Competition in Home Care
In the 1950s the
automobile changed the way we eat forever. Automobiles used to be a
luxury item for the tool of a trade. Franklin Roosevelt's new deal
spread highways across America. Postwar enthusiasm led to a strong
economy and more disposable income. Detroit automakers learned how to
simultaneously lower costs while developing the cars that are icons
Suddenly, cars were
affordable, stylish, and streets were paved across the nation. We
needed places to go! We drove to the movies, literally, and we created
the demand for fast food.
Also in the 50’s a
thriving little restaurant owned by the McDonald's brothers was visited
by Ray Kroc, inspiring a vision. McDonald's franchising exploded to 500
locations in less than 10 years.
In 1966, McDonald's
put its first commercial on television.
In 1975, McDonald's
introduced a sandwich invented by one of its franchise owners, the Egg
When Ray Kroc passed
away in 1984, McDonald's had over 7800 locations in three dozen
Today, competition is
thick. There are burger joints, taco stands, fish fries and our
hometown hero, The Colonel, serves his Kentucky Fried Chicken.
So what do fast food
and home care have in common?
Starting last year
the largest and wealthiest generation in American history started
turning 65. Over the next 30 years home care companies will have the
opportunity to care for the parents of baby boomers, then the baby
boomers themselves. This generation is our automobile.
is thick and getting thicker. Over the past eight years our newsletter
readership has increased tenfold. Part of this growth, I'd like to
think, is the Editor's witty and insightful writing. Realistically,
this is predominately the reflection of rapid growth.
Prior to McDonald's,
fast food is a collection of small chains and independently owned
restaurants. The industry was fragmented. Competitors fought
head-to-head, and copied each other. Fast food was getting faster,
heck, some of it even arrived on roller skates.
solidify and refine this industry. Management strategies and
technologies were shared. Results were shared and benchmarks were
established. The thriving fast food industry today is the result of the
sharing of best practices.
So how do we create
the spirit of cooperative competition in home care?
It's the size of the
pie, not the size of the slice.
In the restaurant
industry, the best thing that can happen to your restaurant is to have
three others open their doors on your block. Now you only get 25% of
restaurant goers on your block, but it has become the destination for
Home care companies
need to focus on the pie rather than the slice. Private pay home care
services are relatively new, and we expect rapid growth. Educating
consumers as a whole about the benefits of home care will help rapidly
grow the pie, even as new competitors start stealing slices.
If you don't have
anything nice to say...
I've heard owners
talking about their competitors negatively. This hurts everyone.
about competitors, even when those comments are accurate, hurts all the
companies serving our industry.
You will never see a
McDonald's commercial announcing that "Burger King's Whopper Sandwich
has 670 calories!" This, by the way, is true. Burger King won't
say "The Big Mac has 12g of saturated fat." This is also
true. This type of naysaying is more likely to cause people to stop
Think about our
political system today. Mudslinging has become sport. The "Red vs.
Blue" battle rages on. Yet for the vast majority of Americans,
we'd be happy with a nice shade of purple if it kept the economy
strong, provided access to education and healthcare, supported our
national defense, and protected us from the dangers we can't yet see.
The result of
mudslinging is that Americans perceive all politicians as somewhat
sleazy. More than 50% of Americans are so disenfranchised that they
don't even cast a vote.
I believe the vast
majority of politicians began their careers by trying to make a
difference and make life a little better for their constituents. I ask,
"How can so many men and women with idealism and good intention be
perceived so negatively as a whole?"
To grow home care we
need to talk positively about our competitors when we can, and say
nothing when there's nothing positive to say.
Be innovative, and
share the knowledge...
Yes, there is such
thing as proprietary knowledge. However, developing a good system that
works and creates profits can sometimes help more if everyone uses it.
More than five years
ago our company identified a need for behavioral and personality
testing of caregivers. This became the core of our Caregiver
Quality Assurance program.
Users of the
technology can show a clear competitive advantage to their customers.
However, that advantage goes away if several of your competitors also
Or does it? As more
customers understand the value, having several competitors in the same
market using the technology will strengthen its recognition and value
in the minds of customers. Additionally, it can separate a handful of
competitors from the rest.
Don't let competition
become a distraction...
A few days ago I had
a conversation with a CEO who was distraught about rapidly increasing
numbers of competitors in her market.
She's been in
business 15 years. When she began, she was one of only three companies
providing companion services. Today, she knows of 29 competitors in her
Her triple digit
growth dropped to double digits, then to single digits and she blamed
However, her company,
and her two original competitors were still the three biggest providers
I urged her not to
worry about the 26 nipping at her heels.
I simply said, work
with your other two competitors to help improve the companies overall.
If you focus on improving your own business, you will continue to stand
out. Most of the other competitors won't be able to keep pace.
I told her to focus
on profits and then use those profits to buy the companies that aren't
doing it right.
Ask yourself this
"Is my company better at providing service, retaining caregivers,
and operating efficiently than we were yesterday?" Your
only competition should be yourself. Compete against yourself and
you'll leave your competitors in the dust.
What not to do...
I believe in
cooperative competition. It's healthy, locally and nationally. However,
there are some things you shouldn't share.
Pricing -- Discussions of
pricing with direct competitors in any form is antitrust, and illegal.
Wages -- Be cautious in
giving or taking advice about what to pay caregivers. Caregivers are
your inventory and you need to acquire them as inexpensively as
possible. Waging war with your competitors on wages will ultimately
create red ink on the bottom of your profit statement.
New Innovations -- Innovative
companies will always lead their marketplaces. Good innovations will be
copied, no doubt. Innovators also make mistakes, however. Sharing a new
idea that doesn't pan out could lead to replicating a bad idea and
hurting you and all your competitors. Innovate, identify best
practices, then selectively share that information but only after it's
Contacts -- Sharing
techniques for finding new customers or new employees is fine. Sharing
contacts is deadly. Every company has a list of key individuals that
significantly affect daily business. You, most likely, have the classic
80/20 rule, where 20% of referral sources generate 80% of business.
Keep these people secret as long as possible and treat them extremely
Where to share...
· Your state home care association meetings
· Your local Chamber of Commerce
· Online forums, blogs, social networks and e-mail list
· With your vendors and suppliers
You will find the
more you share, the more benefits you will receive.