

Erin Valier (43:07):

No, I love it. How are you two personally thinking about M and a today in this post or pandemic or post, is there gonna be a post pandemic? I’m just gonna say during the pandemic, what’s on the docket for your companies and I’m gonna layer on a, a, like a B question to this, cuz I’ve read that like the provider relief funds and all that stuff is kind of muddying the waters in terms of M and a that the, you can’t use any of those dollars for M and a, and if you, if you sell or something happens, you have to report that transaction and you may be audited. So talk to me about all that. Are you dealing with it? Yeah. How are you thinking about it?

Jeff Weiberg (43:49):

I’m totally seen this. I I’ve seen for example somebody wanted to inflate the value of their business because they got a PPP loan forgive and they, they, you know, put that right to profit and, and they, and they’re like, look at how profitable I am. And so therefore you should be paying multiple of EBIDA. In reality, we don’t pay multiples of EBIDA. We pay multiples of adjusted EBIDA and what are those adjustments? Well, to the favor, the, of the seller, there are one time expenses or extra extraordinary expenses, or maybe even, you know, if you’ve, if you’ve been running, you know, all of your family’s expenses through the business, which has some good tax ramifications you know, clearly that’s not gonna be something that survives the transactions. So therefore you can adjust those out and actually still get a multiple of, of, of those types of dollars.

Jeff Weiberg (44:41):

That’s all positive, but the, the, the flip is also true. If there are extraordinary revenues or profits that are coming for for, are you like the the tax refunds for, or credits for the retention credits or, or PPP loans being forgiven or something of that nature? Those are, those are one-time adjustments off of your books, because what we care about is buyers is we care about the continuity of the revenue. If even if you said, well, during the pandemic, I charge $5 more per hour because, you know, Hey, we could get it, but you’re no longer doing it. I’m not gonna give you credit for the $5. Right. So it has to be something that will survive in perpetuity in order to be able to get that credit. And that’s all the stuff that goes into the, a, of the, of adjusted EBIDA.

Jeff Weiberg (45:31):

So I think that that’s a reality that folks need to, to understand there. And you pointed out very accurately that you could even get trouble with the IRS if you’re attempting to drive value from some of those relief funds that were given to you through the generosity of, of the taxpayers. And then you, you said on a you know, where, where, where am I feeling at I, I’m definitely in a place where I, I am shopping. I have a fairly decent pipeline right now of transactions that I’m considering at the present moment, and that is no different from what it was in 2021. So that’s one of the reasons why I’m still bullish that there’ll still be additional transactions in 22, because at the end of the day from my perspective, the way to be able to get to the value proposition that we started, this whole conversation on is in part the ability for me to create a meaningful network with which to contract.

Jeff Weiberg (46:28):

So, I’m a consolidator, I am, I’m bringing together under one roof in a, and therefore under one system the, the capability of becoming the professionalized agency that Kunu talks about. So I’m definitely an interested buyer. I’m also looking at greenfielding new new stores and just starting ’em up from scratch. And we’ll be doing both in 22 and, and 23 and, and into the future. I think that there’s still a lot of inexpensive money out there because the, the fed is you know, as of today is not raising the rates. So you know, I think that there’s a lot of bullishness around being able to leverage CA available capital to, to generate M and a be that, that yields a great ROI. So I think that the environmentals with the, with the monetary fund are policies that are going on right now speak to the fact that there’ll be, there’ll be plenty of M a activity going into 22.

Erin Valier (47:29):

All right. Exciting things on your calendar, Jeff. How about you Kunu?

Kunu Kaushal (47:34):

Yeah, I think you know, candidly, we’re Jeff and I’s strategies right now are in two different places. And you know, and I humbly say this Jeff’s years ahead of where we could even want to be at this moment. And I think a lot of that has to do with, you know, I don’t think it’s, it’s actually very indicative of home care. There’s not the right answer. It’s the way that you’re willing to show up and actually perform in the industry. And I’ll kind of make this comparison. It’s like in home care, somebody says, well, is private pay right? Or governmental you’re right. Well, it depends on the one you wanna do. And, and the one that you’re gonna build an engine around I, I think from to answer your question, Jeff’s looking at maybe 1% right. Of the industry to make the right transaction with, and we’re looking for, you know, the other 99%, let’s say of independence that are, you know, reasonable and all of that.

Kunu Kaushal (48:32):

We’re looking at the other 99% to partner with, right. We’re, we’re wanting, I think if, if we could play out this as we wanna professionalize some agencies to increase their value, to be in that category of, of someone that maybe Jeff today says, Hey, you know, you’re not quite our our, our target and maybe all the other buyers also say, you’re not quite our target yet. And we can work with them, partner with them to kind of professionalize them, help them from being burned out or just fizzling away or shutting down and reinvigorating, I think through some smart, whether it’s education group purchasing programs, or even back office support, right in a really smart way is then over time, we wanna impact about 10% of all the independents and, you know, there’s fuzzy numbers out there. I think the best ones I like to go with right now is there’s roughly 13,000 very fragmented independent agencies around the country.

