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Starting an Adult Day Care Business – A Complete Guide

Are you interested in starting an adult daycare business? If YES, here is a complete guide to starting an adult daycare business with little money and no experience.

Okay, so we have provided you an in-depth sample adult daycare business plan template. We also took it further by analyzing and drafting a sample adult daycare marketing plan backed up by actionable guerrilla marketing ideas for adult daycare businesses. In this article, we will be considering all the requirements for starting an adult daycare business. So put on your entrepreneurial hat and let’s proceed.

What is an Adult Daycare Center?

An adult day care center or adult day care center is a non-residential facility that supports the health, nutritional, social, and daily living needs of adults in professionally staffed, group settings. Normally, adult day care is used to relieve the caregiver or his or her duties for the day while ensuring that the care recipient will still receive the proper care in a safe, friendly environment.

These centers usually operate during normal business hours five days a week, and some centers also offer additional services during evenings and weekends. Currently, there are more than 4,000 of these programs operating in the United States.

In general, there are three main types of adult day care centers:

  • Those that focus primarily on social interaction
  • Those that provide medical care
  • Those dedicated to Alzheimer’s care

Many of these facilities are affiliated with other organizations, including home care agencies, skilled nursing facilities, medical centers, or other senior service providers. The average participant in this type of program is a 76-year-old female who lives with a spouse, adult children, or other family or friends.

About 50 percent of these individuals have some form of cognitive impairment and more than half require assistance with at least two daily living activities.

Adult day care centers can be public or private, non-profit or for-profit. The intent of an adult day center is primarily two-fold: to provide older adults an opportunity to get out of the house and receive both mental and social stimulation and to give caregivers a much-needed break in which to attend to personal needs, or simply rest and relax.

Here is how to start an Adult Daycare Business;

 

  • Industry Overview

According to the National Adult Day Services Association (NADSA), each state provides different regulations for the operation of adult day care centers, although NADSA offers some overall guidelines in its Standards and Guidelines for Adult Day Care.

  • Interesting Statistics About the Adult Daycare Industry

In 2013 more than 5,000 adult day centers were operating in the United States, providing care for more than 260,000 elderly Americans each day. 72% of centers were operating as nonprofit organizations, and 16% were affiliated with the public sector.

NADSA recommends a minimum staff-to-participant ratio of one to six. This ratio can be even smaller, depending upon the level of participant impairment. If a program serves a large proportion of participants with dementia, for example, the ratio of staff to participants should be closer to one to four.

According to the 2010 MetLife National Study of Adult Day Services, US day care centers have one direct care worker for every six participants. Nearly 80% of adult day centers have a nurse on staff, nearly 50% have a social worker on staff, and approximately 60% offer case management services. Industry research suggests centers with higher staff-to-patient ratios provide more individualized, person-centered care.

Daily fees may be less than a home health visit and half the cost of a skilled nursing facility, but vary depending on the services provided. Funding comes from participant fees, third party insurance, and public and philanthropic sources.

Approximately 30% of adult day services participants pay privately for the services. Average daily fees range from $40 to $60 and include a wide range of services such as a personal care, therapeutic activities, nursing care, and meals including a light breakfast, hot lunch, and an afternoon snack.

There are two types of senior adult day-care centers:

  • Social
  • Medical

Currently, informal social centers are more prevalent. They usually cater to seniors who have a higher level of functioning, although some clients may be wheelchair-bound, incontinent or need limited assistance with daily activities. The focus in this type of setting is more on activities, social interaction and meals.

A medical day-care facility provides a more complex level of care and has a registered nurse on staff that can perform tube feedings, administer medications and oxygen, and provide other related care. Typically, these programs operate during the same standard business hours of a traditional child day-care center, which is usually from 8 a.m. to 6 p.m.

Market Research Feasibility

  • Demographics and Psychographics

The only set of individuals that need this service are old individuals who are either senile, suffering from dementia or Alzheimer. Costs vary and can range from $25 to over $100 per day, depending on the services offered, type of reimbursement, and geographic region.

While an adult day care center is not usually covered by Medicare insurance, some financial assistance may be available through a federal or state program (e.g., Medicaid, Older Americans Act, and Veterans Health Administration).

List of Niche ideas Within the Adult Daycare Industry

  1. Social Interaction
  2. Alzheimer care
  3. Medical care
  4. Art therapy
  5. Audiology
  6. Counseling
  7. Exercise classes
  8. Hair and beauty services
  9. Massage therapy
  10. Occupational therapy
  11. Oxygen therapy

The Level of Competition in the Adult Daycare Industry

Before you open an adult day care center in your town, it’s a good idea to see what the competition looks like. Try our link below to get a list of local competitors in your city. Simply enter your city, state and zip code to get a list of adult day care centers in your town. Gain knowledge of how existing firms have positioned themselves in the marketplace, and then design your business in a way that sets you apart from the others.

