Miriam Allred (00:10) Welcome back to the Home Care Strategy Lab. I'm happy to be here. I'm your host, Miriam Allred. Hope everyone else is doing good and feeling good this week. Today in the lab, I am joined by Jesse Walters, the CEO of Hillendale Home Care. Jesse, welcome and thanks for being here. Jesse Walters (00:26) Thanks for having me, Miriam. It's great to see you. I think it's been two or three years. Miriam Allred (00:30) been a minute, but here we are back together. It's good to see you as well. How are you doing? How are you feeling about everything? Jesse Walters (00:38) Everything's a big question. think that ⁓ I try to ignore everything except for ⁓ the things I can control. Families, families healthy. ⁓ I get to work with incredible, incredibly talented people every day and get to try to create the company that I've always wanted to work for. Miriam Allred (00:58) Amazing. For those that don't know you, let's start with your background. Talk a little bit about your experience in home care. Jesse Walters (01:06) So I started when I was ⁓ in college, I was a caregiver in college working with, I remember an older gentleman with Alzheimer's and a young kid with learning disabilities and with very little direction reflect on that period of time as I could have been such a better caregiver ⁓ to people. And then had an opportunity through a mentor of mine. who had been opening up a number of home care companies in Las Vegas. And I actually dropped out of Boise State and went and lived in his garage for about six months to learn the home care industry. I think it was about 21 at the time and have been in the industry, focused on it ever since. A lot of Medicaid in the early days, which was super challenging and then moved to. Walnut Creek, California to open up a new home care location for the company. And that was where I learned how to work in the private pay market, which was trial by fire. I felt like I was running for office for that first year hugging, ⁓ shaking hands, kissing babies. But it was it was a blessing. And then right around 2011, I Miriam Allred (02:17) Yeah. Jesse Walters (02:27) came across this fairly small unknown company called Home Care Assistance, had the opportunity to meet with Jim and Kathy, the founders of Home Care Assistance, and joined ⁓ the company and worked there for about 12 years or so, working within the Bay Area primarily, and then eventually ⁓ leading the kind of Pacific Northwest through or a lot of organic growth, acquisitions, de novos. was one of the most incredible experiences in my career. And then left in 2022 after the kind of rebrand and now they're called the Key and had an opportunity to acquire Hillendale Home Care. Love to, yeah. Miriam Allred (03:17) Yeah, what did you think you were going to do for your career? mean, pre that like caregiving experience in college, in and around college, what did you think you were going to be doing? Jesse Walters (03:29) I had no idea. ⁓ Sometimes I laugh, I was like the firstborn child to very young parents and ⁓ everything was an adventure because we never had a plan. ⁓ And so, you know, I looked, knew that and my mentor said it to me best one day, he said, Jesse, you love helping people. You're interested in exploring businesses. ⁓ When you're ready, come on down. And so was kind of that intersection of really interesting challenges or chess of business. And when you perform exceptionally well, you're actually improving everybody's lives, right? Caregivers, clients, et cetera. So that's been the fuel for the last 23 years now is how do we get better? How do I get better? How do I support our teams to... see the industry differently or just even optimize what we're doing today. Miriam Allred (04:33) And now you can't probably imagine it any other way. The last like, you know, 15 years, 20 years, it's like this is your life. Home care is your life has become your identity. A big part of your identity, would you say? Jesse Walters (04:38) ⁓ yeah. I, fortunately I had, yeah, yes, in many ways ⁓ it's a part of my identity. I've had enough heartbreak over time to make sure that ⁓ this identity is not the only one that I operate under. And if my identity is challenging my colleagues in the industry to improve their service, right? to optimize a client experience, then that's the identity I really want. Miriam Allred (05:16) Let's talk about acquiring Hillendale So you said left home care assistance, key 2022, maybe took a little hiatus. I think you've told me before you were like considering retirement, you your wife was working like, you know, maybe press pause for a minute, but then what lit you up to go out and seek out a home care company to acquire? Jesse Walters (05:37) That's a great, ⁓ I love that story. It was the first time in my life that I'd ever had both time and money. I've never had one of those two ⁓ at the same time. So I was really looking forward to be a semi-retired stay-at-home dad for, was May, so I was looking forward to the summer and just kind of catching my breath after a pretty significant. run, pretty significant 10 year run. went from, I mean, over the period that I was there, we went from maybe 20, 25 million a year to north of 700 million a year. ⁓ And it was just this incredible experience. And so I was looking to hang out with the kids. ⁓ And then about four to six weeks later, a really talented woman that I absolutely adore in the industry, we'd worked together for quite a while, she called me and expressed how frustrated she was with the company that she was at at the time and said, listen, if you can find something to acquire, I'm in, right? I want to be a partner, but I'm in. And she's an extremely talented sales leader, ⁓ market mover, industry leader. person, right? I love her to death. And so that was four to six weeks after I was supposed to be semi-retired and a stay-at-home dad. And there was one company ⁓ over the years that we hadn't acquired that had a fantastic reputation in the marketplace and was run by a really thoughtful ⁓ nurse named Bridget. And so I, there was the one company, if I could acquire one, I was like, well, let's see if, know, what Bridget's up to. So I actually guessed her email address. I couldn't find her exact email address. And so just guessed it, sent an email and said, hey, this is who I am. This is what I'm about. Love to see if you're exploring an exit at some point in the future. Probably a similar email that everybody gets all the time. I know I do. Miriam Allred (08:00) Did your reputation precede you? Did she