Do you want to start a nursing home and want to know the cost breakdown? If YES, here are 13 factors that affect the cost of opening a nursing home. When it comes to caring for people who can’t take care of themselves, there are several options and one of them is to take them to a nursing home care facility.

Basically, a nursing home care facility is a private residence for the elderly, children or young people who cannot live with their families due to obvious reasons, or people with chronic disabilities who may be adults or seniors and can’t take proper care of themselves if left to live alone.

The basic things needed to be able to operate a nursing home facility could range from getting a license to even getting a certification. Some countries consider these as the basics, while in some other countries you could get a waiver for it if you are able to meet other criteria.

In starting a nursing home facility, you will be expected to have a standard facility with the required rooms to accommodate your residents, and nursing/first aid kits et al and they are same prices in any of the countries listed above, especially when bench–marked against the US Dollars.

Other factors that may be slightly different in terms of costing when it comes to starting a standard nursing home business in any of the countries listed above are cost of labor, cost of transportation and logistics, local tax, insurance policies, branding and promotion, business incorporation fee, permits and license and rent/leasing amongst other factors.

Over and above, when it comes to starting a medium scale nursing home business, you should be prepared to either rent or lease a standard facility designated for such business; this is going to be one of the areas where you are expected to spend the bulk of your start-up capital.

Estimated Cost Breakdown to Start a Nursing Home in 2022

These are the key expenses you are expected to make when starting a medium scale but standard nursing home business in the United States of America;

  1. The total fee for registering the business in the United States of America – $750.
  2. Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
  3. Marketing promotion expenses for the grand opening of the nursing home in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
  4. The cost for hiring a business consultant (including writing business plan) – $2,500.
  5. The cost for insurance (general liability, theft, workers’ compensation and property casualty) coverage at a total premium – $30,400.
  6. The cost for leasing a standard facility in a good, centralized and serene location – $350,000
  7. The cost for remodeling the facility – $100,000.
  8. Other start-up expenses including stationery ($500) and phone and utility(gas, sewer, water and electric) deposits – ($6,500).
  9. The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
  10. The cost for start-up inventory and equipment (Stocking with a wide range of products such as toiletries, food stuffs and drugs, staff uniform et al) – $150,000
  11. The cost for store equipment (cash register, security, ventilation, signage) – $13,750
  12. The cost of purchase and installation of CCTVs: $5,500
  13. The cost for the purchase of furniture and gadgets (Beds, First Aid Kits, Hand gloves, Telephone, fax machine, printing machines, computers, flat screen TV, sound system/radio, tables and chairs et al) – $25,000.
  14. The cost for building and hosting a website – $600
  15. The cost for opening party – $8,000
  16. Miscellaneous – $10,000

You will need an estimate of seven hundred and fifty thousand dollars ($750,000) to successfully set up a medium scale but standard nursing home business in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with the potential of owning more than one outlet in key locations within same region.

Starting a small scale but standard nursing home business that can only accommodate a handful of people per-time in just one location in the United States of America will cost about two hundred and fifty thousand dollars to five hundred thousand dollars ($250,000 to $500,000).

When it comes to starting a standard and large scale nursing home business with several facilities in key cities in the United States of America, a nursing home that can accommodate over fifteen people per-time and a nursing home with the intention of selling franchise and also offering complimentary services, then you should look towards budgeting well over two million, five hundred thousand dollars ($2.5 million).

Having said that, here are some of the factors that will influence the cost of opening a nursing home in the United States of America;

13 Factors That Determine How Much It Cost to Open a Nursing Home Business

1. The Type of Nursing Home

A major factor that will determine the overall cost of opening a nursing home in the United States of America is the type of nursing home the owner of the business wants to start. There are different types nursing homes and they are;

  • Independent Living Community

Independent living communities offer the least health care, but the most freedom. They aim to ease the burden on their residents without intruding in their lives. Many offer different types of living arrangements, from small apartments to houses.