List of Well-Known Brands in the Adult Daycare Industry

  1. Sarah Care
  2. Adult day care group

ECONOMIC ANALYSIS

No matter how small or large your company is, it’s critical that you not neglect the administrative side. It won’t do you much good if you do the work but never bother to issue invoices so you get paid. Poorly maintained records can get you into trouble with the IRS and other government agencies.

Slopping purchasing procedures can mean you run out of important supplies at critical times. And if you aren’t marketing on a regular basis–even when you’ve got all the work you can handle–your business will eventually dry up.

Is an Adult Daycare Business Worth Starting from Scratch or is Buying a Franchise Better?

If this is your first venture, you should consider becoming a franchisee. If you planning on starting an adult day care center, a smart move is to assess whether buying a franchise could alleviate your startup process. Franchising offers an opportunity for those seeking an independent business, but needing assistance in providing services to the elderly that reflects best business practices, maintains high standards of care, and promotes profitability.

The franchiser provides an opportunity to develop the enterprise while providing structured guidance and assistance in all aspects of business operation. Rather than facing unforeseen risks associated with starting a new business franchisees receive instruction and training in areas ranging from management to personnel to marketing.

Legal Matters

  • Best Legal Entity to Use for an Adult Daycare

No doubt starting an elder care company is indeed a serious business which is why the legal entity you choose will go a long way to determine how big the business to can grow. Choosing a legal entity for a business such as an elder care company is some worth straightforward especially if you decided to grow the business big.

When it comes to choosing a legal entity for your eldercare company you have the option of choosing from a general partnership, a limited partnership, an LLC, a “C” corporation, or a “S” corporation. It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build your eldercare outfit on.

These are some of the factors you should consider before choosing a legal entity for your eldercare company; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and tax issues.

If you take your time to critically study the various legal entities to use for your eldercare company, then you will agree that limited liability company; an LLC is the most suitable. You can start your eldercare company as a limited liability company (LLC) and in future convert it to a ‘C’ corporation or even a ‘S’ corporations especially when you have the plans of going public.

Upgrading to a ‘C’ corporation or ‘S’ corporation will afford you the opportunity to grow your eldercare company so as to compete with major players in the eldercare industry; you will be able to generate capital from venture capital firms, stock market, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures as well.

Catchy Business Name ideas for an Adult Daycare

  1. Cozy Caregivers
  2. Tamara’s place
  3. Calm Care
  4. Loving care
  5. Pediatric Pampering
  6. Coddling Care Providers

The Best Insurance Policy Needed for an Adult Daycare

In the United States and of course in most countries of the world, you can’t operate a business without having some of the basic insurance policies that is required by the industry you want to operate from. Besides, the nature of the eldercare industry requires that you have the proper insurance cover in place or else you will be forced out of business if anything goes wrong with the eldercare contract you are handling.

So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your eldercare company; it is their duty to help you assess the risks involved in the type of eldercare business you intend running and then advice you accordingly.

One universal requirement is liability insurance. Before a bank or other lender will consider hiring you to repossess vehicles, you must carry about a $1,000,000.00 liability insurance policy to protect yourself and the lender in case there is damage to the vehicle or other property. Depending on your state and your history with insurance companies, expect to pay $1,000.00 to over $5,000.00 per month for insurance on your company

INTELLECTUAL PROPERTY PROTECTION AND TRADEMARK

If you are considering starting your own eldercare company, then you should consider filing for intellectual property protection. Filing for intellectual property protection for an elder care company goes beyond protecting your company’s logo and other documents, but also protecting your software applications and of course the name of your company.

If you want to file for intellectual property protection and also register your trademark in the United States, then you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.

Is Professional Certification Needed to Start an Adult Daycare?

The majority of states require licensure or certification. The majority requires licensure, fewer require certification; and even fewer require both licensure and certification. “Certification” means to certify the individual adult day services program by measuring the ability of the adult day services program to meet standards set by the Department of Human Services. States that require certification distinguish between different types of ADS programs.

States vary in their approach to licensure, primarily licensing providers of specific ADS programs or operators of specific types of facilities or centers. For example, Maine licenses two types of programs–adult day health services and social ADS programs–as Adult Day Services. With the growing of the aging population expect specific standards will continue to evolve.

