Best Steps To Start A Home Health Care Business
Do you find yourself driven by both entrepreneurial and humanitarian interests? Is it important to you to build a business you can be proud of, knowing you are making a positive difference in people’s lives?
If any of this speaks to you, you could be an excellent candidate to start a home health care business. There’s never been a better time to do so—home health care is one of the largest growing industries, not just in North America, but around the globe.
The home healthcare sector is one of the fastest-growing healthcare industries in the United States.
In 2019, there were approximately 1.4 million people employed in home health care services in the US.
Home health workers — comprising nurses, therapists, and personal care aides — provide a range of medical and daily living services to nearly 12 million people. Most of whom are elderly and many chronically ill, disabled, bedridden, or struggling with Alzheimer’s disease and other cognitive issues.
Fueled by over 73 million baby boomers – almost 25% of the U.S. population – there’s never been a better time to start a home healthcare business.
So what’s actually involved in setting up a home health care agency? Here’s an executive summary of what we’ll cover:
What is a home health care business?
Home health care is a catch-all phrase that comprises a half-dozen or so kinds of care ranging from complex medical treatments to simple, assistive companionship. Understanding the ranges of a health care business is the first step in opening a home care business of your own.
Business intelligence service IBISWorld tracks five areas of the home care industry:
• Traditional home healthcare and nursing care
• Home hospice care
• Homemaker and personal services
• Home therapy services
Each of these sub-groups represents particular areas of need. Deciding which area you want your business to fill is the first step. After all, each of these kinds of businesses provides distinct services, many of which require employees with specialized training or state licensure.
Traditional Home Health Care and Nursing Care
When most people think “home health care,” they immediately picture a nurse knocking on a door to check blood pressure, draw blood, and make sure a patient is taking their medicine as prescribed. Care providers in this category administer injections and other medications, track vital signs, and conduct other medical interventions when necessary. In all 50 states, home nursing care providers must employ licensed nurses—either registered nurses (RN) or licensed practical nurses (LPN)—to deliver their services. Many states also require non-nursing staff working in client homes to maintain a Certified Nurse Aid (CNA).
Home Hospice Care
Another significant portion of the home health care business focuses exclusively on end-of-life care for the elderly or for individuals with terminal illnesses. Like traditional home health care, nurses and CNAs provide clients with medical support through the administration of prescription medicines. Unlike traditional home health nursing, hospice services focus on palliative care, such as pain management. Most hospice providers will not provide medical intervention for their clients.
Home Therapy and Other Services
When an individual is injured in an accident or suffers other illnesses, such as a heart attack or stroke, care providers may prescribe various therapies to help the patient recover. These therapies can include occupational therapy, physical therapy, psychological support, dietary guidance, and other skilled-care activities. In each of these, state and federal requirements typically dictate a licensed professional from each field administers the care. Also, in many cases, doctors might require in-home telemetry, lab testing, and other diagnostic and therapeutic treatments that must be administered by skilled healthcare providers.
Homemaker and Personal Services
Businesses that provide homemaker and personal services make up more than a third of the entire home health care industry. These care providers assist clients with the day-to-day of their lives, whether it’s providing meal preparation, doing some light housekeeping, or simply giving the patient a trusted companion to spend time with. Though licensing requirements for homemaker and personal care services vary by state, this category of home health care does not typically require licensed professionals to deliver care in the home. Homemakers and personal services also represent one of the fastest-growing categories of home health care business.
Now that you have a more in-depth understanding of the home care business, you have to decide which kind of business is right for you.
Types of home health care business you can run
|Photo: PRN Funding|
Choosing what kind of services to offer is the first step of starting a home health care business. It’s a big decision that influences everything from the laws you’ll need to follow to the qualifications of the professional caregivers and employees you hire.
There are two main types of home care agencies, each with its own benefits and limitations. The structure that’s right for you all depends on how you’d like to provide services and what you want to accomplish.
Home care agency
Home care agencies support aging in place. Potential clients could include seniors who need some assistance around the house but otherwise are in a healthy mental state. Instead of admitting senior citizens into nursing homes, relatives can have peace of mind that their loved ones are being cared for while they remain independent.