Assisted Living Facilities are a step up from independent living communities with regard to care provided. In other words, they assist with a greater degree of your daily tasks. Often, assisted living helps you with bathing, meals, and dressing, or provides supervision.

  • Skilled Nursing Facility

If you feel you need more help for your medical and daily needs, a skilled nursing facility is probably your best option. Often called “nursing homes,” these facilities provide 24-hour health care from licensed nurses, as well as access to registered nurses (RNs) and certified nursing assistants (CNAs).

  • Continuous Care Retirement Community

If you’re not sure which type of facility you need, or suspect your needs will change, a Continuous Care Retirement Community (CCRC) may be a good option. CCRCs are campuses that combine the services of all the other care facilities. These different types of nursing home comes with different cost implications when starting the business.

2. The Choice of Location

Another major factor that will determine the cost of opening a nursing home in the United States of America is your location. As a matter of fact, there are business consultants cum realtors who are specialized in helping people choose an ideal location for their type of business; a location that will guarantee them to profitability.

So, you will now agree that location can influence the cost of starting a nursing home business not just in the United States of America but anywhere in the world.

For example, renting or leasing a nursing home facility in a location that is off the city center or off residential estate will be less expensive when compared to renting or leasing a nursing home facility in a well – populated growing residential estate; a location in an ideal cozy and serene environment, a location in a metropolitan city with the right demographic composition of families and old people who can afford to pay for your services.

3. The Required Licenses and Permits

In the United States of America, you cannot open a nursing home without first applying for the mandatory licenses and permits. Of course, you would need accreditation certificate, building license, zonal permits, signage permits amongst others.

These license and permits cost money and it will influence the overall cost of opening a nursing home in the United States of America. Please note that there may be several inspections you must pass before you can be issued your licenses and permits – this will also cost you money.

In order to get the overall cost of licensing and permits associated with opening a new nursing home in the United States, we will advise that you reach out to your city government to find out what you need for your nursing home. You also need to consider state and federal requirements.

4. The Type of Facility

The type of facility you want to run your nursing home business from is also a major factor that will determine the overall cost of opening a nursing home in the United States of America. As regards the facility, you have the options of renting, leasing or designing and constructing your own nursing home facility from the scratch.

With renting and leasing, you might just have to spend extra to modify the facility to fit into the number of rooms, waiting room, assembly hall, playing space and dining halls and library or gym you want to have, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants.

Let us assume that you want to construct your nursing home facility from the scratch. It means that you will buy the land or a property, construct and equip the nursing home facility. With that, you will agree that you are going to spend way more when compared to people that rent or lease a facility. This indeed will greatly influence the overall cost of opening your nursing home.

5. The Number of Residents They Want to Admit

Another very important factor that determine the cost of opening a nursing home in the United States of America is the number of residents they intend accommodating or admitting per time. No doubt, there are nursing homes that can accommodate over 50 residents per time and there are others that can only accommodate less than 100 residents.

Aside from renting or leasing a facility to accommodate the number of residents and staff members you want, it will also cost you more to furnish and equip the nursing home and the more the number of residents the nursing home can accommodate, the more the money that you are expected to spend to set up and run the home.

6. The Cost of Hiring and Paying a Business Consultant and Attorney

As expected, if you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. For example, a business consultant will help with drafting a workable business plan document, a marketing plan and strategy, comprehensive SWOT analysis and other advisory services.

So also, an attorney will help you with registering the business, drafting contract documents and offer you all the legal expertise that will help you start the business on the right foundation. Of course, you will agree that these services will cost you money and it will indeed influence the overall cost of opening a nursing home in the United States of America.

7. The Cost for Branding, Promotion and Marketing of the Nursing Home

The cost for branding, promoting and marketing the nursing home is yet another key factor that will determine the overall cost of opening a nursing home in the United States of America. Trust me, if you need massive results as it relates to competing and winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your new nursing home.

It is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction of the nursing homes industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your nursing home.

