Louisville, Ky., is at the center of an effort to transform senior care in America

About a decade ago, Joseph Steier, CEO of long-term-care company Signature HealthCare, wanted to move the company away from Palm Beach Gardens, Fla. He needed to find more healthcare talent to grow the company, and he knew the post-acute industry would soon be going through a painful transformation with the value-based care shift and reimbursement cuts. He wanted to be near like-minded companies dealing with similar issues.

Steier chose Louisville, Ky., the land of the famed Kentucky Derby, mint juleps, barrels of bourbon and, curiously, a bunch of healthcare companies that focus in some way on the over-65 crowd. The city has long served as a headquarters for a large cluster of senior-care companies, including skilled-nursing, assisted-living, hospice, and home healthcare organizations that have helped drive its economy.

Medicare Advantage giant Humana, home-health company Kindred Healthcare, and assisted-living companies Atria Senior Living and Trilogy Health Services are among those that call Louisville home and helped build its $80 billion healthcare industry. For Steier and other startups and entrepreneurs who would later set up camp there, Louisville represented a hub of experts in the senior-care space—a place to grow and learn, troubleshoot common problems and collaborate on best practices.

“Being around those kinds of organizations that are smarter than you or more resourced is just helpful for us. It’s really helped Signature a lot being part of this Louisville ecosystem,” Steier said. Since it moved to Louisville in 2010, the private company has grown from about 13,000 employees to 17,000.

But as home to the largest cluster of aging care companies in the nation, Louisville thinks it can do more than help the businesses that set up shop there. The city’s leaders and its healthcare companies are betting they can solve some of the biggest challenges the U.S. healthcare system is facing as Americans grow older in a country ill-equipped to care for them.

“There’s more power to our own stories and our own strategies within our own companies if we find ways to work together on common challenges, problems and opportunities plaguing the healthcare system,” said Rick Remmers, a senior vice president at Humana.

Louisville is far from the only city with a large concentration of healthcare companies, but what’s singular about this healthcare hub is that many of those businesses cater to seniors. The city developed an identity as an epicenter of aging innovation both organically and by design. One of its titans, Humana, was founded in the ’60s as a nursing home company called Extendicare; its insurance ambitions took hold two decades later. Now, it’s one of the largest Medicare Advantage companies with more than 4 million Advantage members.

ResCare, which provides in-home personal care services, was founded in the ’70s, along with hospice provider Hosparus Health and a company that would later become Almost Family, a home-health provider recently bought by LHC Group. Atria and Trilogy came on the scene in the ’90s. Kindred, meanwhile, was born out of an earlier venture that split in two. Humana bought a 40% stake in Kindred’s home-health division last year.

A decision by the city government to promote this natural identity as part of its official economic strategy helped bring about an ecosystem of aging-related organizations that surrounds the big guns. They include the Thrive Center, which showcases technology for the senior caregiving space, startup accelerator XLerateHealth, and the University of Louisville’s Trager Institute, which is focused on research and innovation aimed at improving the aging experience.

According to the Health Enterprises Network, created by the city’s Chamber of Commerce to promote healthcare economic growth in Louisville, healthcare accounts for 124,000 jobs, or about 18% of the region’s employment, and nine of the top 25 employers are healthcare companies.

These companies, like the rest of the nation’s healthcare industry, are dealing with immense change in the way American healthcare is delivered. Care is moving from the hospital to the home. Healthcare financing is shifting toward an emphasis on the quality and cost-effectiveness of care, not the volume of services delivered.

At the same time, the U.S. population is graying. All of the baby boomers will have reached retirement age in the next decade. That means 1 in 5 U.S. citizens will be older than 65, and by 2034, seniors will outnumber children for the first time in the nation’s history, according to the Census Bureau. As a result, aging care is being forced to change, said Anna Faul, executive director of the Trager Institute.

“It’s an industry on the move,” she said. “It’s no longer you get older and you go to the nursing home. It’s a different scenario: It’s you get older and learn to stay independent and you focus on quality of life, you focus on how older adults can flourish, and that has opened up many opportunities for these businesses.”

What if the CEOs of these Louisville healthcare entities put their heads together to deal with the challenges and find opportunities that are arising from all this change? That was the idea behind the Louisville Healthcare CEO Council, formed in 2017.

The council—whose board members include a dozen local CEOs from companies including Humana, Kindred, Signature, and hospitals Baptist Health and Norton Healthcare—first set out to find ways to support unpaid family caregivers. These overburdened family members and friends provide $522 billion in free care each year, according to a RAND Corp. study. That tab will grow as the population ages and people live longer lives.

“We are all in business to be successful, and part of being successful in the aging healthcare innovation space is understanding the needs of the caregiver and recognizing them as an important stakeholder when you’re dealing with a senior we might insure, or Norton might be providing services for,” Humana’s Remmers said. “Yet many of us weren’t sure, how do we support that caregiver? How do we help them? What could we be doing more of?”

The council put out a request for information and then a call for proposals to explore solutions being developed to meet caregivers’ needs. It narrowed a pool of 200 submissions from all over the world to six young companies and brought those innovators to Louisville to pitch their products or programs. Last month, it recognized two of the startups as winners: St. Louis-based TCARE and Family Directed-HomeHero, which located its headquarters in Louisville in 2018 in large part because of the ability to collaborate and access talent.

Some council companies, including Humana, are in discussions to implement the finalists’ solutions, though they haven’t disclosed specifics. Next, the council is taking on social determinants of health, a spokeswoman said. Remmers said the council may also tackle patient engagement and end-of-life care in the future.

Tammy York Day, CEO of the Louisville Healthcare CEO Council, said the group is also developing an investment fund specific to aging innovation, and discussing with Microsoft Corp. creating a “data lake” to combine information from all the council member companies for the use of researchers and innovators. (A data lake holds both structured and unstructured data.) Mayor Greg Fischer announced in June that Microsoft would partner with the city to launch a regional hub for artificial intelligence.

Despite sometimes competing, the council companies “understand that if we are going to provide the national solutions needed—and how uniquely positioned we are to have all of the continuum represented—then they have to work together to be able to do that and they are willing to,” Day said.

There are other cities with dominant healthcare industries and lots of venture capital. Louisville is where you go to make real change in the senior-care space, several sources said. The innovations that scale in healthcare are those that create value by improving health and bringing a return on investment, said Aaron Gani, former Humana chief technology officer who founded virtual reality company BehaVR in Louisville in 2016.

“In our neck of the woods, there’s a much more natural or deeper understanding of how does this scale up? How do you create value in the system?” Gani said. “Not just ‘can we create a new consumer-facing technology like Silicon Valley might, or a new therapy like Boston is so good at?’ ”