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CEO Profile - Lily Sarafan, President & COO, Home Care Assistance

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CEO Profile - Lily Sarafan, President & COO, Home Care Assistance

In 2005, Lily Sarafan, age 23 and recent graduate from Stanford University with a Masters in Management Science and Engineering, saw an ad on Craigslist for a senior in-home care company looking for “experienced team members.” Fast forward eight years, and 31-year-old Sarafan is President and COO of the company, Home Care Assistance, a leading provider of in-home care services. From the May issue of PRESIDENT&CEO Magazine.

Listen to the entire interview with Lily Sarafan by clicking here

Invoking the entrepreneurial spirit of Silicon Valley to disrupt the stagnant senior care business model, she has overseen corporate and franchise growth from zero to over 70 locations throughout North America, and growing revenue in 2012 to $63 million. Under Lily, the company has exceeded 25% growth every year, and she expects to hit $150 million in revenues in 2015.

PCEO: I guess we should start with how you got involved in this industry, in homecare assistance.

Sarafan:  That is a great question.  I certainly did not see myself in this industry.  When I was completing my graduate studies at Stanford, I always had a number of interests across the broad spectrum of different issues, everything from high-tech public policy to US foreign policy to tech start-up companies.  I did the Management Science and Engineering program, which is basically like business school for engineers or those involved in technology, and this wasn’t the direction that I saw myself going in. But it was a really exciting opportunity. 

I was doing an online search for a gentleman who had been quoted in an article in the Palo Alto Daily, and as I was doing a search for his name, his actual name and email address came up in a craigslist posting, which happened to be a posting where it said “local homecare companies seeking caregivers.” At the time, I didn’t even really know what homecare was, but I thought that it was a fantastic vehicle through which to contact this gentleman, so I actually went through the job posting and said “I saw that you are quoted in the Palo Alto Daily,” an article that actually had to do with day trading, and I thought that we could meet.  So, it was very serendipitous.  I ended up meeting with him at what was then the nascent beginnings of Home Care Assistance. His name was James Johnson, who is now the chairman of our board. His wife Kathy Johnson was there as well, and they were starting to provide home care services in the Palo Alto area.  The conversation went from Stanford, to day trading, to current affairs, history, a cross of different of topics, and I was asking “what are you doing here” and he talked about senior care. [He was] very charismatic.

He said “You know what, you’re young.  I know you can go out there and go work for Google like the rest of your graduating class, but why don’t you go home and think a little bit about this opportunity and see if there is anything about it that interests you.” That was literally where it began.  It was February of 2005. 

"Everything from bathing assistance, transportation, medication reminders and, of course, we go above and beyond by doing mental stimulation and nutrition consulting and all of that."I did go home over the weekend and started doing extensive research, as I do, about things like aging demographics, what players existed, etc.  I found that it was a highly fragmented industry.  Not a lot of sophistication in the business model, and I was excited to apply not only some of the case studies from my graduate studies, but also some of my personal experiences - being in a very entrepreneurial family - to a real world issue. I came back and said “you know, I’m going to defer law school and do this for a couple of years. It seems like a great opportunity.” Eight years later, here we are.

PCEO:  Okay,  so, you came on, you have this sort of epiphany, and you research it and said “I’m going to take a 90-degree angle in my life.” What happens then?

Sarafan: It’s funny because we talk about it sometimes now.  I don’t even remember.  I don’t even know if there was an official position.  I kind of just came in with the hope of taking this operation and seeing what I could do to make it scale. 

The thing that I really poured myself into at the very beginning was franchising.  We did not have any outside funding.  This was all privately funded, so we didn’t really have the resources to open tons of corporate locations to use as incubators for lots of different testing and ideas.  The best means we had for expanding nationally and really refining the model over time as we went in to new geographies and new markets was through franchising. 

I did not come from a franchise background, and I noticed that a lot of individuals involved with some of the different senior care franchise concepts came from franchising backgrounds, whether it was fast food or dry cleaning.  It seemed to be that the cookie-cutter approach to franchising was to find individuals who had experience in franchising and bring them into senior care.  We thought, we need to bring in individuals who have strong home care experience.  We don’t want to be known as the company that is best at franchising.  We want to be known as the most recognizable and reputable home care company in the world, and franchising is just the means through which to do that. I think that allowed us to do things very differently from day one. 

For instance, where every other franchise company was selling these tiny territories because, you know, franchises define their success by how many units they sell, we decided to define our success by how well our individual units did, which meant selling huge territories.  Very unheard of within franchising, but that sort of gives you an idea of the type of different thinking that contributed to our success up until now.

PCEO: Obviously, home health care is a big deal.  You know, maybe I should clarify that.  I said health care.  You’re not medical care.  You are more personal care.  Is that right?

Sarafan:  That is correct, and you know it gets very, very tricky. The reason is that even though we’re operating in this one country called the United States, we may as well be operating within, you know, 50 different countries. The reason is that every single state has such different regulations around this industry that in some states we are considered home care providers, in some states we’re considered home health providers, in some states we’re regulated by the Department of Consumer Affairs, in others by the Department of Health and in others, not at all.  So, we are a personal lifestyle care provider, but based on the regulatory environment in that state, we might be officially labeled a home health provider. 

In general, for those who aren’t familiar with the industry, Home Care is the non-medical lifestyle care that allows someone to stay in the comfort of home all the way to end of life.  Everything from bathing assistance, transportation, medication reminders and, of course, we go above and beyond by doing mental stimulation and nutrition consulting and all of that.  Home health care, in general, is a Medicare provided service, typically just a few days a week for a few hours for a short period of time.  Let’s say, once you’re recovering from a joint replacement surgery or you have other health needs that are considered temporary solutions by Medicare, they usually turn it over to a home care company like us because government does not provide the 24/7 care that our service does.

PCEO: I would presume, then, that you are not reimbursed typically through a government program.  You’re typically reimbursed by the private individual, or is it a combination?

Sarafan:  That is exactly right.  About 90% to 92% of our cases are private-pay and the remainder is paid through long-term care insurance.  LPC insurance does cover non-medical in-home care.  Unfortunately, not a very large segment of the population have long-term care insurance, but with every passing year we are seeing that number increased as people realize just how expensive it can be to actually provide the level of trained and compassionate care that the elder population deserve.

PCEO:  Look, you’ve obviously done an astonishing job in terms of rolling this company out.  How did you do it?  How would you describe your managerial process, and how would you describe the reasons for the success you’ve had heretofore?

Sarafan:  Certainly, there has to be just good fortune and good timing.  I have read Malcolm Gladwell’s Outliers and I do believe that sometimes there is the right time and right place.  At the same time, I’m an extremely driven and motivated person and I have never settled for anything less than A+, so I’m sure that has contributed to it as well. 

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