8. The Cost for Furnishing and Equipping the Nursing Home

Another very important factor that will determine the cost of opening a nursing home is the cost for furnishing and equipping the facility. You will quite agree that aside from the basic facilities that are expected to be found in a nursing home, an investor that wants to open a nursing home may decide to spend more to equip the facility to look unique.

You should budget and buy chairs and tables, beds, projectors, flat screen TVs, sound system, DVD players, Satellite dish and decoder, office furniture (table, stools and sofas), drawers and cabinets, telephones, filing cabinets, office equipment (cash register, security and fire alarm and protection gadgets, CCTV, ventilation, signage), and sports / gym equipment and wares amongst others.

All these will cost money and it will influence the overall cost of opening a nursing home in the United States of America.

9. The Cost of Insurance

The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a nursing home in the United States of America. In the United States and in most countries of the world, you can’t operate a business without at least liability insurance and general insurance.

Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own nursing home business.

10. The Cost for Registering the Business

The cost for registering the nursing home business is yet another cost that will influence the overall cost of opening a nursing home in the United States of America. Although, the cost of registering a business an obtaining all the needed document that will give you the leeway to operate without any obstacle is affordable, it will no doubt add to the overall cost of opening a nursing home in the United States of America.

11. Source of Your Supplies and Ongoing Expenses

Another major factor that will determine the cost of opening a nursing home in the United States of America is the source of your supplies such as medications, office supplies, toiletries and food supplies. For example, if you have access to manufacturers of the type of medications, office supplies, toiletries and food supplies that you would need, it will sure cut down the cost of running the nursing home as against buying your supplies from retailers.

12. Cost of Recruiting and Training Your Staff

The fact that you are opening your nursing home as a new business means that you are expected to recruit and train your staff. The training will help you sell the corporate culture of your organization to the new employees. As expected, it will cost you money to hire expert trainers that will help you train and bring your new hires up to speed and that will add to the overall cost of opening a nursing home.

13. The Cost of Purchase and Customizing of Uniforms

Another factor that will determine the overall cost of opening a nursing home business in the United States is purchase and customizing of uniforms, shoes, and caps amongst others. As expected, your staff and security personnel are expected to have uniforms and they are expected to put on these uniforms when on duty.

All these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a nursing home in the United States of America.

14. The Cost for Grand Opening of the Nursing home

In recent times, no nursing home opens its door for business without first organizing an opening party to officially launch the business. This means that the cost of grand opening will determine the overall cost of opening a nursing home business in the United States of America.

You can choose to do a soft opening if you operating on a low budget or you can choose to go for grand opening party. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the nursing home.

Can a Nursing Home be Bootstrapped on a Lean Budget?

Although it is almost impossible to bootstrap a nursing home business on a lean budget, but the business can indeed be run from your home. This is possible if you have the required facility that conforms to the expected standard by the regulating authority in your city.

The fact that you have to employ key professionals such as nursing aides and caregivers and other essential staff members, means that you cannot successfully run a business such as nursing home on a lean budget. 

How Much Does It Cost to Buy a Nursing Home Franchise?

In the United States of America, the Average Cost of Purchasing a Nursing Home Franchise is $20,000. Examples of 3 Well – Known Nursing Home Franchising Companies in the United States of America are;

  1. BeeHive Homes/Nursing Home Franchise
  2. Home Instead Senior Care Franchise
  3. Home Helpers Franchise

In Conclusion,

Please note that there are other factors not listed above that will sure influence the overall cost of opening your nursing home which is why we will advise that you work with a result driven business consultant to give you the needed guide and info as it relates to the unique factors in your location that will influence the overall cost of opening your nursing home.