A home health care agency may only require caregivers, home care aides, or certified nursing assistants.
Services of this type of agency include:
• Assisting with personal care and hygiene needs
• Prepare meals and fold laundry
• Transportation to doctors appointments
• Medication reminders
• Companionship care
Home health care agency
The names are similar, but traditional home healthcare agencies differ from home care agencies in a few ways. While home health care agencies still support aging in place and independence, they also provide other services that go beyond meal preparation and personal care, requiring registered nurses and medical professionals. Regulations for this type of business are much stricter and your state may expect Medicaid certifications.
These services can include:
• Nursing care
• Blood pressure checks
• Wound care
• Occupational therapy
• Palliative care
• Physical therapy
A lot goes into establishing a health care business. To set up your business successfully, you need to be aware of all of the legal information, licensing requirements, and insurance recommendations.
What are the steps for starting a home health care business?
Once you’ve decided which segment of the home health care market you want to serve, there are steps you’ll need to take to start your home health care business. you’ll need to get licensed to provide services. This can be as simple as registering your business name at the courthouse, or as complicated as taking state licensing exams, depending on your chosen area of service.
After you’ve tackled state licensing, you’ll need to pick a name for your business. The name should tell potential clients a little something about your business, and it should be memorable. A good business name is vital to establishing a brand.
Finally, after you’re licensed and have created your brand, you’ll need to market your business to potential clients. This can mean advertising in the local paper, radio and television, and developing a social media presence. It can also be expensive.
If it seems like a lot, that’s because it is. This is why IBISWorld estimates over half of home health care businesses will be franchise businesses within 20 years.
We’ve gone over some of the most important parts of starting home health or home care agency, now let’s walk through the process of getting started.
Step-by-Step: A Overview of the Steps Necessary to Start Your Home Health Care Business
You’ll notice that many of these steps, especially regarding legal requirements, are a bit vague. This is on purpose! Licensing requirements and other regulations vary from state to state, and it’s important that these steps are considered on a case-by-case basis to ensure success.
Step 1: Plan For and Establish Your Business
The first step in any business venture is to plan for and establish your business. In this step, you will write a business plan, incorporate your business, and obtain a federal employer identification number (EIN).
You need to define the type of care you will give, your suite of services, and how you plan to deliver those services and in which markets. These are all important considerations that should not be taken lightly when planning to launch.
You should also get your business finances together. Establish a business banking relationship by setting up a business checking account and getting set up with basic accounting software.
What to include in your business plan:
Regardless of the format you choose, there are some things you’ll need to keep in mind as you write. These include:
Equipment and starting expenses
Providing top-quality home health care requires sophisticated and expensive medical equipment. You’ll require a detailed list of everything you need to hit the ground running.
That list of key starting expenses will include:
• Business development
• Rental expenses
• Office equipment
• Office supplies
• Nursing supplies
Financing and cash flow
Once you compile your list of starting expenses, you need a plan to raise the capital. The most traditional routes are bank loans, small business loans, or angel investors. There may be state-level grants geared toward emerging businesses in the health care field as well.
It is almost a given that your business will operate at a loss for the first three to six months while your client base grows and you get on a regular billing cycle with Medicare and Medicaid. This means a carefully thought out cash flow management plan is required to ensure you can get through these key first few months.
Market research and your competitive landscape
The greatest weapon you can have in your arsenal when it comes to raising capital is a bullet-proof analysis that yours is a great local market for this type of business and that you can serve a need currently unmet by competitors.
There is no question this is a growing industry on a national and global level; however, if your community is currently over-saturated with home health care businesses, you will have a hard time making it work.
Also, a strong competitive analysis will help direct you with marketing and recruitment strategies when you identify where others have fallen short in their attempts to penetrate the market.
Step 2: Research and Obtain Required Licenses and Certifications
If you ever want to actually start providing care, you’ll have to make sure that you are totally licensed and certified in accordance with your state, city, and/or locality requirements. Contact your local and state health departments to make sure that your business is ready for licensure and certification. The types of licenses and the process to get licensed will differ if you are starting a home health or home care agency.
To complete the process of Medicare accreditation, you must complete a three-day Medicare survey which is an audit of your business’s operations and patient clinical records. Carol Byrne cautions prospective business owners about the length this part of the journey can take.