know who you were? Jesse Walters (08:05) Interestingly, not in like a really positive way, it was, ⁓ I found in the market, there's generally two types of leaders. There's ⁓ the leader that if you are winning, maybe kind of starting to really saturate the market. There's leaders who will assume that you're cheating. and finding loopholes in the rules. And then there's people who I try to emulate, which is like, wow, they're doing really well. Like, what is it they're doing? I want to learn, right? I think that this person has some unique view of the industry. So anyway, Bridget wasn't necessarily a fan of mine right off the bat. And as we connected for coffee a couple of times, it helped. you know, the way we translated some early things in the market was different than how she translated it. And so I was able to explain, I mean, if you think we're cheating, that was under my leadership. So that's me, right? Like that would be me. So we connected and built a really strong relationship over a handful of coffees. And I remember this very distinct meeting where she kind of looked me straight in the eye and said, I see what you want to do. ⁓ I do want to sell Hillendale to you. My first thought was like, ⁓ shit, why? Sorry. You know, why? my gosh. Yeah. Yeah. Yeah. Yeah. But the rest is kind of history. Within six months of my semi-retirement, I ⁓ acquired Hillendale Home Care and put together, had a number of people join the team and we just... Miriam Allred (09:38) Yes, here we go. I'm actually doing this. Jesse Walters (09:59) have had a tremendous three-year experience so far. Miriam Allred (10:03) Oh my goodness. And the thing that you've told me, hopefully this is okay that I share publicly. One of the first things you said to me when I first met you two or three years ago, kind of at the beginning of your journey was, you know, I want to acquire four or five, $6 million company and grow it to a hundred million in five years. And that stuck with me. There's not many owners that say something like that. And I was like, well, here I'll be on the edge of my seat waiting to see you pull that off. And so just give kind of a quick overview. It's been what two years since you actually acquired three. Jesse Walters (10:20) Okay. Three, yeah, it's been, yeah, yeah, three years. November was our three year anniversary. Miriam Allred (10:36) So just kind of quick overview. I know that's like a loaded statement, but kind of the size shape payors of the business when you acquired it. And then just kind of overview, like just like the trajectory kind of like quick history of the last three years. Jesse Walters (10:53) so when I acquired Hillendale, they'd had one of their best years yet. It was about a $4 million a year revenue business, ⁓ a mix of payers from, forgive me, I won't remember the name, but ⁓ like a county type program, unrelated to Medicaid, ⁓ closer to like a PACE program they were a provider for, long-term care insurance, and ⁓ primarily private pay. And within six months, we'd actually hit that $4 million revenue number that they'd hit the year previously. And so we grew, it was pretty wild. We grew from four to nine to 18 to last year, about 24, 25, somewhere in there, like 24 and a half. And really looked at... expanding into different markets. So we have four locations, primarily growing in Walnut Creek, Santa Rosa, Oakland, sticking within the Bay Area, and then opening up Palo Alto. And this year looking at an additional three, four, five locations, just depending on how the world turns. Yeah, it's been really squarely within Our growth has been our focus on rates and kind of you can't, for me, I can't separate rates and quality. I think that they go pretty in sync together in our focus. Miriam Allred (12:33) You're teeing me up for the topic, which is rates here. And I first approached you and said, hey, I want to talk about rates. And you're like, well, that sounds dry, which it is. you're about to see, I mean, you might prove me wrong, but I think there's like so much more to rates than one might think, even private pay rates. And I talked to companies that, you know, they service all private pay, but they've got like a massive spectrum of rates. And so you're in California, which is already kind of like a differentiator in and of itself. But I want to hear. Jesse Walters (12:39) Hahaha Miriam Allred (13:01) You said Hillendale was already doing well when you came in, clearly they had things going right. I'm curious what their place in the market was and then how that's evolved. Were they kind of premium provider charging the most and providing the best care? Were they kind of like mid-market? they, ⁓ you know, specialty care provider? Like there's a few different like key differentiators and I'm curious when you acquired Hillendale, what was their unique differentiator at that time? Jesse Walters (13:27) Hillendale was interesting and I see this in a number of situations that I've come across and Hillendale was, they were a smaller company and really nervous about ⁓ getting too big. They didn't want to dilute their care quality as they grew or as they added clients. Their rates were probably in the like, top 70, 75 percentile. So it was, you know, they're like upper middle market. And they had, you know, like that pace type contract in place that actually had a pretty significant ⁓ hourly rate tied to it, but it was really short hours. sometimes rates are designed to eliminate stress or reduce stress. And I found that even with the rates where they were, it still increased stress quite a bit, because caregivers don't want to go anywhere for two hours, particularly in the Bay Area. So we, our first step, if your question is, what do we look like today? ⁓ Our first step, we increased our rates pretty significantly. I was looking at bringing on some ⁓ very, very talented people to the team. And I knew that our rates were a signal to ⁓ the talent in the marketplace on who's going to join the team, talking managers, staffing managers, client care managers, ⁓ sales teams. And then caregivers, are caregivers going to do better with us or the same or less, right? So we immediately raised rates. We fairly quickly, I would say within about three months ⁓ terminated the PACE contract, but connected the PACE program with a company in our area that kind of specializes in one to two hour shifts. And I think they're doing really great with that. which we're happy to hear. ⁓ So those are kind of the first couple of things that I did. Miriam Allred (15:34) Hmm. Okay, yeah, a