A startup Salem company wants to break into the health care industry with a concept that offers the elderly an alternative to nursing homes.

Still in its infancy, the company plans to lease specially designed modular buildings that can be placed in the back yard of a family member's home. So far the building, which has been named MEDcottage, exists only on paper.

But on Monday, the company inked a deal with Vanguard Modular Building Systems LLC to manufacture the prototype.

The company behind the MEDcottage is N2Care LLC.

With a current leadership team of seven people, N2Care officially formed in December. The company's roots go back about three years.

That's when company founder and president Kenneth Dupin of Salem was traveling internationally for work on his doctorate in international development. While his intentions were to focus on economic aspects of development, he ended up taking an interest in how other countries care for their aging parents, grandparents and friends. Mainly he noticed that nursing homes were not nearly as common as in the United States, and that the elderly are often cared for by family.

He also began to realize how few people actually want to live in a nursing home.

"The greatest fears the baby boomers have is that someday we will be isolated from our family and friends," Dupin, 54, said during a news conference Tuesday morning at the Sheraton Hotel in Roanoke to unveil the MEDcottage concept. "That's what I fear."

Additionally, he said, the elderly resent spending their accumulated wealth living in a place where they would rather not be.

The goal became to develop a living environment that is less expensive than a nursing home, offers independence and could be placed in close proximity to loved ones.

While its design is a simple, efficiency-style layout, the MEDcottage isn't a typical prefabricated building. Outfitted with state-of-the-art smart technology features, the home would be equipped to help ensure the safety of the occupant, Dupin said.

For instance, the MEDcottage would come with a variety of monitoring systems to ensure medical needs are being met. These systems are inventions of others, with N2Care simply incorporating the products into the cottage's design.

Features would include special floor lighting, webcams, medical monitoring and alert capabilities, and automatic pill dispensers.

Dupin estimated that the prototype will cost about $100,000 to build. To help lower the cost, he said, he hopes to form partnerships with some of the companies that have developed the products identified for use in the MEDcottage. No deals have been arranged yet.

The prototype should be completed in about four months, with the following six months dedicated to researching and testing it, Dupin said.

The company has reached out to Janis Terpenny, a mechanical engineering professor at Virginia Tech, for help with research and design. Her role is to identify research and small business grants that will help in bringing the product to market.

"I think we will focus on the human use and on the technology capabilities of the home," she said.

Next the company plans to manufacture about 50 MEDcottages, to be located in Virginia. From there the business plan is to go nationwide.

The MEDcottage price tag is between $2,000 and $2,500 a month to lease.

There are a few obstacles to overcome before back yards are lined with modular in-law suites, however, the biggest being zoning ordinances.

The company is already in discussions at the local and state level to allow the 288-square-foot MEDcottage into back yards. Dupin pointed to the Fair Housing Act, which prohibits discrimination against disabled persons, as a way to circumvent zoning laws.