In addition to a director and program staff, NADSA guidelines call for the staffing of a social worker and a RN or LPN. Even though your center won’t directly provide social services or medical care, you’ll need to have staff resources available to handle unexpected events as they arise. A social worker may also be able to facilitate the transition from nonresidential to residential environments.

List of Documents Needed to Run an Adult Daycare

In The United States of America and of course all over the world, the eldercare industry is amongst the industries that is highly regulated so as to avoid costly eldercare breaches in the country. If you are considering starting an elder care company, then you are expected to meet the legal documents requirements as stipulated in the constitution of your country.

These are some of the basic legal document that you are expected to have in place if you want to start a eldercare company in the United States of America;

  • Certificate of Incorporation
  • Eldercare Clearance Certificate
  • Business License
  • Business Plan
  • Non – disclosure Agreement
  • Memorandum of Understanding (MoU)
  • Apostille
  • Employment Agreement (offer letters)
  • Operating Agreement
  • Company Bylaws
  • Operating Agreement for LLCs
  • Insurance Policy

Writing a Business Plan for your Adult Daycare

A well-designed business plan will appeal to potential funders and donors, and satisfy a new board of directors, or a board looking to expand the services the organization already offers. The plan can be key to arranging alliances or collaborative efforts for the organization. A business plan can be developed in many forms but every plan has common elements. A business plan:

  • Identifies the organization, what is special about its services, and its current funding sources.
  • Describes the organization, including the year started or proposed start date, type of business, philosophy, structure of the organization and location.
  • Provides a market analysis that summarizes the community (market) and how this supports the start-up or expansion of the program. Specific data includes population and trends, other services in the area, funding sources, barriers identified and ways to overcome them, community support, major competitors, etc. This information should be correlated with the program’s expected target population and geographic boundaries.
  • Includes an operations plan that explains how services will be provided and how specific goals will be met. A goal is a very general statement such as, “We will provide the best dementia care possible.” An objective defines the specific results to be achieved, for instance, “We will offer home and community- based respite services to our community.” To accomplish objectives, specific actions are described such as, “Utilizing space at the local senior center, we will provide trained staff to facilitate respite care once a week.”
  • Describes core services and optional (ancillary) services. Since it is common for adult day programs to offer basic, core services initially, plans for additional, anticipated services, such as baths/showers, hair care, rehabilitation therapies, medical escort, tracheotomy care, injections, etc., should be included.
  • Has a marketing plan that identifies your targeted participants and how you will advertise your services (flyers to potential referral sources, radio or newspaper ads, Web resources, etc.)

A Detailed Cost Analysis for Starting an Adult Daycare

It is difficult to nail down exact numbers for the startup of an adult daycare, but it is not cheap. Much depends on the scope of your operation, such as whether you plan to build or remodel existing stand-alone facilities for many residents or do a small home setting.

At minimum, you will need to obtain the facility which can be hundreds of thousands of dollars to start with; fit the structure with ramps, wheelchair- and senior-friendly bathing facilities, adjustable beds, security measures, adequate kitchen and dining facilities, pass a health inspection, not to mention getting properly licensed both as a facility and a healthcare administrator and hiring the medical and social service personnel to make sure your visitors receive excellent quality medical care while in your care.

In addition, you need to purchase lift assist and toileting assist devices and liability insurance, as well as providing refrigeration and secure storage for medications and training for staff in med passing, first aid, CPR, lifting, transporting and hygiene.

That doesn’t even include aesthetic measures to make your place comfortable and welcoming for residents and their families and providing entertainment and stimulation during their stay. Depending on the needs of your clients and the size of your operation, a startup could easily run up to half a million or more.

  • Financing your Adult Daycare Business

Because adult daycare services represent an important community need, both government and nonprofit organizations offer grants to assist with their creation. Although finding a grant to cover the entire cost of an adult daycare center’s construction and upkeep is unlikely, grants that support particular programs that can be offered by the daycare center will help make offering quality care easier. Funds for your eldercare business can be sourced through the following means;

  1. Social Services Block Grant

The Social Services Block Grant is a federal program that awards funds to states for the provision of social services. Although states determine which agencies and projects can receive the funds, the United States Department of Health and Human Services reports that one type of program supported by these grants is adult daycare.

Furthermore, the grant is intended to help individuals become independent, self-sufficient and to reduce neglect. Organizations starting an adult daycare center can learn more about opportunities through their states by contacting their state departments of social services.

  1. Administration on Aging Grants

Because many people consuming adult daycare centers are the elderly, the Administration on Aging offers a number of grants that can be used to fund adult daycare centers where the elderly reside. For example, in 2011, the AOA made funds available to State Units on Aging for the creation of a statewide services network capable of caring for dementia patients.

