Are you interested in starting a home healthcare business for seniors? If YES, here is a complete guide to starting a home healthcare agency with NO money and no experience.
Okay, so we have provided you an in-depth sample home healthcare agency business plan template. We also took it further by analyzing and drafting a sample home healthcare agency marketing plan backed up by actionable guerrilla marketing ideas for home healthcare agencies.
Table of Content
- 1 What is a Healthcare Agency?
- 2 What Does It Take to Start a Home Healthcare Agency Successfully?
- 3 Industry Overview
- 4 Interesting Statistics About the Home Healthcare Industry
- 5 Market Research and Feasibility Study
- 6 List of Niche ideas Within the Home Healthcare Industry
- 7 List Of Well – Known Brands in the Home Healthcare Industry
- 8 Buying a Franchise vs Starting a Home Healthcare Agency from Scratch
- 9 Possible Threats and Challenges You Will Face When Starting a Home Healthcare Agency
- 10 Best Legal Entity to Use for a Home Healthcare Agency
- 11 The Best Insurance Needed for a Home Healthcare Agency
- 12 Is Professional Certification Needed to Start a Home Healthcare Agency?
- 13 Legal Documents You Need to Run a Home Healthcare Agency
- 14 Writing a Business Plan for Your Home Healthcare Agency
- 15 Detailed Cost Analysis for Starting a Home Healthcare Agency
- 16 Financing Your Home Healthcare Agency Business
- 17 Choosing a Suitable Location for a Home Healthcare Agency
- 18 Technical & Manpower Details
- 19 The Service Process in a Home Healthcare Agency Business
- 20 Marketing ideas and Strategies for a Home Healthcare Agency
- 21 Factors That Will Help You Get the Right Service Pricing
- 22 Possible Competitive Strategies for Winning Your Competitors
- 23 Strategies to Boost your Brand Awareness and Create a Corporate identity
- 24 Creating a Suppliers/Distribution Network
- 25 Tips for Running a Home Healthcare Agency Successfully
What is a Healthcare Agency?
Home care agencies are those that care for the aging population, and how this segment of the population preferred to be cared for in their homes. However, there are two types of home healthcare agencies – medical and non-medical. Non-medical home healthcare agency services mainly include personal care, meal preparation, and assistance with daily living activities, housekeeping and transportation.
Medical skilled home healthcare agencies administer skilled licensed nursing and rehabilitation therapy services that are usually under the orders of the physician with imposed strict guidelines. This type of home healthcare agency requires extensive licensures that usually include Medicare and Medicaid certifications.
However, most people that start up in this business prefer to venture into the less complicated non-medical home care venture because the start-up cost is usually lower than that of the medical field.
What Does It Take to Start a Home Healthcare Agency Successfully?
In starting this business, you would have to decide if you want to start off on your own or team up with others already in the field. Each decision has its own pros and cons, and you would have to think carefully before venturing into this field. If you elect to start off on your own, you would need a detailed business plan of how you intend to start, grow and operate the business.
A medical background or formal training isn’t required to own and manage a home healthcare agency. The success strategy of this business requires strong communication, organization skills with a well planned business strategy. Licensure usually varies depending on the state and is not so complicated so as not to discourage those that intend to start off in this field.
In setting up this business, you would need a location that the population using your agency can afford, and doesn’t have excessive competition from other healthcare agencies. It doesn’t have to be in a high traffic commercial area, and should be in a place easily accessible to your employees.
Starting a Home Healthcare Agency Business for Seniors – A Complete Guide
The home healthcare agency business usually includes medical and skilled nursing services; such as medical equipment, supplies, and medication services; personal care such as bathing and transportation; therapeutic services such as physical and respiratory therapy and psychosocial services like counseling and spiritual care.
Interesting Statistics About the Home Healthcare Industry
37% of the industry’s revenue accrue from traditional bundled home care and includes rehabilitative services; home hospice care is about 23% and home nursing 21%. The growths in this industry are driven by patients’ preference for in-home care, as well as developments in portable medical technologies.
Effective marketing, efficiency in operations and reputation is what determines the profitability of individual companies. The industry in the United States is highly fragmented as the 50 largest companies account for just 25% of revenue.
According to research and statistics, the revenue of the industry is $84 billion and annual growth between 2010 and 2015 has been at a 4%. Nearly 1.8 million people are being employed in this field, with home healthcare businesses amounting to 386, 384. In 1990, there were 11 caregivers for every family that needed care, by 2050; the projected ratio is four to one.
As at 2010, there were 12 million patients and more than 428 million patient visits each year. As at 2008, home healthcare providers drove more than 8 billion miles to provide care to their clients. By 2011, growth among employees had grown to an average of 50%. 70% of those that used healthcare agencies or services were aged 65 and older, with common medical conditions such as heart disease, diabetes, and cerebral vascular disease.
80% of those who were aged 60 and above chose to live independently, in comfort and with an enhanced quality of life. About 8 million of the elderly populations have some form of disability that requires assistance; this number is expected to be 15 million by 2020.