couple of follow up questions that so when you came in and you say their rates were maybe like upper mid market, did the team in place know that would they would they have been able to identify like, hey, here's where we're at in the market or was that you having come from outside experience perspective coming in and saying like, hey, here's where we sit because I asked that I'm curious if companies know their place in the market as well as they think they may know their place in the market. Jesse Walters (16:06) I think there's a lot of fear connected to rates. If we raise rates, nobody's going to knock on our door, right? And you can find in every circumstance companies that are going to charge less than you, right? That could be 1099 contract agencies. In my previous experience where I tried to be the lowest cost provider in the same market, I was very much at the bottom of the market and I could still find people that were less than me, charging less than me, right? So you can always race to the bottom. So the team in place felt, they felt confident about where their rates were. They weren't pushing the ceiling. They were comfortably in the middle, the upper middle. But I also find that many teams aren't actually exploring who's charging what in their marketplace, right? So every six months for us, calling and kind of shop calling and trying to understand what rates are the different companies are charging or paying caregivers to make sure we stay positioned ⁓ where we wanna be in the marketplace. you can know for a minute, but that changes tomorrow. Are you updating your information? Miriam Allred (17:19) and And that's really good perspective because that's interesting to hear you say you thought you were the lowest, but there's always someone lower. And I think the same can be said about the highest. I think a lot of providers think, yeah, we're the premium provider in our market. That could be the case for like a month, a quarter, you know, but very quickly there's a lot of, a lot of fluctuation, which then begs the question. So you step in, you kind of identify where the rates are. You say over, over three months or so, you know, intentionally you want to raise those rates. The thing that you just said was the biggest factor was actually like leadership costs, like paying the caregivers more and then actually bringing on leaders. Those were the key things you were factoring into raising your rates. I think that's really interesting. There's a lot of reason to raise rates, but yours was, hey, we need to grow this team, sophisticated this team, and we need to bring in more money to be able to do so. Just explain that thinking a little bit more. Jesse Walters (18:24) In my previous experience at Home Care Assistance, ⁓ We had tremendous growth. I felt so blessed with the leaders that I had the opportunity to work with, right? ⁓ Because I wasn't involved in their growth. was kind of their board member. I was supporting them. As they had challenges, I would come in and support them. But on the good days when they're crushing it, I was fairly irrelevant as a leader, right? They're doing well, they don't need anything. ⁓ And so I've found that I was able to grow significantly more if I could have really be surrounded by really talented people, people who are passionate about their specific market or about operations in general or sales. And those folks want to be paid well. And if I can pay them more than they will be paid anywhere else, then they'll actually. be here long enough to see what our mission is and really build loyalty and kind of continuity for the business. So yeah, it was 100%. I want to be surrounded by extremely talented people. Miriam Allred (19:36) And the same could probably be said for the caregivers. We talk about kind of like leadership office team, those key roles, but then also the caregivers early days, Hillendale were what was kind of like the margin or the ratio of wage to rate. And were you concerned about that? And did you want to quickly also up the rates to be able to pay more or where was that at? Jesse Walters (20:00) That's a great question. The margins, today we're running like a 50%, give or take, right? 49.5 to 50.5 % caregiver margin, probably boiling down to like all in 43.2 is our gross. Looking at the company previously, was closer to like 35 to 37%. So they were actually, paying their caregivers a pretty decent amount, ⁓ but then also not charging that much for the service that they were providing. So they weren't kind of lifting that ceiling on the clients. ⁓ And so we changed that fairly quickly. And the team that I brought on board initially, they didn't wanna sell a middle market service. They wanted to sell a high-end, high-value service because We generally operate with much lower client caregiver ratios, right? We want two managers for every 20 to 25 clients ⁓ to really provide that value that we're looking at. So the rate has everything to do with our ability to provide ⁓ a really high level care. Miriam Allred (21:19) Okay. Let's talk about the like the client perspective here. When you're talking to these clients, these families, even referral sources, is there more of ⁓ a price sensitive group that you're talking to or a care sensitive group that you're talking to? Does that make sense? You when you think of your population, are people more price driven or care driven or somewhere in the middle? Jesse Walters (21:47) I think to some degree, everybody's price sensitive because nobody wants to spend more than they have to. And oftentimes in our industry, this isn't the... fifth company that they've worked with, right? This is like the first time they're entering into our service. We've had a major event change and they're, geez, I have to have a caregiver, this is terrible, now I have to spend six, seven, $8,000 a month. So our goal is to educate them in a way that most people are price sensitive and what I've seen over working with thousands of clients, what they want. is a continuity of care, a relationship with the caregiver, trust that the caregiver will be there, ⁓ trust in the care team that's going to be supporting them. And I've seen that 100 % of the time, 99.9 % of the time. I've had clients who were like, I don't care if it's a revolving door, send a new person every week. And that was actually not a client we wanted to work with. So yeah, everybody's price sensitive. But when we get down to it, what they're... what everybody wants is a relationship. They want a relationship with the company, with the caregiver. ⁓ Miriam Allred (23:06) The tricky thing is proving that though, know, proving that upfront, you know, when it's in that kind of like price negotiation stage, they may have shopped around, likely they've talked to one or two other companies and they say, wow, you guys really are a premium rate. And then you come in educating, here's why we're a premium rate, but it's hard to convince them of that upfront. Or do you find that it's tough to convince them of that upfront without proving yourself over 30, 60, 90 days with the actual care? Jesse Walters (23:35) We work pretty heavily in ⁓ sales, like referral relationships, right? And so a lot of the, when you work in the referral space, client referral space, a lot of the relationship has been built with that referral partner. And so you actually get to, you get kind of a head start on the trust with the client because they have the trust with this discharge planner. And so we can, ⁓ I don't know what the term is, but we get some of the goodwill off of that trust that's been built. And then we need to prove it, right? ⁓ Marketing leads, digital advertising leads, that's where we have to, over a much longer period of time, build that relationship with that individual consumer, that individual client, to then build the trust that we can be the right care provider. we try to have... ⁓ We have a lot of really solid indicators in the marketplace, best of home care in our various markets and in a number of other ways to demonstrate without us saying it, right, that we're a pretty high level provider. Far from perfect. We make mistakes. We're human. There's a lot of humans in this business, ⁓ but we're gonna show up. Miriam Allred (24:56) And I think what you've done right, arguably so, is setting that like ICP, your ideal client profile internally. know that your referral partners know that, you know exactly what you're after. And the companies that I talked to that are the most successful, they are locked in on that ICP and they know who to say yes to and they know who to say no to. And that alone earlier, you talked about like headaches around high rates, lower rates, flux, it's like you have to know who your target is and stick to your guns. And similarly with rates, I want to ask you about fluctuation in your rates. know, when I say, you know, what is your rate? Like there's a standard rate, like, you know what your rate is. Are you flexible or is there nuance to rate? You know, is there an edge case when a client or family comes to you and you make exceptions? Like what have you learned in regard to making exceptions when it comes to rate versus, you know, like you put the hammer down and there's no, there's no edge cases when it comes to. fluctuation in your rates. Jesse Walters (25:56) There's fluctuation in that our rates can go up ⁓ based on geography, right? Based on how challenging a situation will be to staff, right? To get ⁓ one, two, three caregivers out to support a client. That's a pretty decent distance from us. Usually we'll look for a trusted provider in that market to connect the client to. But if they're right on the edge, ⁓ sometimes we can service them. It depends on. hours and the rates. So we can go up with like discounting rates. ⁓ I don't discount rates for my family, right? I don't discount rates for anybody only because our team, if you discount a rate, in my mind, you become deprioritized. with the experience because the caregivers, are you going to take it from the caregivers? Are you going to take it from the margin? If you take it from the caregivers, you're kind of disenfranchising a caregiver to provide exceptional care in this situation. And if you take it from the staffing team or the team that's working on it, now you're hurting their margin and their ability to expand and add to the team. If anything, with my closest friends, And family, I've literally had a conversation that pay more. Like our rates are designed for the average consumer, but if you wanna have a really great experience, add $5 an hour to the rate, right? You'll become a client that caregivers will flock to and want to stay at, versus many of the other clients in the marketplace. So I'm very, I've had a lot of... internal debate and dialogue with some pretty high level with myself, but then also these conversations with some pretty high level partnerships that we've had in the past. ⁓ And this is exactly what I've said. I want your buildings to be priority. I want them to get the best caregivers, sorry. Miriam Allred (27:59) And I'm guessing you're speaking from experience, whereas earlier days you said you were kind of like a low cost leader. You were chasing racing to the bottom. I'd imagine in that position, you were willing to discount rates. You are willing to go down out of necessity. And so I'm guessing where you're at today is based off of like bad firsthand experience earlier on. Is that fair to say? Jesse Walters (28:07) Yeah, yeah, yeah. Yeah, yeah. Like today, trying to live in a space of abundance, right? And we're the right provider for the clients that trust we can do what we can do, right? And how do we communicate that better? Earlier on in my career, was, I still wake up with like cold sweats and nightmares from 20 years ago, trying to be the lowest cost provider. And we hit really, really great revenue numbers. ⁓ But I had to work 24 hours a day to maintain that and question why this caregiver can't meet the commitments that I'm making to the clients when I'm paying this caregiver 40 % less than anybody else in the market. ⁓ It was horrible. was really, really challenging. Wouldn't trade it for anything. Wouldn't go back to that time for anything. Miriam Allred (29:21) Yeah. And these are good lessons for different providers to hear because everyone is at a different place in their market and some haven't lived through this experience like you have. So that's why I asked those questions a minute ago. You said, so in your territory, your territory is getting bigger, you know, by the day. And so you have different markets, different challenges, different needs. You said there's a couple of things that you factor into increasing your rates. One being distance, one being like number of caregivers needed in the home hours talk about Jesse Walters (29:27) Mm-hmm. Yeah. Miriam Allred (29:49) I mean, I just kind of rallied off those three. Are there more things that you factor into increasing the rates? Like what are kind of the key components of, okay, you check these boxes, this warrants a rate increase. Jesse Walters (30:00) coming from a staffing background, which was really my second career in home care, right? After Caregiver, I was staffing for three, four years. And then moving into a client, more client facing role, ⁓ sales and client care, I could look at ⁓ client situation and have a good sense of what it will take to staff this client well, right? Part of it could be the height of the client, the weight of the client, the distance driving through mountains to find this client, the environment of the client. may not be a great environment to provide care in. ⁓ And so I would ask myself and I would pull in my staffing team and say, listen, what rate do I need to charge for this to be easier to staff? Not completely easy, but like much easier. defining easier is can I line up three, four, five caregivers behind this just in case the first one doesn't work out. And so that's where I'm able to move the floor up and at our best, and I don't think we've fully unlocked our capacity to do this ⁓ individually, ⁓ but at our best, our client care managers are asking that question. Can I provide this care at our base rate or do I need to add additional? ⁓ dollars per hour to make sure that we can get a really solid caregiver who can handle this unique, challenging situation. need a caregiver that can drive at night and work a night shift with a client who's up consistently the entire time. So that's the of the algorithm that we have is what does it take to get this client the care that they need? Miriam Allred (31:50) And you just said something interesting, like you haven't like hit your stride yet in this regard. I'm curious what you mean by that. Is it a matter of training and like more experience for your leadership team making these decisions? Or is it like penetration, knowing your roster better to know what your current team is capable of? Or how do you like hit your stride in this regard? Jesse Walters (32:17) This is... I think it's one of the challenges of scale. If I'm the client care manager going out to this situation, can think on my feet, can look at a situation and not commit, but communicate with my team and then recommit to the client, right? So there's all this experience in my brain that's like creating this thing that I can do in this one circumstance, it's going to work out. But you can't scale off of my experience. It's how do you create a system that you can replicate? to increase rates appropriately in situations and then communicate the why. We oftentimes fail at communicating the why and just say, nope, your rates this, right? Well, there's a reason, explain the reason. We can be transparent, right? can, people wanna know, clients wanna know. I've had conversations with clients and explained to them what they really want, which is continuity of care. They want a relationship with the caregiver. And all of a sudden, it's kind of an aha moment. Right? So if we look at, have we created the algorithm at Hillendale to know exactly what situations should increase the rate and then empowered our teams to charge the appropriate rate? We've empowered the team to do it and we still need to give them the algorithm or the tools of something we're still trying to work through. ourselves at the leadership level. Miriam Allred (33:51) Yeah, like trying to put a formula to it so that the whole team can follow the formula. But I guess do you think it can become formulaic or there is just so many factors in one case? know, every single client and their circumstances warrant a unique set of parameters to hit the mark for that client. You know, we talk about scale and it's like, yeah, we want to create processes and formulas. that standardize our processes so that we can scale. But can that be done? There's only so far we can like take that, I think, in home care because it's people taking care of people. Jesse Walters (34:20) Right. I would say, so I've been in the industry 25 years, something like that. ⁓ And I'm still very much in it and very much engaged because I'm optimistic. I don't think the job's done, right? I don't think our work is done. So if you ask me, can it be done? Like without hesitation, I'm like, yeah, of course. If you ask me how it can be done without hesitation, I'm like, no clue. You know, thinking about it. How do we communicate it? How do we learn it? It's... Miriam Allred (34:52) hahaha Jesse Walters (34:58) adapting to situations, humans are all different. Situations are often very similar, right? And it's how do you, how do you, what does it find the signal in the noise, right? So I do think it would be done, but I'm a terrible optimist. Miriam Allred (35:16) But good answer, because I also think like there has to be, to scale a home care company to a hundred million, there has to be formulas. There have to be strategies. That's why a minute ago I think of it like check boxes. Okay, for this client to warrant this increased rate, there's like a set of five criteria. If they hit four of the five increased rate, you know what I mean? Like we have to break it down. Jesse Walters (35:40) Yeah, you look at senior living and right, you move in on your base rate and then based on these five to seven ADLs or IADLs, they'll increase or add cost to that. So it's been done in apartment or group housing environments, which are, I feel like it's static to some degree in where they're going. ⁓ But we're also, like this isn't like a burning. topic in my mind because I'm talking about 10 % of our clients, Well, you know, like not a huge percentage, the majority of people fall within a range that we can effectively provide really, really solid care, right? And it's those edge cases that because we want to solve their needs, we wanna support them in... more often than not in those situations, we go in at the average market rate and we actually perform really poorly, right? And if we'd gone in four or $5 more an hour, we could probably do much better, right? We could perform much better. But it can be, listen, you're... Miriam Allred (36:49) Mm. Jesse Walters (36:57) and you say our average market rates are this, but for you, I'm going $5 more an hour. And so it's having the confidence and being empowered to say why, right? And getting to that emotional why, not the ⁓ statistical analysis of caregiver wages and reasons, but really what's at the heart of the issue, ⁓ which I find a lot of, believe it or not, like a lot of people in our business have a hard time getting to that emotional. place. It can hurt. It can be scary. ⁓ But that's where the relationships are built. Miriam