The administration also offers grants to nonprofit, educational and academic organizations for research and services in the area of respite care and caregiver support, nutrition, research and the prevention of elder abuse. Organizations and states wanting to create adult daycare facilities may be eligible for some of these funds, depending on what kind of residents they will serve and what types of services they will provide.

  1. Robert Wood Johnson Foundation Grants

The Robert Wood Johnson Foundation offers grant funds to public universities, nonprofit organizations and other public agencies for the improvement of health-care services, including adult daycare. Although the foundation prefers to grant programs that can be easily assessed, such as research and training initiatives, organizations that want to start or reorganize adult daycare facilities may be eligible for grants to fund a part of their projects, such as staff training or innovative programs.

  1. Department of Veterans Affairs Grants

Since many veterans are in need of adult day services, the U.S. Department of Veterans Affairs offers project grants for the creation of community programs for eligible veterans. Adult daycare centers that will offer services to veterans and agree to receive per diem compensation from the VA may be eligible, as long as they offer all of the medical services required by the federal agency. Organizations interested in creating such a program should visit the VA website for more information.

Equipment Needed to Start an Adult Daycare

A house or building outfitted for disabled access and safety, medical equipment and devices, lift-assist equipment, safety gear, operating license and insurance, properly licensed and trained management and staff, entertainment options, therapeutic devices, lift chairs, tables and chairs, commercial kitchen and laundry and bio-hazardous waste disposal, funding sources, arrangements with Medicare and other insurance companies, the ability to comply with local, state and federal regulations and pass audits in the healthcare industry on an ongoing basis.

Choosing a Suitable Location for your Adult Daycare

In order to establish a need for an adult day care center there should be approximately 10,000 older adults that are at least 60 years of age living within a defined driving radius. Location differs in importance among providers. For programs such as home care or home health, in which the service comes to the client, the location is less important. For services such as adult day or senior center programs, in which the participant comes to the service, the site is more important.

The location of the building strongly influences accessibility, as well as potential service users. An outdoor area accessible to participants enhances the therapeutic value of the program. Major consideration must be given to the safety of the surroundings (traffic, crime) and the reputation of the building and the area.

For example, locating in a former funeral home may cause marketing problems for natives of the area. Locating in an upper-class neighborhood may create the perception that services are restricted or costly.

Locating in a nursing home could heighten the anxiety of people who fear they will be moved there permanently. Co-location, on the other hand, may bring economies of scale, thus reducing the cost of facilities or staffing. For example, sharing space, emergency equipment, office equipment, etc., may save on overhead costs.

Technical and Manpower Details

Employees will be responsible for providing personal care and related services for residents, providing companionship, and promoting mental alertness and physical well-being. Assistants range from $9.55 to $22.85 per hour or $19K to $48K a year. Managers’ salaries run from $9.74 to $25.87 an hour or $21K to $48K a year. A healthcare administrator salary can range between $25,016 – $70,973 a year.

The Service Delivery Process Involved in Running an Adult Daycare

The services provided vary depending upon the center. Common types of services are listed below, as well as questions that may help you determine whether a specific day program fits your ability and capability as care giver. (Keep in mind that few adult day programs offer all of the services described, and not all of the services are necessary for a program to be of high quality.)

  1. Counseling: The center may provide support services for people with dementia and their families. For example, they may offer guidance on outside resources and arrange for supportive care in the home.
  2. Health services: If the person with Alzheimer’s requires medical services (i.e., insulin shots, help with medication, etc.) be sure to ask if staff provides medical assistance. Some centers also may provide blood pressure checks and physical, dental, foot, eye or ear examinations.
  3. Nutrition: Does the center provide nutritious meals and snacks? Sample a meal to find out. If needed, ask if the center can accommodate a special diet or provide a culturally specific menu. Some centers also offer nutritional education programs.
  4. Personal care: Centers may provide help with hairstyling, toileting, eating, showering and other personal care tasks.
  5. Activities: Daily activities may include music, art, recreation, discussion and support groups. Ask what activities are offered for people with dementia.
  6. Behavior management: Find out if the center is prepared to deal with behaviors associated with dementia. These many include wandering, incontinence, hallucinations, sexually inappropriate behavior or speech difficulties.
  7. Therapy: Some centers help arrange for needed physical, occupational or speech therapy. They may have therapists onsite or on-call.
  8. Special needs: Make sure the center can accommodate any special needs. For example, is the center equipped to deal with someone who uses a wheelchair, who is hearing or visually impaired, or who is handicapped in another way? Knowing about any service restrictions before using a center may help prevent problems.

