Investing in Health | November 23, 2021

Investing in caregivers to fill gaps in long-term care

Chris Hedrick

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Guest Author

Chris Hedrick

Editor’s note: ImpactAlpha is partnering with Johnson & Johnson Impact Ventures to explore purpose-driven entrepreneurs and impact investments in health outcomes for underserved communities around the world. Check out all of our coverage at Investing in Health

When frontline health care workers are mentioned in the media today, it’s often in the context of the COVID-19 pandemic. From burnout to vaccine hesitancy, the list of challenges faced by long-term-care providers has expanded exponentially in the last two years.

The reality, though, is the caregiver crisis existed long before COVID-19. In the United States, a growing older population is quickly expanding demand for care while the supply of professional caregivers, primarily Certified Nursing Assistants (CNAs), is falling further and further behind. By 2040, we will be short an estimated 355,000 paid caregivers.

To close this gap, caregiving careers must be made more accessible and attractive to potential health care workers through innovation and investment. 

The living and working conditions faced by many CNAs were bleak even prior to COVID-19. Twenty-one percent of nursing assistants are on Medicaid, and 22 percent make use of food and nutrition assistance, according to a 2020 government report. Other challenges like lack of access to paid leave, affordable housing and adequate wages have contributed to high turnover rates among caregivers — an astounding median rate of 129.1% last year for CNAs working in nursing homes.

If we are to close the gap between those who need care and those who are willing and trained to provide it, government policy makers, training programs, long-term-care providers and investors must step up to improve working conditions for CNAs and other professional caregivers. In early 2021, a group of investors representing more than $3.34 trillion in ​​combined assets issued a list of expectations for improvements to working conditions that included higher wages, improved safety, and the ability to unionize. It was a stark acknowledgment that immediate action is needed to ensure “a more socially and financially sustainable model of eldercare.”

Identifying strategic goals is a big first step in improving conditions for caregivers, but reaching these goals will require tactical thinking across all segments of the long-term-care industry. The Milken Institute, a nonprofit, nonpartisan think-tank that researches health and well-being, issued a report in 2020 warning of the dire consequences of “market failures and funding gaps in providing long-term care” and presenting actionable recommendations for closing the care gap, including a call to create an impact investing fund to support development of new technologies. 

Innovative, tech-enabled approaches to caregiver training, staffing and community building have the potential to both improve caregiver working conditions and decrease staffing stresses on long-term-care providers. Some companies, such as Kevala, have received venture capital funding supporting their work to help care communities access supplemental health care workers and avoid understaffing, which can lead to an unsafe environment for residents and increased burn-out in caregivers. Others, like Aiva Healthcare, are employing technology to improve communication between caregivers and their clients. 

At NextStep, our goal is to create a community for caregivers where they can receive ongoing training and career coaching; connect with our network of highly respected long-term-care employers; receive and provide peer-to-peer support; and benefit from NextStep’s advocacy for better working conditions and wages. We aim to make our programs as accessible as possible by using a blended online and in-person approach that allows our learners and graduates to participate in our community without disrupting their daily routines. 

The positive impact of NextStep’s holistic business model is already apparent in the regions where the company is currently operating. In a 2020 survey, we found that training with Nextstep increased our graduates’ projected lifetime earnings by nearly 60% on average, and we’ve already reduced staffing shortages with more than 75 long-term-care providers.

Moving forward, we’re focused on expanding and strengthening our community. Recent investments by Johnson & Johnson Impact Ventures, JAZZ Venture Partners, Springrock Ventures, ZOMA Capital, the ETF@JFFLabs Impact Fund, and Frontier Angels totaling $3.3 million will support NextStep’s efforts to scale our program nationally and make critical strides toward closing the caregiver gap. 

Solving the care crisis will take the ongoing cooperation of all long-term-care stakeholders. Some of these players — like government agencies — are an essential part of the solution but inherently move at a pace that’s too slow for those already caught up in the deficits of the caregiving system. Given the exacerbation of the COVID-19 pandemic, it’s essential that impact investors inject funding into innovative health care start-ups that are directly training and supporting caregivers and have the capacity to respond nimbly to complex and evolving long-term-care challenges.

Caregivers deserve a long-term solution, but they need a lifeline now — impact investors can throw it to them. 

Chris Hedrick is CEO of NextStep.