Are assisted living facilities profitable? What are the pros and cons of starting an assisted living facility business? Here is everything you need to know. An Assisted living facility is a conducive facility designed basically for the elderly/aging people who need care and assistance.
The facility is usually in a secure and less noisy area. It is usually well furnished with beddings, furniture, fittings and other things that can add to the comfort and ambience of the facility; a place that can be conducive for elderly people.
The essence of assisted living facilities is to provide accommodation strictly for rent to only elderly people who would need people to help them carry out some domestic tasks that they can no longer do on their own. Nurses are assigned to these facilities to help take care of the elderly people because some of them may be battling one sickness or another.
Businesses in the Assisted Living 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. Any business that mainly provides skilled nursing is not included in this industry.
Pros of Owning an Assisted Living Facility Business
1. Support from Government and Charity Organizations
One of the advantages that encourage entrepreneurs to start their own assisted living facility business is the fact that the business can easily get support from the government and the business is indeed a profitable venture despite the legislature governing the industry. If you start your assisted living facility business in the United States, you can explore ways to get support from the government and from charity organization.
2. The Business is Recession Proof
Another advantage of owning an assisted living facility business is that the business is recession proof. The fact that people will always grow old and also the fact that there is a wide range of clienteles ranging from parents with disabled kids and kids with special need, and people generally who cannot take care of themselves due to accident or one form of disability or the other means that an assisted living facility will always be in demand.
3. Opportunity to Specialize on a Niche
Although most assisted living facilities tend to operate general service, but that does not in any way stop operators in this industry to choose a niche and build their business around it. One good thing about choosing a niche when operating an assisted living facility is the fact that you can monopolized the market in that area and make good money from it.
You have the options of specializing on Continuing care retirement communities, Assisted living facilities and homes for the elderly, Independent-living facilities, Providing room and board for people with special needs, Nursing and other supervision, Assistance in daily living, Home Medication Management and Personal Assistance Services.
4. Less Competitive
Another advantage of owning and operating an assisted living facility business is the fact that the business is less competitive. This is due to the fact that aside from the fact that it is capital intensive to start, it is also difficult and energy consuming to take care of elderly people. As a matter of fact, you will come across some counties without assisted living facilities despite the fact that there are loads of old people there.
5. Favorable Market Trend
One thing is certain in the assisted living facility industry, the fact that there are growing aging population in the United States, it will continue to benefit the industry. The trend in the industry is that players are now flexible enough to adjust their services and facilities to attract more knowledgeable and educated residents by incorporating more technology and adapting to new markets.
Another trend in the industry is that in other to make assisted living facilities more affordable for low income individuals, many states in the United States of America are enacting changes to the portion of Medicaid which can be applied to Assisted Living Facilities.
Before now, only individuals living in nursing homes were typically provided Medicaid assistance, but in recent time, there are now a growing number of states that have recognized the importance of offering Medicaid dollars to senior citizens living in Assisted Living Facilities.
Cons of Owning an Assisted Living Facility Business
a. Requires Hard Work
Setting up an assisted living facility requires hard work and serious planning. You are expected to apply and obtain permit and license to run such facility, and your facility must meet the required health and safety standards before you can be allowed to operate.
Aside from well – trained domestic employees that will be on your payroll, you will also need to hire nurses. Starting an assisted living facility business is indeed capital intensive, but at the same time it is a lucrative business. You are rest assured to make good returns on your investment because there will always be need for your service since people grow old daily.
b. High Startup Cost and Running Cost
Running an assisted living facility can gulp quite a lot. This is because of the various things that are involved. They include renting a facility, paying the workers, furnishing the facility, feeding, as well as some other very essential things that cannot be neglected.
It is for this reason that you may need to source for funds. If you have a great savings culture and have been able to save the amount involved, then that is fine. If not, there may be banks and microfinance banks to turn to for a loan. Also, there are angel investors that may be very interested in supporting your business.
c. Difficulty in Hiring and Retaining Staff
Assisting individuals with daily living activities can be an overwhelming undertaking which is why most staff members usually resign after a short period of time. This is due to the fact that working as caregiver can be physically tasking.
An assisted living facility provides assistance to individuals by administering medications, preparing meals, doing household tasks and assisting with physical exercise et al. If you have assisted individuals with daily living activities or are interested in doing so, an assisted living business might be a great business for you.
d. Hurdles Involved in Securing Licenses and Certifications
One of the bottlenecks involved in starting an assisted living facility business in the United States is overcoming the challenges of obtaining the right type of licensing and certifications. All states regulate assisted living facilities in some capacity.
License and regulation can be grouped into three basic categories: 1) states that regulate assisted living facility licensure, 2) states that regulate assisted living facility standards of care, and 3) states that create a cause of action against assisted living facilities. Again, almost all licenses, permits and regulations needed to own an assisted living facility is handled at state and local level.
First you will have to file an application on behalf of your business, and then receive a certificate of authority to do business. Not only will your healthcare providers need to be licensed and comply with all regulations, but your facility will have to be up to state standards, as well. Most states put all the information you will need on their own website.
e. Multiple Levels of Regulations and Compliance
Generally, it is difficult to classify the legal requirements as it relates to assisted living facilities This is majorly because regulation and legal requirements concerning assisted living facilities are completely fragmented, existing almost exclusively on a state-by-state basis.
It is clear that individual state regulation bears serious examination, especially with respect to regulations defining assisted living facilities standards of care, as well as applicable licenses and permits. Presently however, assisted living facilities face a much higher degree of legal risk in more traditional areas of common law tort, particularly negligence. Similarly, claims or questions may arise from contract – based theories.
Those assisted living facilities that deal in some small way with public payers like Medicare and Medicaid may be impacted by the federal government, and the otherwise overwhelming discretion given to assisted living facility owners may also implicate some ADA concerns.
How Much Do Assisted Living Facilities Charge for Their Services?
Assisted living facilities make money by charging residents a fee for staying in the facility. This cost is applied on a per – month or per – year basis. In general, assisted living facilities can charge between $2,000 and $4,000 per resident per month. But note that the exact cost depends on the location and the quality of the facility. Possible profit level in this business depends on the size of the facility as well as its amenities.
If you have a large facility with top – notch amenities and maintain full capacity, profits have the potential to reach the six – figure mark or higher. If you build a true brand and open additional assisted living facilities at new locations, it is possible to make millions of dollars in profit.
However, certain state permits and licenses may be needed to operate an assisted living home. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
But over and above, assisted living facility business is a profitable business and this can be supported by available statistics which shows that in the United States of America alone, there are about 18,076 licensed and registered Assisted Living Facility businesses responsible for employing about 909,415 employees and the industry rakes in a whooping sum of $62bn annually with an annual growth rate projected at 3.7 percent.
No matter how attractive and profitable a business is, there are always pros and cons of owning such business hence the need to weigh your options before starting the business. In this article, we will be looking at the pros and cons of owning an assisted living facility business and they are;