Allred (37:34) Yeah, when you stick to like the financial piece, it just feels very cold and very rigid and people want to understand emotionally, psychologically, you know what's behind that and what type of care they're going to be getting that warrants that increased rate. A couple of kind of like nuts and bolts questions. So you said three years ago you came in and you raised the rates. How many times have you raised your rates since then? In the last three years, how many times would you say you formally like raised your rates? Jesse Walters (37:44) Yeah. We've done it twice so far. the first, so we've done it one other time in the market. We're still, I find that I'm seeing rates pull back a little bit. So we're still the highest in the market, ⁓ but I'm not seeing it as, there was a time, I think, especially during COVID, where everybody was just ratcheting up their rates and their prices. And we're seeing a number of our, fellow home care companies pulling back a little bit in the market. Miriam Allred (38:34) Is this the first time you've ever seen it go backwards in all your experience? Jesse Walters (38:40) Ooh. Yeah, yeah, I would say so. I mean, it's been a big, big run since 2008, right? So we've got a... Miriam Allred (38:47) You And we've all lived in this world the last five years, like cost of living, the cost of every single thing has gone up. So naturally home care just followed suit. But that's interesting to hear you say that people are actually walking it back. Jesse Walters (39:03) A little bit. mean, for me, I'm seeing private equity jump into this market like crazy, right? And so I tend to see rate increase with oftentimes with PE coming in and then depending on what's happening in the market, they might pull back a little bit and view more of a volume play. So charging a lot is scary in general, right? It's like discomforting your... kind of sticking your head out. ⁓ And so yeah, I've seen it. I've been tempted many times throughout my years to pull back. Miriam Allred (39:42) Okay. So, so twice in the last three years is interesting. Is that what you would have expected or I guess in all of your 20 years in home care, how often are you typically raising rates? How often are you considering it? Thinking about it like earlier in the conversation we were talking about, like rates can change on a dime. And so you have to keep a finger on the pulse. Doesn't mean you have to change your rates all the time, even quarterly or semi-annually, but Jesse Walters (40:07) Right. Miriam Allred (40:09) How often are you thinking about it? And then how often have you historically changed your rates? Jesse Walters (40:18) We've I think historically, probably on an annual basis, we've gone up maybe 50 cents to a dollar an hour. My first rate change was something like five to $10 an hour. we're sitting very comfortably at the of the higher end of the market. But I look at it in Market saturation, right? Are we a well-known player in the market? And do we have a pretty solid like referral volume or referral base built out? If we don't, we might pull rates down to the like upper quartile. If we do, then we're looking at how do we stand out as a premium provider in that marketplace? So the pressure exists every day. I'll get a call from my leaders and hey, this company just beat us out on price. They were $3 less per hour. But then I'm like, what about those other 47 clients that we started? So it can be, there's pressure to not want to lose any clients or opportunities to serve. But the reality is we're not right for everyone. We wanna consistently be more right for more people who we can't be. Miriam Allred (41:51) Okay. And it sounds like when you made that initial increase, it was a big increase, like an unconventional increase. When you made your second increase, was it another sizable increase or was it more like a regular incremental, know, like marginal increase? Jesse Walters (41:57) Yeah, it's huge. Yeah, was, let me go back in time. was like a $2 increase. So still pretty sizable to what I've seen in the past. But that was more on the floor. We have more of a pricing band. And so that was increasing the floor $2 an hour to make sure that we feel like competitive in the market. Miriam Allred (42:33) Okay, because I ask what is the best way to do this? In my mind, like most products, goods that we typically buy, there's just a really steady marginal increase that you almost don't even recognize. Is that the approach to take in home care or is there a different approach? Or there's too many factors. Jesse Walters (42:54) Well, we're not, if what you're asking is, we raising prices without launching a big raising price campaign? Yeah, so we're raising prices on our costs basically for new clients coming in the door. our quotes would go up a dollar an hour, two dollars an hour, and there's no announcement, there's no real discussion about it. Miriam Allred (43:22) How often is that happening then? Jesse Walters (43:23) at the market. That's the rate I'm talking about. ⁓ So that was twice, first time was like close to $10 an hour. And the second time was like $2 an hour just in our new client acquisition or new client pipeline. Miriam Allred (43:45) Okay, but what you're saying is every time you bring on a new client, there's an opportunity to like adjust a rate. You know, they're a net new client. They don't know what your rate was six months ago. They don't know what it was yesterday. Like every time you bring in a new client, it's like the rate is subject to negotiation. And so I guess that's where I'm asking like, how, how do you make that decision? Like, oh, it's been three months, you know, we're at $45 an hour. Like why not go to $46 an hour? Because we can. Jesse Walters (44:14) Yeah. I have those thoughts as well. ⁓ Where is the ceiling? I think it's, not to have too many changes, rate changes, whatever it might be. One, ⁓ it can be confusing to the teams, right? I don't wanna think about rates, I wanna think about serving this client, and these are the rates, right? So don't want to make too many changes where everybody's having to remember what's our rate of the day, right? What's our... Miriam Allred (44:43) Yeah. Jesse Walters (44:44) soup du jour. And it is, seen, I think that, I don't think we've seen the ceiling on where rates can be in our industry. ⁓ Like we're probably close in many ways. We're not seeing caregiver wages increase significantly, which is one of our largest significant cost of every rate. ⁓ And that was where in the past we were moving