Frequently Asked Questions

  1. How Do You Start A Nursing Home?
  • Conduct your market survey and feasibility studies
  • Learn everything you need to learn about owning and operating a nursing home
  • Choose a name and register the business
  • Draft a detailed Business Plan and market strategy
  • Secure the needed licenses and permits / Obtain Medicare and Medicaid certifications
  • Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
  • Open a corporate bank account
  • Lease or rent and equip a nursing home facility
  • Hire employees
  • Promote and Market your nursing home facility
  1. What Is The Main Purpose Of A Nursing Home?

Nursing home essentially provides accommodation and personal care services for elderly people and of course other individuals who are unable to fully care for themselves due to ailment or disability. Businesses in the Nursing Home Care industry provide a significant range of services such as independent living, assisted living, skilled nursing and a combination of these, which are usually referred to as continuing care retirement communities.

  1. Do You Have To Be A Nurse To Manage A Nursing Home?

In most countries yes.

  1. What Insurance Covers Nursing Homes?

Medicaid covers nursing homes. Medicaid is a joint federal and state program that helps with medical costs for some people with limited income and resources. Most health care costs are covered if you qualify for both Medicare and Medicaid. Most, but not all, nursing homes accept Medicaid payment.

  1. How Much Does It Cost To Start A Nursing Home?

Starting a small scale but standard nursing home business that can only accommodate a handful of people per-time in just one location in the United States of America will cost between $250,000 and $500,000.

  1. What Are Some Key Signs That It May Be Time For Nursing Home Care?
  • Falls or physical injuries.
  • Increased phone calls — especially at night.
  • Personal hygiene becomes an issue.
  • The house and/or garden is a mess.
  • Changes in mobility.
  • Medication is piling up.
  • Eating habits have changed.
  1. Is Owning A Nursing Home Profitable?

Yes, it is. As a matter of fact, a new report lists home health care as one of the top five most profitable franchises in the U.S.

  1. What Is The Most Important Thing To Look For When Choosing A Nursing Home?

The most important things to look out for when choosing a nursing home are the quality of the staff, their attitude towards their residents, the quality of the facility and perhaps the number of staff to resident ratio.

  1. What Is Difference Between Nursing Home And Hospital?

A nursing home is a place for people who don’t need to be in a hospital but can’t be cared for at home. One difference is that hospital care is aimed at finding a cure, but a nursing home does not typically cure illnesses. Residents in nursing homes usually do not have acute, singular problems that have a cure.

  1. How Long Can You Stay In A Nursing Home With Medicare?

Medicare covers care in a nursing home for up to 100 days in a benefit period if you continue to meet Medicare’s requirements.

  1. Can Nurses Start Their Own Businesses?

Sure, nurses have the liberty to start their own business and as a matter of fact, there are loads of business opportunities that a nurse can start.

  1. How Long Does A Person Live In A Nursing Home?

The average age of participants when they moved to a nursing home was about 83. The average length of stay before death was 13.7 months, while the median was five months. Fifty-three percent of nursing home residents in the study died within six months.

  1. What Happens To Your Social Security Check When You Go Into A Nursing Home?

Whatever their age, when individual SSI recipients live in nursing homes, the amount of SSI that they receive each month is affected. In a nutshell, if you move to a nursing home where Medicaid pays for part of your stay, your SSI benefit may be terminated or lowered.

  1. What Qualifications Do You Need To Run A Care Home?

Currently, there is no need for a registered care home manager to hold a particular professional qualification, although Skills for Care (the adult social care skills council) recommend a Level 5 Diploma in Leadership for Health and Social Care and Children’s and Young Peoples’ Services.

  1. What Makes A Good Manager In Care?

To work in the care sector, you must be caring, have large amounts of patience and resilience, be reliable, be trustworthy, have good communication skills and be ready to listen.