However, despite the industry strong growth, there have been funding from the government sources which in recent years has come under intense pressure, as Medicare and Medicaid reimbursements cuts are already threatening the industry’s revenue. The steady demand by the aging population might however see the revenue for this industry even after the cuts from the government still growing.
Market Research and Feasibility Study
- Demographics and Psychographics
When it comes to the demographic and psychographics composition of those who need the services of a home healthcare agency, it is obviously injured folks, elderly people especially those over 60 thanks to baby boomer population between 1940s and 1950s, hospitals and physicians, the government, and other person that require home care due to a medical condition.
The baby boom population will ensure that the demand for home healthcare rises, especially as more than 10,000 boomers turn 65 every day.
78% of those that are 65 and above homeowners intend to age in their own homes. Aged folks or those requiring assistance due to a medical condition usually make use of medical insurance such as Medicare and Medicaid, which is a subsidized form of medical payment from the government.
List of Niche ideas Within the Home Healthcare Industry
The services offered by home healthcare providers are usually uniformed services, and so there are no clear cut services that would differentiate a home healthcare agency from another except maybe through the individual employee that go to provide home healthcare and offers additional services that might not usually be required.
Some of the areas of specialization in the home care industry usually fall between medical, non-medical and psychosocial services which include;
- Non-medical home care
- Providing medical services using medical equipment
- Meal preparation
- Assistance in daily activities that might be required.
It is usually easier for independent home healthcare agencies to provide additional services for their clients than it is for those working under an agency.
The Level of Competition in the Home Healthcare Industry
The inclination for home healthcare by senior citizens have not gone unnoticed by entrepreneurs who are banking on filling the demand, which is expected to grow as significantly in the coming years due to the fact that the massive baby boomer generation is aging. About 4,500 franchised home healthcare entities exist in the United States.
The home healthcare business has been growing since 2010, and has not even accounted for the boomers that are expected to retire within the next 5 to 10 years. Competition is often encouraged in this industry, as it is a mechanism for increasing value for the patients. This means that competition ensures that there is provision of better products and services to satisfy the needs of clients.
Traditional competition in this industry involves one or more elements, which includes price, quality, convenience, new technology and innovation, and superior products or services. A key role of competition lies in providing a mechanism that reduces health care costs.
List Of Well – Known Brands in the Home Healthcare Industry
Brands become well known due to a number of reasons, which might include how long they have been in the industry, and their provision of services that have been satisfactory to clients. Below are some of the well known brands in the home healthcare agency industry in the United States of America:
- Assisting Hands
- Almost Family
- Addus Health Care
- Apria Health Care
- Community health Systems
- LHC Group
- National Healthcare Corp.
Before venturing into this business, entrepreneurs would do well to thoroughly investigate the industry and be certain of various factors before venturing in even though it might seem like the demand for caregivers is on the increase, one could still fail in the business if not well researched. Even though this industry is funded by the government, continuing cuts have shown that all might not be rosy if one decides to venture into the business.
It is essential to note that the demand for home healthcare agencies are mostly driven by those who are in retirement, this means that they were the baby boomer population in the 40s and 50s, and so it might be important to note that a slump might occur when the retirement age reduces and when the government funding might have also been reduced to the barest minimum.
Anyone going into this business might do well to keep their overhead costs low, while being efficient enough to generate revenue as well as profit.
Buying a Franchise vs Starting a Home Healthcare Agency from Scratch
The decision on whether to start a home healthcare business from the scratch or if to team up with a home healthcare care franchise solely depends on the entrepreneur and what you feel might be good for you in the long run. Each decision comes with its pros and cons.
Starting out on your own usually has lower start-up costs without having to pay entry or re-occurring franchise fees, with the ability to create your own business strategies that you feel will be best for your business in the short, medium or long term. This also involves you writing out a detailed business plan that will clearly show how you intend to start, operate, and grow your business.
However, even though you would need to pay an entry fee or re-occurring fees, a franchise will also provide a business model, start-up guidance and continual support. You would also get more clients using the brand name of the franchise than you would have on your own.
It is important to note that, the decision on whichever route you choose to take – either starting from scratch or buying a franchise – should solely depend on the vision and objectives of your company.
Possible Threats and Challenges You Will Face When Starting a Home Healthcare Agency
As the retirement population grows, so will the home healthcare industry but this will bring forth challenges as well. The possible challenges in this field will be in the health care reforms which recently is the Affordable Care Act (ACA), which 60% of care providers say is a threat both to the industry and their businesses.
Another challenge is in finding qualified staff, especially as research shows that the demand for capable individuals will continue to lag behind the growth of the industry for at least the next five years, which shows that it is far above the supply.
Another challenge facing the industry is the continuous battle over certification and classification, especially as most home health aides are not certified but just regular people. Also workers are classified as independent contractors instead of employees to avoid paying benefits and payroll taxes.
