Are You Ready to Start a Home Care Business?
According to a report from IBISWorld, the home care industry has grown by 4.8% in the last 5 years, with over 450,000 businesses in the US. Another 2022 statistic shows that over 23% of Americans are 65 years old or older. This figure is expected to double in the next 20 years, and the demand for home care agencies will increase.
It's also a lucrative industry with excellent economic potential for healthcare professionals.
Great expertise, qualifications, certifications, and legal processes are important building blocks when starting a home care agency in the USA. Let’s start off by asking three important questions. Is it profitable? What qualities do you need? And what care will you provide?
Is starting a domiciliary care agency profitable?
The short answer to this is yes. Home care agencies primarily provide skilled nursing and other therapeutic services to senior citizens and discharged patients. The likelihood that a new patient will be a private-paying customer is high.
The standard hourly charge for a patient is from $16 to $19 or $18 to $22 for more intensive personal care services. Additionally, your hourly rate may change based on where you work.
Consider a situation where your employee is paid $15 per hour, and your new patient needs 15 hours of care per week. Accordingly, your business would have turned in a revenue of $225 per week, or at least $900 per month, by the end of your patient's 15-hour workweek. Imagine having more clients and working more hours; your revenues will increase significantly as your company expands.
What qualities do you need to have to start a home care business?
Even though the home healthcare business can be fascinating and rewarding, it can also be challenging. It requires a particular individual with specific traits to accomplish the work and do the job successfully.
These are some attributes to have or seek when recruiting care assistants.
1. Caring
Along with providing patients with physical and medical support, you must also interact with them and pay attention to what they have to say. You need to be careful and ensure that no process is skipped.
Any role in home care requires empathy for the struggles your clients and their families face; you must be able to show compassion and give comfort and care by comprehending their sentiments.
2. Respectful
When caring for patients from diverse backgrounds, a care assistant must treat behavioral, cultural, or religious differences with the highest respect. You must treat each client as an individual with unique demands and privacy requirements.
3. Versatile
No two days in the life of a care assistant are ever the same, and you are typically expected to care for different clients throughout the day. You must, therefore, exercise some degree of flexibility at work and be able to adjust to novel circumstances and individuals.
4. Communication
All facets of home care require effective communication, including speaking and listening. Because of this, being able to start up a discussion isn't enough; you also need to be able to listen and reply appropriately.
5. Motivation and mental strength
Care assistants must have the strength to handle the position's responsibilities successfully. This entails showing up early, carrying out all duties with care, and protecting the welfare of clients who aren't always able to care for themselves.
They must have the grit and resiliency needed to handle the emotional demands of their work. Patients need to be upbeat and motivated when dealing with difficulties and obstacles.
What care will you provide?
Home care providers come to the fore when a patient needs additional help to live securely at home but doesn't need facility care or hospitalization.
Medical home care includes general nursing services like blood pressure monitoring, mental health monitoring, and wound treatment. Patients and senior citizens recently discharged frequently require home healthcare.
Non-medical home care includes providing basic day-to-day help by caregivers or other non-medical individuals. Home care helps clean, cook, get people dressed, or drive them to doctor's appointments.
As an entrepreneur, you must be decisive early enough in choosing which direction to channel your business idea. Hence, Settle for either medical or non-medical home care and run with it.
How Do You Set Up a Home Care Agency?
Now, let’s dive into the complex, but necessary nuances of starting a health care business.
Why your business plan is crucial
Home care is distinct in many respects, but it shares one trait with all other new business ventures: inadequate planning and forecasting will always undermine its success.
It's crucial to have clinical expertise, but it's also essential to have business insight because, at its core, healthcare is still a company that must be managed to be successful.
You'll want to be sure that you meticulously plan out every aspect of the logistics for starting the firm and navigating the challenging initial years. You will need a business plan that includes the following:
Executive summary: Explain the basics of what your agency stands for and how it plans to differentiate itself.
Description: Describe your agency’s goals and mission.
Services: Describe what services you will provide and how you will price them.
Marketing strategy: Explain how you will tell people about your agency.
Management and organization: Explain the ownership structure of your home care business.
Operational plan: Describe the space, the personnel, and the supplies you'll need to run it.
Financial plan: In this section, provide a cash flow forecast, a snapshot of the balance sheet, and a break-even analysis.
Governing bodies and legal acts you need to know
Getting your state's home care license application and any necessary business license documentation comes first in the certification procedure in the US.
This entails incorporation and getting a National Provider Identifier (NPI) number and a Tax ID for your home care agency.
Each state will have its regulations and standards for home care licenses and operations. The best way to ensure you have everything covered is to ask for help from your state's health department.
You may find it valuable to know that a patient's qualified home care services, such as physical therapy, skilled nursing care, occupational services, speech-language pathology services, and others, may be covered by Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).
Also, your company must acquire the necessary Medicaid and Medicare certifications.
So, how do you go about this?