a little bit quicker, a little bit more often on rate increases. When I started 20 years ago, caregiver wages were, was it $10 an hour maybe when I started? Nine, $10 an hour and today it's 18 and some change or 17 and some change. So ⁓ we've had to adjust pretty quickly to about five to seven years of pretty significant caregiver minimum wage increases. Miriam Allred (45:39) Yeah, and I think what you said is interesting. Like we haven't, we don't know what the ceiling is for home care rates. Yes, we saw a huge increase recently, but then you said, yeah, like fluctuation of private equity. There's all these like kind of outside forces making their way in and that affects wage and rate. And so we don't know, but I guess, yeah, that's why I ask you like. you know, every client that comes in, it's like, almost do you just keep inching forward until, like you said, your team calls you the other day and says, Hey, we just lost this case due to a, you know, a $3 difference is, you know, if enough of that happens, you start to question, okay, have we inched up too high too fast? Do we need to walk it back or do we hold here for six months or hold here for a month or three months and see what happens? Like, you know, we don't know what we don't know. Jesse Walters (46:28) Well, there's reputation also, right? And so everything comes back to our referral partners or the marketplace reputation, right? So we try to be very intentional and very purposeful on broad rate increases. There's individual situations. can generally justify why the caregiver should be paid more. provide care to this client, right? And then the client rate will go up sometimes significantly depending on the needs. But we're really trying to balance that being a high-end service provider with not gouging clients in the marketplace and making sure that we're doing things, we're operating as fairly as possible ⁓ with our people in the market, with our... clients in the market. Miriam Allred (47:25) How do you think about rates in conjunction to revenue? Because in my kind of naive mind, it's like higher rates, higher revenue. But they're not necessarily parallel. So I'm curious how you think about it right now at Hillendale. Increased rates equals increased revenue? Or are you most focused on revenue or rates or margin? What are you thinking about consistently as a leader? Jesse Walters (47:50) I think rates... Rates often equal stress to me. And so if you look at the stress or the burden that you're putting on the team to provide service to X number of clients, you can actually reduce that burden and reduce that stress significantly by who you say no to or by how you structure your rates in the marketplace. And so I've seen companies that ⁓ have grown very quickly based on the lowest ⁓ rates in the marketplace, but then there's usually a tipping point or a breaking point to where ⁓ the team that's actually servicing those clients, the staffing managers behind the scenes or the care coordinators, ⁓ they burn out, they fall off. And that turnover to me is the biggest killer of expanding a business is turnover. And so there's... Rates to me just signal so much. It signals to me who you're looking to attract to your team from a ⁓ leadership perspective, which caregivers you want to be working with in the marketplace, ⁓ which caregivers you're attracting. And then how many clients do you want? A thousand two hour shift clients or do you want 50, 40 hour a week plus clients? One is much easier to service than the other. So rates to me are the foundation of our mission is like, okay, what can we do well? And let's go do it. Miriam Allred (49:32) And I think the other interesting thing that you said is just like rates relevance to stress levels. I think a lot ⁓ of owners that would resonate with them is, you know, we're mid-market or we're lower mid-market and their stress is extremely high, the turnover is extremely high, the stress is extremely high. They're losing office staff over X period of time because the stress is so high and it does, you could correlate it back to the rates. I think that's really interesting. Jesse Walters (49:59) Yeah, it's. One of the most powerful, I didn't learn this for 15 years, but There's two ways to gain like, what's the word I'm looking for? Like positional power or just personal power, right? And it's, what do you choose to say yes to? And more importantly, what do you choose to say no to? And I found no to be a much more kind of signal of power and boundaries is what can I say no to? Because I realized that this is kind of the long tail of stress. I've been in... such challenging situations of ⁓ growing a company, working all the time and realizing that ⁓ we're actually not growing that much. We're adding a bunch of new clients, but we're not seeing significant growth. ⁓ And I feel a ton of stress within my body, ⁓ emotional stress, like spiritual stress, all of that. And I'm really trying to hang out for the long haul. I'm really trying to be in this for a long period of time. So how do I protect myself? first, which means I have to protect my team, which means I have to protect my caregivers, and then I need to protect the clients we choose to serve. Miriam Allred (51:14) Can you go one layer deeper and think, reflect on this past year 2025, what are some hard things that you had to say no to as a leader? I'm putting you on the spot with that. What are some maybe specific pointed things that were hard for you to say no to, but you ultimately did and there was a payout. Jesse Walters (51:34) think that ⁓ it was more of a where I choose to spend my time and focus. There's a number of opportunities, especially CEO to attend certain events or to meet certain people or to take certain meetings. And as somebody who generally love working with people, et cetera, et cetera, I've really had to get comfortable with saying, no, like now is not the time. We've had some really great offers for investment, ⁓ et cetera. It's saying, does this company or does this align with what we're trying to do and with our vision? ⁓ So there's a number of partnerships that we've looked at that just would. be a distraction for us. Miriam Allred (52:36) And it feels lonely at the top. You have a really great network, sounds like mentors, peers, industry folks that you know, but these are weighty decisions. know, someone reaches out to you, like you're at the top and you think, wow, I'm the one that gets to say yes or no to these very large opportunities, partners, et cetera. What helps you stay grounded? You know, who