The Marketing Plan

  • Marketing ideas and Strategies for your Adult Daycare

In general, the more specific you can get with your plan, the more effective you’ll be in its implementation. Try and keep it concise and don’t make your marketing strategy so lofty and broad that it’s unattainable. This plan will guide your actions, but it will also be a measure by which you determine whether you’re succeeding or failing at eldercare. You don’t want to set yourself up for failure from the outset.

The first step to any marketing strategy is to establish objectives and goals that you hope to achieve. Having these objectives also allows you to quickly react when your campaigns are not meeting your expectations. Without these goals, you have no means of gauging your success and no means of proving your return on investment.

These goals should be aligned with your broader marketing strategy, so that your social media efforts all drive towards business objectives. If your marketing strategy is shown to drive business goals forward, you’re more likely to get executive buy-in and investment. They should also go beyond vanity metrics like retweets or Likes, in favour of more advanced metrics like leads generated, sentiment or website traffic referred. Strive to approach these goals using the SMART approach, meaning they should all be specific, measurable, attainable, relevant and time-bound.

A simple way to start your marketing plan is by writing down at least three eldercare goals. Make sure to ask yourself what the goal will look like when completed, and use that to determine how you will track it.

Possible Competitive Strategies for Winning Competitors in the Adult Daycare Industry

Think about your competition broadly. People may not have a social network to interact as you plan, but they are online and interacting already. Consider forums, question and answer sites, social sharing sites, and general networks all to be part of your competition.

Carefully profile your most direct competition. Have someone on your team join and interact there. Understand their strengths and weaknesses. Create a table that compares major features and costs of the competition.

Strategies to Boost Brand Awareness and Create a Corporate identity for your Adult Daycare

Successful business owners know that generating lucrative sales goes beyond having a product to sell. The success of your business also relies on how effective you are in creating greater visibility and awareness for your brand, products or services with targeted customers. Those with huge marketing budgets can go for the traditional route and spend a fortune advertising on radio, TV and print collaterals.

In a rapidly evolving digital age, businesses can get the same or even better visibility and exposure for their brands through digital marketing channels – foremost of which is social media – at the fraction of the cost traditional media requires.

Creating greater awareness for your brand can be a bit challenging particularly for small and medium businesses, but emerging social media platforms can help level the playing field – giving your business potential access to more than 2.046 billion active social media accounts.

Creating a Suppliers/Distributors Network for your Adult Daycare

There are professionals in the community who find appropriate accommodations for the elderly. These referral sources include the county conservators, hospital discharge planners, rehabilitation center discharge planners, day care centers, senior citizen centers, home care agencies, and independent case managers.

Remember to also mail a brochure describing your elder care business along with a cover letter announcing the opening of the new facility. This can be followed up with a phone call and a request for referrals. Place a continuous ad in the local “senior” newspaper and advertise in the yellow pages.

Build a relationship with doctors, clinics and hospitals that can provide referrals, network with senior center events, engage in word of mouth; TV, radio and print ads, professional website, community connect events.

Tips for Running your Adult Daycare Business Successfully

It takes a special type of person to work with seniors. “You have to be a people person and have very good judgment dealing with people and the issues surrounding them,” says Allen Hager, founder of non-medical home care franchise Right at Home. “Whether you are working with clients, caregivers, family members, or with the professionals who are referring you the business, there is going to be very intense people contact.”

While many of your clients will be able-bodied and lucid, others will suffer from infirmities and varying degrees of dementia. In addition to strong management and entrepreneurial skills, if you plan to work directly with seniors, you need:

  1. Honesty and integrity. You may be trusted with access to your clients’ homes and sometimes even to their bank accounts.
  2. Even the sweetest, best-natured client will have a bad day, and you need sufficient patience to work through it.
  3. Often, providing services for seniors necessitates wearing more than one hat at a time. Be flexible and willing to shift gears at a moment’s notice.
  4. Interpersonal skills. You need to enjoy being around seniors and not be bashful about making conversation. At the same time, you need to be a good listener. Many seniors like to reminisce about earlier times in their lives, and they have some truly interesting stories to tell.
  5. Reliability and punctuality. Your clients will appreciate being able to depend on you to pick them up on time or keep appointments as promised.
  6. You need to be able to demonstrate understanding and encouragement with seniors whose capacities are failing.
  7. You can be a tremendous asset to your elderly clients by having information about various services available to senior citizens, both locally and nationwide.
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