“In the United States, it can take a year or longer to open a fully licensed and certified business. It can be a long path,” she says.
• In order to be eligible for Medicare coverage for home care services, the patient must meet the following criteria:
• They must be under the care of a physician and receive the treatments as part of a treatment plan prescribed and reviewed by the physician
The physician must certify that the patient requires at least one of the following services:
• Continued Occupational Therapy
• Speech-Language Therapy
• Physical Therapy
• Intermittent Skilled Nursing Care (more than drawing blood)
• The home care business responsible for their care must be Medicare-certified
• The physician must determine that the patient is “homebound”
• The patient may not require more than part-time or intermittent nursing care
Some states will require a new home health care business owner to complete a state jurisprudence exam before granting a license to operate, so be sure to do additional research for your own state.
Step 3: Prepare for Operations
In this step, it’s time to find qualified caregivers for your business. This is a very important step in the process. The caregivers you hire, whether they be medical professionals delivering professional care or non-skilled professionals delivering basic care, are the face of your business and the “money-makers”. The best way to run a successful home health care agency is to have consistent, competent employees interacting with your patients.
You may also want to set up a website and establish referral relationships with local doctor’s offices and long-term care agencies.
What kind of staff will you need?
If you are not a physician or medical professional yourself, your first hire will be a qualified clinical supervisor. It is a requirement of Medicare (and most states) that a physician or a registered nurse with more than one year of experience be in place as a clinical supervisor. The supervisor must be available as a resource at all times for the front-line employees providing home health care services in patient homes. Most states also require a certified administrator to be in place, although this position can be doubled by the clinical supervisor if that person is certified for both roles.
When it comes to the front-line service providers, there are two routes you can explore. If you have the resources starting off, you can simply hire your staff and keep them in-house. This will require a significant cash infusion from the start as your salary demands will outweigh your revenue in the first months of operation.
The other option is to contract the work out to another agency or association of professional physiotherapists, occupational therapists, or skilled nurses. The most common approach is to specialize with one or two in-house professionals (skilled nurse and physiotherapist) and contract out the other fields on an as-needed basis.
Be sure to conduct a thorough background check for all hires. Your business could be liable for crippling legal action if it is discovered there was a problem with the treatment delivered by someone who had been sanctioned or suspended for similar malpractice issues in a previous job. It should go without saying that this is more important in this field than most.
Step 4: Launch and Learn
Once you’re all set to launch, don’t hesitate to get going! Over time as you operate your business you’ll learn where you need to improve and how to make your home health care business more successful.
Marketing strategies for home health care businesses:
The following are some of the most effective strategies for recruiting clients for a new home health care business:
1. Set up a website: Your client base may not be as internet-savvy as most; however, their family and loved ones will likely use the internet as the first place to find a qualified business.
2. Reach out and network: Contact local physicians, senior centers, long-term care facilities, hospital discharge social workers, and rehab outpatient centers to reach prospective clients.
3. Set yourself apart: Establish expertise credentials in certain areas of service to differentiate your business from your competition.
4. Join local business groups or organizations: Groups like your Chamber of Commerce or The National Association for Home Care & Hospice (NAHC) offer opportunities for agencies to reach home health care decision-makers.
5. Attend as many trade shows and events as possible: Events like these give you an opportunity to meet with physicians, nurses, social workers, vendors of home health supplies, and the owners of related businesses who may have their own network of people in need of your services.
Tips to Grow Your Home Care Business
1. Make sure you understand the costs and are prepared to cover them.
2. Remember that there are three ways to bring in more revenue: 1) getting more clients, 2) increasing per-client revenue, and 3) retaining clients longer.
3. Invest in getting good online reviews from the start.
4. Unless you come from a background in digital marketing, consider hiring a marketing agency to manage your website, SEO, and Google Ads.
5. Develop something that differentiates your agency, both to potential clients and to referral sources.
6. Understand that establishing relationships with referral partners takes time.
7. Use client referral programs and employee referral programs.
8. In general, plan on hiring a sales rep at around 1,000 weekly billable hours.
9. It’s almost always better to have a few solid referral relationships than many weak ones.
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