Establish a legal business organization
Different business structures are available, including sole proprietorship, corporation, partnership, and limited liability company (LLC). The kind of business you start will affect your financial commitments, organizational structure, tax payment, and personal responsibilities.
Obtain an EIN
A Federal Tax Identifying Number (FTIN), commonly known as an Employer Identification Number (EIN), is a unique 9-digit number the Internal Revenue Service gives to corporate organizations operating in the US for identification reasons.
Register with the Secretary of State
Registering your home healthcare business will depend on your organizational structure and location. Sometimes, it’s as simple as submitting your business name to the local and state authorities.
To find out if a business name is available in your area, visit the secretary of state website. You should also see if the domain name for your website is available.
State's licensing requirements
The home care business licenses and forms you'll need depend on your state. You might have to enroll in additional caregiver and personal care training courses. However, states such as Iowa, Massachusetts, Michigan, and Ohio don’t require a license to start a home care agency.
Insurance policy
It's crucial to get enough insurance. To start, you'll require the following:
- Professional liability insurance provides your defense against allegations of malpractice, negligence, or incompetence. Insurance that covers "errors and omissions."
You could also need:
- General liability insurance protects you from charges of third-party property damage and physical injury resulting from your operation or product.
- Cybersecurity insurance shields you from some HIPAA fines brought on by a hack that publicizes a client's Personal Identifiable Information (PII).
Finding the right team
With a home care business, your team is the face of your business. They define the quality of your services.
The best way to keep customers and receive recommendations from others is to cultivate a reputation for offering excellent professional services. Finding the best hands to work for your business and representing it in front of the public entails doing this.
Finding the correct individuals is crucial since, in the end, the person represents you and serves as the public face of your company. And they are also in charge of people’s lives.
What kind of employees will you need?
A trained clinical supervisor will be your first hiring if you’re not a doctor or other medical professional. Most states mandate that a clinical supervisor be a registered nurse or a doctor with at least one year of experience.
The front-line workers delivering home care services in patients' homes must always have access to the supervisor as a resource.
There are two paths you can take regarding the front-line service providers.
- You can just recruit and retain your staff in-house if you have the resources to do so immediately. This will need a sizable amount of cash because your initial salary expenditure will exceed your income in the agency's first few months.
- The alternative is to outsource the work to another organization, occupational therapists, a group of qualified nurses, or physiotherapists.
The most typical strategy is to contract out the other specialties (like a marketer) and focus on two in-house experts (a good nurse and a physiotherapist).
Find out more: Need funding? Check out our guide on small business grants.
The Cost of Starting a Home Care Agency
The cost of starting a home health business can vary, especially if you're starting from scratch. You'll need a sound financial strategy and ample funding to launch your business.
The projected start-up expenses range from the following, depending on where your home care business will be located:
- Private Home Care: $50,000 to $80,000.
- Licensed Home Health non-Medicare agency: $70,000 to $120,000.
- Home Care Agency with Medicare Certification: $150,000 to $400,000.
Getting funding
As estimated above, starting a home care agency in the US is expensive. If you can’t pull the business funding from your savings, you'll need to look out for other options. Your family and friends may be one, also:
Startup loan
In the US, a government-supported program called the Small Business Administration helps entrepreneurs start or expand their businesses.
You can read about other loan options in our guide on loans to buy a business tailored to your business plan. Also, our small business grant guide will help you understand what grant options are available to you, and how to apply for them.
How Do You Market Your Home Care Agency?
Marketing is where the home healthcare industry will begin to mirror many other industries. Successful marketing tactics and good, old-fashioned hustling are essential for profitability.
Some of the best methods for drawing in customers for a new home healthcare company include the ones listed below:
Create a website: Even if your target audience is less tech-savvy than the average person, their friends and family will probably turn to the internet as their first stop when looking for a reputable company.
Reach out and network: Network and reach out to potential patients by contacting nearby nursing homes, doctors, senior centers, and outpatient rehab facilities.
Join local business associations: These organizations can help you connect with decision-makers in the home healthcare industry. For example, you can join your local Chamber of Commerce.
Find out more: Need more advice on this sector? Read our sector-specific articles.
Starting a Home Care Agency Is Not Your Only Option
Sometimes, the mind can create a bit of a setback when starting a business from scratch. The time and energy it will take to grow into maturity might overwhelm you. Fortunately, there's the franchise option, which offers you the opportunity of keeping your entrepreneurial dream alive.
Considering the industry's competition, it can be safer to opt for a home care franchise as it comes with less liability and risk. We have some care-related franchise opportunities on our site that you can explore.
Buying an existing health care business is also another route to consider. You can read our guide to buying a business to learn more about the other perks of buying an established business, as opposed to starting one from scratch. We also have some home care businesses for sale that might pique your interest.
As an entrepreneur, you must have a clear goal and ensure you have an accountability partner that will always spur you on the days you feel like giving up. Even though you have other options into business ownership, you should let nothing stop you from pursuing your business venture.
You can connect with us if you need support or assistance. We're always happy to help. And we wish you tremendous success in your business journey!