  1. What Are The Signs Of Nursing Home Abuse?
  • Bed injuries/asphyxiation.
  • Emotionally upset or agitated, extremely withdrawn and non-communicative.
  • Falls, fractures or head injuries.
  • Instances of wandering/elopement.
  • Pressure ulcers (bed sores)
  1. What Is The Average Cost Of A Nursing Home By State?
  • State – Semi-Private – Private
  • Alabama – $6,540 – $6,911
  • Alaska – $37,413 – $36,378
  • Arizona – $6,844 – $8,213
  • Arkansas – $5,931 – $6,540
  • California – $9,247 – $11,437
  • Colorado – $8,517 – $9,733
  • Connecticut – $12,927 – $13,992
  • Delaware – $12,349 – $12,699
  • District of Columbia – $12,471 – $14,357
  • Florida – $8,669 – $9,817
  • Georgia – $6,722 – $7,173
  • Hawaii – $12,015 – $13,802
  • Idaho – $8,669 – $9,125
  • Illinois – $6,235 – $7,026
  • Indiana – $7,133 – $8,486
  • Iowa – $6,570 – $7,148
  • Kansas – $6,692 – $7,026
  • Kentucky – $7,330 – $7,939
  • Louisiana – $5,536 – $5,840
  • Maine – $9,642 – $10,615
  • Maryland – $10,190 – $10,646
  • Massachusetts – $12,623 – $13,535
  • Michigan – $8,973 – $9,733
  • Minnesota – $11,026 – $12,025
  • Mississippi – $7,057 – $7,148
  • Missouri – $5,080 – $5,749
  • Montana – $7,665 – $8,273
  • Nebraska – $7,194 – $7,931
  • Nevada – $9,262 – $10,585
  • New Hampshire – $10,646 – $11,315
  • New Jersey – $11,254 – $11,863
  • New Mexico – $7,406 – $8,304
  • New York – $12,319 – $12,927
  • North Carolina – $7,300 – $8,060
  • North Dakota – $12,167 – $12,764
  • Ohio – $7,148 – $8,213
  • Oklahoma – $5,323 – $5,779
  • Oregon – $10,114 – $11,178
  • Pennsylvania – $10,038 – $10,828
  • Rhode Island – $8,669 – $10,220
  • South Carolina – $7,298 – $7,861
  • South Dakota – $7,011 – $7,521
  • Tennessee – $7,072 – $7,619
  • Texas – $5,019 – $6,388
  • Utah – $6,388 – $8,365
  • Vermont – $9,779 – $10,311
  • Virginia – $7,665 – $8,821
  • Washington – $9,581 – $10,950
  • West Virginia – $11,376 – $12,136
  • Wisconsin – $8,684 – $9,429
  • Wyoming – $8,258 – $8,714
  1. How Do People Afford Nursing Homes?

People afford nursing homes from their savings, from family members and friends, from pension funds, from Medicaid and from free donations from NGOs and charity organizations et al.

  1. How Do You Start A Small Assisted Living Home?
  • Conduct your market survey and feasibility studies
  • Learn everything you need to learn about owning and operating an assisted living facility
  • Choose a name and register the business
  • Draft a detailed Business Plan and market strategy
  • Secure the needed licenses and permits / Obtain Medicare and Medicaid certifications
  • Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
  • Open a corporate bank account
  • Lease or rent and equip an assisted living facility
  • Hire employees
  • Promote and Market your assisted living facility
  1. Do Nursing Home Provide Three Nutritionally Balanced Meals A Day, Seven Days A Week?

Yes, nursing homes provide three nutritionally balanced meals a day, seven days a week for their residents. As a matter of fact, nutritional guidelines and menu checklist for residential and nursing homes is mandatory.

  1. What Happens When You Run Out Of Medicare Days?

Medicare will stop paying for your inpatient-related hospital costs (such as room and board) if you run out of days during your benefit period. To be eligible for a new benefit period, and additional days of inpatient coverage, you must remain out of the hospital or SNF for 60 days in a row.

  1. Are Family Members Responsible For Nursing Home Bills?

In most cases, Yes. Family members are responsible for nursing home bills.

  1. What Happens If You Can’t Afford A Nursing Home?

If you need to go to a nursing home but can’t afford it, Medicaid kicks in to pay for it. The rules get complicated and they vary by state, so to get a clear picture of your family’s situation you’ll need to consult your state Medicaid agency or an attorney.

