Eldercare Startup Papa Slated to Lose Dozens More Customers

(Bloomberg) -- Papa Inc., a startup that sends contractors to the homes of the elderly to help them with household tasks and offer companionship, is facing a flurry of contract terminations by health insurers for next year, following a Bloomberg Businessweek report that revealed extensive allegations of abuse from its workers and the elderly who rely on it.

Most Read from Bloomberg

• Microsoft Ends Weekend of OpenAI Drama With Coup of Its Own

• The Doomed Mission Behind Sam Altman’s Shock Ouster From OpenAI

• OpenAI Leaders' Efforts to Bring Back Altman Reach Impasse Over Board Role

• OpenAI’s Murati Aims to Re-Hire Altman, Brockman After Exits

• Altman Sought Billions For Chip Venture Before OpenAI Ouster

Nearly three dozen insurance plans and employers have determined they will not renew partnerships for next year, according to a document reviewed by Bloomberg. Those insurers include Cigna Group and several Blue Cross plans in different states, as well as the grocery chain Albertsons Cos., which offered Papa’s service to employees in a pilot program at a distribution center but did not continue it. Major insurers including Humana Inc., CVS Health Corp.’s Aetna and Molina Healthcare Inc. also declined to renew relationships with Papa, Bloomberg reported in September.

A spokeswoman for Papa said that the company would continue talks with customers. “While some of the annual [Medicare Advantage] contracts will expire at the end of 2023, Papa remains in active discussion with nearly all of those plans for 2024,” she said in a statement.

The spokeswoman said that even as some plans are cutting back because funding for Medicare Advantage programs is declining, more than one-third of its clients are “expanding relationships” with Papa. “While certain economic factors are putting pressure on the market, there’s a greater need than ever for Papa,” she added. The spokeswoman said the startup is still “actively selling” services for next year.

Representatives for Cigna did not respond to requests for comment. Albertsons did not respond when asked why the company didn’t extend its pilot program.

The contracts ending mean Papa is losing a large swath of business heading into the new year. Health insurers, including Medicare Advantage and Medicaid plans, as well as employers, sign contracts with Papa and then offer its service to their members as part of their plans, typically for a certain number of hours per year. Medicare Advantage plans are offered by private insurance companies and sometimes provide extra benefits, such as dental and prescription drug coverage. Papa sends contractors to the homes of the elderly for help with household chores, including cleaning, transportation to and from the doctor or other errands, and companionship. The company has in the past described its service as “grandkids on demand.”

Last year, Papa said in a statement that the Cigna partnership would extend its service to 72,000 of the insurer’s members across nine states.

In May, Bloomberg Businessweek revealed extensive abuse allegations at Papa, based on more than 1,200 confidential complaints filed by its users and workers. The investigation described alleged incidents that could fit on a worst-nightmare list for family members looking to hire help for their elderly relatives, including claims of sexual harassment, assault and theft. The story also detailed a pattern of incidents that the company, last valued at $1.4 billion, was aware of and failed to put in measures to prevent.

Papa said in a statement at the time that, “Whenever you are connecting people, there is a chance something can go wrong, but we are committed to doing everything we can to try and ensure that does not happen. And if it does, we will do all we can for anyone involved.”

In July, Democratic Senator Bob Casey, chairman of the Senate’s Committee on Aging, sent a letter to Papa’s chief executive, pressing for more information on its safety protocols. The company also announced it would add additional safety measures to its service.

Most Read from Bloomberg Businessweek

• More Americans on Ozempic Means Smaller Plates at Thanksgiving

• The Share of Americans Who Are Mortgage-Free Is at an All-Time High

• The Impact and Cost of Musk’s Endorsement of Antisemitism on X

• Sequoia Icon Michael Moritz Bets $300 Million on Reshaping San Francisco

• Inflation Raging in Triple Digits Is Pushing Argentina Down a Radical Path

©2023 Bloomberg L.P.