NextStep raises $2.5M to turn displaced workers into caregivers

Steven Loeb · January 5, 2021 · Short URL:

The company trains workers to be certified nursing assistants, and then helps place them in jobs

The United States has a caregiver crisis: we're getting older, with about 16.5 percent of the American population being 65 years old in 2019, a number that is expected to reach 22 percent by 2050. Yet, we're also experiencing a shortage of careworkers, which is expected to be over 151,000 by 2030. 

While that's happening, many workers in the hospitality industry are losing their jobs due to automation, and because of COVID. Now NextStep has come up with a solution to both of these problems at the same time: retraining displaced these workers to take on these much needed caregiver roles.

The company, which acts as a two-sided marketplace, offering a technology-based training program to certified nursing assistants (CNAs) while also working with companies in which to place them, announced on Tuesday that it raised a $2.5 million round. The money came from new funders ZOMA Capital and ETF@JFFlabs, along with existing investors Springrock Ventures and JAZZ Venture Partners, and it brings its total funding to $13.46 million.

"The certified nursing assistant is the key credential job role. It's the largest healthcare job role there is, and the traditional way of training folks wasn't working to fill the supply or to reach out to people that could be good caregivers if they had the right skills and could pass the exam," Chris Hedrick, CEO of NextStep, explained in an interview.  

"The fastest growing job roles in the country are in health care, particularly frontline health care workers, those that interact directly with patients. I started looking at the market and and quickly saw that there's an enormous opportunity to dramatically expand the pipeline of certified nursing assistants, meet this huge business challenge, and, at the same time, create opportunity for lots of people that are either unemployed or in very low wage jobs."

Founded in 2018, NextStep takes the traditional approach to training and CNAs, which is typically expensive, done in person and not well connected to employers, and digitizes it.

The NextStep platform takes the part where CNAs learning their skills, but are not actually physically practicing them, and allows them to be done in 10 to 15 minute increments, divided into over 100 skills. Those are then supplemented with a practice lab that allows students to practice and master the basic skills that they need both to pass the exam and to be effective on their job. Students also get access to a clinical experience, which happens just before they're assigned to their jobs. 

"We recruit students, train them and place them at no cost to the students. Our business, or employer, partners, they pay us a one time placement fee that's both more than it costs us to recruit, train and place the new students, but less than they're currently spending to to get new CNAs under the old system," said Hedrick.

The reason that NextStep has chosen to specifically train certified nursing assistants is because, one, they represent the single largest healthcare job role in the country; depending on the facility and the acuity of the care, there might be 10 CNAs to each registered nurse. Second, the gap between supply and demand is the largest, meaning there's far more demand than there is supply, particularly in skilled nursing facilities and nursing homes. Third, it is a credential that can be earned in a matter of weeks, rather than years, and one that does not require a college degree. 

"We saw that there was an enormous market poorly, met by a highly fragmented existing training market, and an opportunity to create a new model that was tuition free and integrated technology every place that it can make it more efficient but also more effective," Hedrick explained. 

The company, which is based in Seattle, is currently operating in Colorado, and in just one year grew from one employer facility partner to over 70 and added into that primarily long term care facilities, like skilled nursing facilities, nursing homes. It also added into that home care, so it is now also placing people with agencies, like Visiting Angels and Comfort Keepers.

When it comes to the number of CNAs who have graduated its program, NextStep doesn't release those numbers. Hedrick would say, though, that 42 percent of its graduates were previously unemployed or from low wage jobs. Those that were employed are on average making 20 to 30 percent higher wages after going through the program. 

"In 2021, we expect that we will be providing, by the end of year, more than half of the CNAs  in the state. There are about 6,000 CNAs certified each year in the state. We're on pace to, to get to that level of 250 or more a month," he told me. 

The company plans to use this funding to go deeper into Colorado, which means recruiting more students and developing more relationships with employer partners. Right now it is working with about half of the potential market in Colorado, and the plan is to be the preferred partner of every long term care facility and home based care provider in the state and be the single largest provider, and the leading and highest quality, trainer of CNAs in the state.

The company also plans to expand into new markets, specifically Washington, Oregon and California, before expanding nationally in 2022. Those three states are the next logical step for NextStep due to their governments being "interested in supporting companies that are trying to provide innovative solutions to solve big problems for their citizens," not to mention that they all contain big markets. The other advantage is that some of NextStep's existing customers in Colorado also have skilled nursing facilities in Washington, Oregon and California, making it an easy transition.

The other plan: to expand its curriculum to certify other types of nurses, specifically licensed practical nurses (LPNs) or licensed vocational nurses (LVNs), which also do not require a college degree, but which do require significantly more training and skills than CNAs.

"We call the company NextStep, because we want to provide an opportunity for people to take the next step in their careers. We want to make sure that they get credit for what they already know, and that's one of the different things, or different approaches, in training," said Hedrick.

"Historically, you'd have to like to start at zero, assume that you know nothing. But we're going to be, over time, working with the same employers to fill both their CNA and their LPN needs, and they'll understand that once you've been badged as having the competencies that are required to be successful as a CNA, you're already halfway to being an LPN."

Scaling up those opportunities for those workers is what success will look like for NextStep, he said.

"We want to be able to provide this level of support to the businesses and opportunity to the students in every state and, eventually, internationally. We think that this approach of blended learning, where you combine really high quality online skill development with in-person practice of particular physical skills and understanding some of the cultural aspects of the environment in which we place our graduates, that that's a really appropriate model for this type of adult education."

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