Geriatric Care Management:
A Private-Pay Revenue Stream for LTC Insurers
Those selling long term care insurance to middle aged (and older) consumers are in a unique position to sell something else as well. They could sell a solution to a problem often discussed during a long term care insurance sales call: the client’s current frustrations regarding his or her own failing parents and grandparents.
A long term care insurance provider who successfully offers a solution to this problem will add profitable revenue and create a competitive advantage for itself. The solution is geriatric care management, a still-small and fairly new concept that is already serving private-pay clients across the country.
This industry appeared about 25 years ago, the result of 2 demographic shifts in the U.S.the lengthening of the average life span and the continuing trend of families to scatter across the map due to job opportunities and retirement living options.
Because aging makes independent living, health care and travel more problematic for many seniors, a few visionary nurses and social workers launched the industry in the mid-70s from their spare bedrooms and small offices. They began to provide families with expert advice and eldercare oversight, particularly for those families separated by geography.
The industry has grown but remains mom and pop. Given the enormous demographic shift represented by the baby boom, geriatric care management is poised to become a highly successful service industry of much greater size. We estimate that the current cottage industry serves only 3% of the 2.5 million qualified families who could benefit from the service. The industry lacks what it always has lacked, marketing savvy, something that major insurers have in abundance.
Similar to other professional services, care management generates attractive margins. A typical care manager spends between 4 and 10 hours per month per relationship, interacting with the senior client and his or her family, making care arrangements, monitoring the quality of the care, solving everyday problems such as transportation, home companion or home health care services, home repair, meal services, medication management, etc.
For that, a care manager charges an hourly fee comparable to a paralegal in their market. This means that care managers charge between $65 and $180 per hour. Most also charge for travel.
In my experience, one care manager can serve between 12 and 20 clients in any given month (depending on the complexity of the clients’ needs) and can individually generate annual gross revenue of $75,000 to $100,000. The margins on those sales typically stay above 30%.
If this service sounds familiarly like long term care insurance case management, it is because care management and case management are 2 sides of the same coin. Long term care insurers use case management to protect their assets. Families use care management to gain peace of mind.
Geriatric care management can be an added-value service that meshes nicely with the resources that most long term care insurers already have in place: (1) a sales force and (2) a case management network. And, even if the insurer’s case management is conducted by a third party there is an alternativethe network of certified practitioners of geriatric care managers established across the country.
Given the robust margins associated with private-pay care management, there is room for sales commissions and revenue sharing, should the process involve third-party partners.
Done right, the revenue impact for insurers can be substantial while the expense side need not balloon. As mentioned, much of the resource infrastructure is in place, marketing is low-key and cost-effective, the family’s need is often volunteered, the financial qualification parameters easy to establish, the resulting service a true blessing for many families and the delivery of the service is a variable cost.
Geriatric care management is a service whose time has arrived. What is needed is an established, trusted and related service industry to add this revenue generator to its list of services and grow it. Many baby boomers already are paying for geriatric care management for their aging parents and many more would, given the knowledge and opportunity. The sons and daughters of these boomers will also want this concierge service for their parents in the coming years. The growth curve is headed only up for the next 25 years.
Bruce J. Brittain is the founder of Wisdom River Partners, LLC, a geriatric care management/consulting company in Atlanta. He can be reached via e-mail at [email protected].
Reproduced from National Underwriter Edition, June 11, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.