Kunu Kaushal (49:29):

We hope through the independent home care Alliance to attract about 1300 of them and of those attract about a hundred or 130 companies and offer them deeper services so that we can help them with valuation over time. And I think the thought process exactly, to kinda what Jeff’s point is here is there’s, there’s a lot going on. And yet I can almost guarantee you this education and transition of an organization, not everyone is set up to do it because they don’t even understand, you know, that world yet to know what is being valued. What, you know, what do people care are my books, even in the right setup? You know, we’ve got people porting caregiver costs in seven different ways, right? If you’ve seen seven different books and, and that in itself is, is some challenges. So I would say Aaron, for us, we’re looking to partner with agencies we’ve attracted about 400 agencies into the membership side.

Kunu Kaushal (50:29):

We’ve got over a dozen organizations in just five months to be part of our partner or power partner program where we’re doing back office services for them. And I think for us, we’re seeing that’s the best place we can help the industry. And hopefully one day those are the kind of organizations that you know, we can refer to Jeff and, and anyone else in the marketplace based on the kind of model or the organization that they’re aiming towards. And that’s where the, you know, the marriage of the two can really happen. So right now I’d say we’re almost like we’re like a contractor, you know, for hire, for people who need to do a lot of work around their house to fix it up before they put it on the market. And Jeff is, is, you know, certainly a buyer who has the opportunity to put some capital to use today. We are, we’re doing our good old fashioned, you know, bootstrapping model. Like we’ve done for a little over 12 years where we’re saying what, you know, let’s just start a at basics and see where we can help and do the most good. And then ultimately, you know, I think 23 and beyond, it’s gonna be an exciting time for everybody.

Erin Valier (51:38):

And your passion is visible in how you speak about the industry. And I think that both of you are amazing like sources for our listeners. And that leads me to the, the final question I have, cuz there might be some folks who just wanna reach out and learn more about your organizations, learn more about any services you might offer or get some, pick your brain on something. So as my final question to you guys, how can we get in touch with,

Jeff Weiberg (52:09):

Oh, okay, I’ll go first. I would say reach out to me on LinkedIn. I’m pretty active on LinkedIn and I’d love to make new connections and happy to always take questions and so forth. And that’s one of the best ways to be able to put context to it, you know, Hey, I listen to the podcast and then I just had a couple questions for you to have some, a few minutes to chat, cuz bear mind in my inbox, like the email inbox, I’m constantly scouring for avoiding spam. And so as a result, I don’t sometimes connect with people if they email me. So LinkedIn is really, truly the best for me.

Kunu Kaushal (52:43):

Yeah. I echo is the same, you know, it’s LinkedIn’s probably the best place. And the only thing thing that I would, you know, say for those that want to get engaged in general you know, Jeff and I are both very engaged in the industry and I think you can be too right. I think the home care association of America is a place that you should be not only a member of, but involved in if you’re an independent, you know, be part of the independent home care Alliance and really start that you in a different way. If you have a state chapter that’s in your state, get involved. If you wanna make a small investment in yourself and professionally is show up at the events, I mean just go at a state level at a national level, wherever. I mean, there’s, there’s plenty of things going on, but start a conversation and don’t let ego be the thing that stops you. And I have to tell you, I mean, I think there are a lot of people that are looking for attention and eyeballs in time. Right now the bigger and grander question is if you understand the spirit of you wanna help home care. I, I will come connect with you and talk to you any day. I don’t care who you are, you know where you’re from, but if your intent is in the right place we’re all about it. It’s gonna take a village and that’s said very lightly

Erin Valier (53:56):

Bravo. Fantastic. Well, again, thank you so much guys, for sharing your wisdom. Gosh, there’s so many nuggets that you’ve dropped on people, and I just expect that you’ll be getting a lot of LinkedIn requests after this. So thanks

Kunu Kaushal (54:12):

Having us. Thank you so much.

Erin Valier (54:14):

It was wonderful to speak to you.

Jeff Howell (54:18):

Home health 360 is presented by AlayaCare. First off, I wanna thank our amazing guests and listeners to get more episodes, you can go to that’s spelled home health 360, or search home health 360 on any of your favorite podcasting platforms. The easiest way to stay up to date on our new shows is to subscribe on apple podcasts, Spotify, or wherever you get your podcast. We also have a newsletter you can sign up for on health 360 to get alerts for new shows and more valuable content from AllCare right into your inbox. Thanks for listening. And we’ll see you next time.

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Episode Description

Guest host Erin Vallier sits down with Jeff Wiberg, CEO of Family Resource Home Care and Kunu Kashal, founder and CEO of Senior Solutions Home Care to talk about the home care market and how home care has changed since the pandemic.

A lot of the conversations about Home Care prior to the pandemic focused around data, outcomes, and value to healthcare systems and payors. Jeff and Kunu give share their insights on home care market trends, workforce shortage issues, and creating value within home care businesses.

Episode Resources