  1. What Is The Difference Between Care Home And Residential Home?

Residential homes are generally used when a person becomes highly dependent on others for assistance with personal care and general daily tasks. Residential care homes are frequently termed as elderly care homes since many of the residents tend to be seniors who are finding independent living increasingly difficult.

  1. Who Pays For Nursing Home If You Have No Money?

Medicaid, your family members and friends and NGOs and charity organizations.

  1. What Are The Different Types Of Care Homes?
  • Respite Care
  • Convalescent Care.
  • Dementia Care.
  • Disability Care.
  • Palliative Care.
  1. What Is The Procedure For Assessing A Potential Resident’s Need For Services?
  • Assess your needs.
  • Know what questions to ask.
  • Take a tour of the facility.
  • Study the fees and the contract.
  • Find out about the staff.
  • Look into the medical services.
  • Find out what types of activities are offered.
  • Observe the staff in action.
  • Look for accreditation or licensing reports.
  1. How Much Money Can You Keep Going Into A Nursing Home And Still Have Medicaid Pay For Your Care?

You would need to keep about $2,000. Please note that gifting your assets to someone else may not protect it and may incur penalties when applying to Medicaid.

  1. What Training And Certifications Are Needed To Work With The Elderly?

These senior care certifications and trainings can improve your career;

  1. What Kind Of Home Care Does Medicare Pay For?

Medicare does pay for home health services like physical therapy, occupational therapy, speech therapy, skilled nursing care, and social services if you’re homebound after surgery, an illness, or an injury.

  1. Does A Doctor Or Nurse Visit The Resident Regularly To Provide Medical Checkups?

Yes, doctor or nurse usually visit the resident regularly to provide medical checkups on them. It is part of what they pay for.

  1. Does A Nursing Home Reveal What Services Are Covered In The Quoted Fee And What Services Are Extra?

Yes, it is the practice of nursing homes to reveal what services they cover in their quoted fee and also the extra services they render.

  1. What Do Physical And Occupational Therapists Do In Assisted Living Facility?

Physical therapy (PT) and occupational therapy (OT) are types of rehabilitative care. While they have similar goals and treat many of the same conditions, they also differ. PT focuses on restoring or improving movement, strength, and range of motion. OT aims to improve the motor skills you need to perform daily tasks.

  1. How Much Does Medicare Pay For Home Health Care Per Hour?

A nurse, therapist or social worker may cost $70.00 to $100.00 an hour. An aide to take care of daily living needs, so called activities of daily living, may cost $10.00 to $25.00 an hour.

  1. What Is The Importance Of Good Assessment As An Initial Step In Nursing Care?

Assessment is the first part of the nursing process, and thus forms the basis of the care plan. The essential requirement of accurate assessment is to view patients holistically and thus identify their real needs.

  1. Why Is Nursing Home Care So Expensive?

Nursing home care are so expensive because those that offer such cares are paid very well and also, medications and other supplies can be expensive.

  1. How Much Do Care Home Managers Get Paid In UK?

The average salary for Care Home Manager jobs is £32,500. Read on to find out how much Care Home Manager jobs pay across various UK locations and industries.

  1. How Much Do You Get For Working In A Care Home In UK?

Average Care home hourly pay ranges from approximately £8.90 per hour for Care Assistant to £16.10 per hour for Registered Nurse; £18,749 per year for Finance Assistant to £32,034 per year for Registered Manager.

  1. Is Home Based Care More Expensive Than Hospital Care In The Long Run?

The average home health care cost varies depending on the provider you choose. In most cases, though, in home care is significantly more affordable than seeking hospital care. Research shows that acute care for an in-home patient can cost, on average, 52 percent less than care in a hospital setting.

  1. What Are The 3 Most Common Complaints About Nursing Homes?
  • Slow responses to calls.
  • Poor food quality.
  • Staffing issues