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Six Disruptive Business Models to Power Our Neighbourhoods of the Future

Over the past few years, there has been a dramatic increase in the number of start-ups focused on ‘healthy ageing’. Since 2012, when I co-founded Aging2.0[i], we have hosted over 500 start-up pitch events across 65 chapters[ii] in 20 countries and are now tracking over 3000 companies globally. Most tend to focus on their breakthrough technologies, while others their novel user experience. Very few propose radically new business models. This is one of the reasons I believe we are seeing few small companies get to scale.

The majority of companies today use some version of B2B or B2B2C (i.e. business-to-business, or business-to-business-to-consumer.), and most equate ageing with health. That is a shame, since ageing – and building the neighbourhoods of the future – is about living richly in multiple dimensions. Here are six alternative approaches that could help disrupt the status quo:

  1. Direct to consumer

This is the simplest idea, yet it is surprisingly radical to those steeped in ‘Ageing 1.0’ (a siloed, low-tech, ‘dependency’ view of ageing). This is about unleashing the 70% of household wealth locked up in the 50+ population. It’s about expanding Europe’s €3 trillion ‘silver economy’ by creating attractive products that people desire, not just require. BestBuy’s recent $800m acquisition of GreatCall[iii] is validating, but more is needed. The key elements of success are distribution, design, branding, and an ability to curate products and educate consumers. iPads and Oxo products are two worthy examples – succeeding via superior quality matched with person-centred, ageless design. The dementia products portal is a taking a market-building approach, offering community and curation to spark commerce.

  1. Personal budgets

While consumer marketplaces sound attractive, especially to red-blooded, free-market libertarians, in reality many who would benefit can’t afford to pay. Money spent by governments or insurance companies can ‘prime the pump’. The Australians have been pioneering personal budgets[iv] for years, and there are fledgling examples elsewhere (including in the UK.). Unfortunately, bureaucrats picking winners is not always a recipe for success; a fixed shortlist of ‘safe’ products can protect incumbents from innovators. Looking forward, giving people money to spend on curated portals (such as Unforgettable) could help, together with a more commercial, experimental mindset by those who have already large numbers of consumers, such as AgeUK[v].

  1. Capitated payments

What if some older persons are not best placed to be the empowered, sovereign consumer? They may not be interested in comparing vital sign monitors and prefer Krispy Kreme to kale salad. Enter capitated payments – a monthly lump sum paid to an organisation to do everything necessary to take care of older adults. This ties health and social together neatly. It solves the enduring problem of no-one being in charge of keeping older people happy, healthy and independent. Early trial versions of this have emerged in the US as ‘health maintenance organizations’, but these ended up being seen as cost-cutters, rather than advocates for their customer’s happiness and quality of life. An updated version, the Program for All Inclusive Care for the Elderly (PACE) was created by Onlok[vi] in San Francisco and has proven effective at improving quality of life, while reducing care costs. For-profit companies with talented entrepreneurial teams, such as Welbe[vii] and Edenbridge Health[viii], are now offering similar products across the United States.

  1. Pay-for-success models

While the capitated model provides an all-important holistic solution, there is a danger that this approach can lead to stasis. The revenues paid to the provider are fixed; it is usually a set monthly amount equivalent to similar or less than a nursing home; in California this is around $3-5k per month. Pay-for-success instead offers to pay on mutually agreed-upon metrics of success. These include social impact “bonds”[ix] (which are actually closer in risk and behaviour to a capped equity investment). While most SIBs have been related to prison reform, education or the environment[x], some are focused on healthy ageing, such as the Meals on Wheels project in Maryland[xi], or the Connections program in Worcester (though this is decidedly low-tech).

  1. Universal long-term care insurance

While SIBs are intellectually attractive, they have political downsides – strapped local governments paying Goldman Sachs doesn’t look good – and don’t create a new original source of funding. A long-term care insurance fund would. In the 1990s, Japan’s ageing population was precipitating a national crisis. As workers retired and got sick, budgets ballooned, growth stalled, and family caregivers were burning out. Hospitals become de facto nursing homes, with average length of stays for older adults of 50 days[xii]. Compulsory long-term care insurance for people over 40, introduced in 2000, provides discounted care based on five acuity levels, and seems to have, so far, averted further system breakdown. A similar model could help the UK system, and could be combined with some of the more market-oriented efforts, such as personal budgets, to create a unique approach tailored to the UK’s needs.

  1. Funding via health data

The final model taps into the power of data, the buzzword du jour. The world’s most valuable, reusable asset has powered trillions of dollars of market value to Silicon Valley companies and won’t be relinquished lightly. A few weeks ago, the UK’s House of Lords started debating this very topic[xiii], with some estimates emerging that pharma companies could pay up to £10-15bn per year for the data. This is one of the most complex and charged topics, with its importance only matched by the confusion surrounding it. An expert, independent team should be convened to advise the nation – conducting an ‘audit’ of what’s at stake and developing principles (such as giving people the right to own and manage their own data) that are then implemented in pro-growth ways.

We’re still in the early stages of exploring which business models will work in different contexts – differing populations, use cases and technologies will play a part in constructing systems that successfully deliver change. There won’t be one particular dominant solution, instead there’ll be a variety of models, some in parallel, and there needs to be significant real-world experimentation and feedback about ‘what works’. Ideally, we will be having a shared conversation across industries and vital lessons won’t be held hostage within corporate strategy departments. The more effectively we test, learn and iterate in a collaborative way, the quicker the progress we’ll make towards enabling all generations to fulfil their ambitions and together realise the promise of the neighbourhoods of the future.

(Note this article to be published in the Agile Ageing Alliance site)





[v] the US organization with 37m members have been active with via investments in pitch events, market reports and some innovation activities, but lack a consumer product generation engine