do you turn to? What is kind of like your guiding light to make really hard decisions as a CEO? Jesse Walters (53:06) That's a great question. ⁓ My wife helps me stay grounded and reminds me that I'm not as special as I would like to think I am. ⁓ But it's, there's a lot of people that are a lot smarter than me. And if I can learn a little bit from each person, I have a really great ⁓ team in Hillendale that I really don't want to be the sole decision maker. I want to understand what how to look at this from an HR perspective or how to look at this from a finance perspective or an operations perspective or ⁓ data analytics perspective, ⁓ and then make the best decision that I can. I joined ⁓ YPO ⁓ this year, which was great, a place of other CEOs who were kind of going through extremely challenging situations. ⁓ And actually I attended this retreat in December called Hoffman to really start to tap into like my emotional wellbeing and how I can show up better for myself, for my family and for my organization. Because it is, it's extremely lonely at the top and it's also, I'm responsible for a lot of lives, a lot of paychecks, a lot of future home purchases. ⁓ life moments that are really impactful. And I've really recognized this year that it's important for me to recognize when I say no to, but then when I say yes, be fully invested in the yes. Miriam Allred (54:43) Thank you for sharing. You're no stranger to how difficult this industry really is. Even for someone like you to be sitting in this position of success, I would call it, it doesn't mean it's easy. It doesn't mean you don't have stress and sleepless nights and your body and your mind are taking the toll of what you've done. so I ask these questions, I think a lot of people may look at you and think, ⁓ how much stress could you really have at that level of success? But that's not the case. Jesse Walters (55:00) Yeah. Yeah, it's, if anything, it's more, it compounds, right? I thought if we could get to 25 million, we'd have it all figured out. And I'm like, okay, I'm just totally wrong. We're never gonna have this figured out. So what can we be comfortable with and how do we continue to be curious? Yeah. Miriam Allred (55:31) I love that. I love that. That's the honest truth. That is the honest truth. We're all like, we all have our sights set on our next milestone and we have this expectation of what that milestone will equate to. But oftentimes that's not the case. Jesse Walters (55:42) Yeah, it's empty. what is the meaning we assign to it? Miriam Allred (55:46) And. Yeah. And that's what keeps us on our toes. That's what keeps life interesting is, you know, there's that next mountain to climb and we're always chasing. ⁓ maybe just last question, open-ended. I always like to ask this, you know, start of a new year. What's on your mind? What are kind of hopes, dreams, goals, ambitions for this year? Is it kind of stay the course? Is it, acquisition is that, new partners? What do you have your, your sights set on this year? Jesse Walters (56:16) A couple areas of focus that I'm looking at is one, ⁓ we have an extremely, extremely talented leadership team that basically we formed, brought on a couple key players within the last 90 days. The Chief People Officer who's extremely talented, our operations leader who's extremely experienced and talented ⁓ joins our existing team. So one of the areas that I'm really focused on is how do I contribute to the mission better? Because I've hired people to do a lot of the activity that kept me busy or kept me focused. I've had a lot of people, I have a great coach that I work with who's like, Jesse, what are you going to do? Because you have a hard time sitting still, right? And so do I go in and make a mess or do I let... the people that I brought on to the team execute and do really well. So some of it's figuring out how I can add the most value to the organization ⁓ this year and into the next three to five years. The other, our kind of practical focus or game plan focus is opening up additional De Novos ⁓ in like four or five more markets this year, looking at in acquisition or two as they come up. We've been really fortunate to have a few come our direction. So working on financing and in kind of the underlying tension, I would say that exists in me constantly is just how do we, how do I help create an organization that's somewhere I've always wanted to be, right? I this unique opportunity. I've been in the industry, worked for so many people. ⁓ really talented CEOs and their own rights, but for me kind of different parts and like, how do I create something that is a place that I've always been looking for myself? So that's what keeps me up at night, is am I doing enough to support the organization and the people? Miriam Allred (58:24) Well, I'll check back in because I think how do you become a CEO that embodies the mission of a company? Like there's no talk about blueprints and formulas. I don't know that there's one for that. It's quite literally like a process. It's like an evolution as an individual to become what the organization needs you to become at this point in time. And so I imagine, yeah, it'll be a lot of like self-reflection, a lot of like personal growth this year to level yourself up in the way that the organization and the people need you. Jesse Walters (58:37) Mm-hmm. Yeah. Yeah, yep, I agree. No, there's no charted course, right? It's not drive up one mile turn left. It's like, okay, let me talk to people, let me explore, let me be curious. ⁓ And let me find a way to add value. Yeah. Miriam Allred (59:07) And become yeah, become something become something that you haven't otherwise been at this point in time. So Jesse, this has been awesome. I know I'm kind of like taking us on a different course here to end the conversation, but I love when you lead in like these questions are getting you thinking and you're just sharing like very transparently off the cuff, which I think you thrive in that environment. So thank you for bearing with me. This conversation was kind of last minute. I've thrown a lot at you, but I love just how you've like. Jesse Walters (59:14) Yes, it's great. Yeah. Miriam Allred (59:31) calculated responses right now in real time based off all of your experience, but also like where you're at right now in this moment, you've shared just like honest raw thoughts and feelings. And so I really appreciate it. So thanks for joining me here in the lab. Jesse Walters (59:41) Yeah, yeah, this is great. This is great. Thank you so much, Miriam.