Best Legal Entity to Use for a Home Healthcare Agency
Although, some of the considerations as to the form of business ownership is common across industries, healthcare often has certain unique entity formation requirements. For example, both federal and state laws limit the extent to which physicians and non-physicians can co-own businesses.
Some states for instance, significantly restrict the types of entities that certain kinds of healthcare providers are permitted by law to operate. Healthcare professionals would be limited by Corporations Code Section to practicing through professional corporations. Other entities are limited to a specific non-profit form.
Some of the basic requirement in starting off this kind of business is to set up a business entity. You will need to determine which business entity is best for your business needs. There are different kinds of legal entities which are sole proprietor, partnership, Limited Liability Company (LLC), S Corporation and C Corporation.
There are different ways to go about this and they include researching online on the website of your state government, consulting with an attorney and or CPA about the appropriate business structure, payroll information, sales tax, workers compensation and the liability insurance for your business.
The Best Insurance Needed for a Home Healthcare Agency
Operating a home healthcare business where patients are cared for is always risky, as things can go wrong at any time. As an entrepreneur who operates this business, the mistakes of your employees are often yours as well and eventually become your liability.
You therefore have to be prepared legally and financially for whatever might go wrong, especially as sometimes there is the limited ability to defend yourself and employees once falsely accused of patient abuse and misconduct.
Apart from difficult clients, you would also have to contend with risk of sending your employees to homes that might be unsanitary for them or where they might be subject to abuse and violence, while still subjected to work environment standards set by the Federal Occupational Health and Safety Administration.
The following are basic insurance cover that you would need to consider to successfully carry out your home healthcare agency business in the United States of America:
- General Liability Insurance
- Professional Liability Insurance
- Workers’ Compensation Insurance
- Hazard Insurance
- Business owner’s policy Insurance
Does a Home Healthcare Agency Need Intellectual Property Protection?
Proprietary advances are sometimes discovered while assisting patients at home. While there are yet intellectual property right in the healthcare sector which is seen as providing an important stimulation for the development of new drugs and medicines, there are scarce intellectual property protection in the home health care sector.
As an entrepreneur, you might consider patenting your logo and brand, or you might stumble upon a solution while carrying out help to senior citizens.
Is Professional Certification Needed to Start a Home Healthcare Agency?
To own or manage a home healthcare agency, it is not required that you have a formal training or medical background, and even though experience is highly necessary and regarded by some, it is not a prerequisite. However, stringent certification can be required from those home healthcare agencies that are purely into the medical aspect.
Licensure requirements usually vary widely from state to state for non-medical care agencies; they however are not so complex so as to discourage many from undertaking the venture.
For employees are not required to obtain formal training, those who choose to work in a certified home healthcare agency are required to possess formal training and pass a standardized test, this requirement might be due to preference or the regulations of the state where the home healthcare agency is operating.
Legal Documents You Need to Run a Home Healthcare Agency
These are some of the basic legal documents that you would need to successfully run a home healthcare agency business in the United States of America:
- Business Plan
- Business License
- Certificate of Incorporation
- Medicare and Insurance
- State Permits
- Employer ID Number
- Contract Document
- Employment Agreement
- Non Disclosure Agreement (NDA)
Writing a Business Plan for Your Home Healthcare Agency
As a matter of fact, businesses these days require a business plan, no matter how easy the business might look like. Any entrepreneur who is serious about starting a business with the aim of offering products or services, competing and also making profits, has to ensure that a business plan is prepared before the investment of hard earned money and time into the business.
If you are going to be buying into a franchise, you might not need to prepare a comprehensive or detailed business plan, but if you are staring off by yourself, this is something you will surely need. A business plan will guide you and give you a clear picture of where you are going and what you intend to achieve by starting the business.
A business plan is like a map that is needed to successfully run a business; it is the document that will influence all your business decisions and actions.
Having a business plan is not just for the sake of having a business document in place; but will help in drafting strategies that will help the entrepreneur effectively administer and manage the home healthcare agency business. The business plan should cover strategies on how start-up capital will be generated, clients attracted and how the scope of the business will be expanded. These key components must not be missing from the business plan.
Other key components that should be included in your business plan are as follow;
Executive summary which clearly states what your home healthcare agency business will be all about, the company’s corporate culture, sales and marketing strategies, marketing goals, target market and perhaps what stands you out from your competitors, It is also expected that you state your company’s vision statement, mission statement and the areas where you would likely want to cover.
Lastly, other key components such as products or service offering, SWOT analysis, marketing and sales analysis / strategies, pricing, costing and financial projection, publicity and advertising strategy, budget and start – up capital generation should be made available in the document.
Not everyone can write a detailed business plan themselves, and so you would need to employ an expert to help in writing a business plan for your home healthcare agency business, or you can download an online business plan template to be used as a guide for your home healthcare agency business.
Detailed Cost Analysis for Starting a Home Healthcare Agency
The cost analysis will depend on the route you choose to take into the industry, either buying into a franchise, buying an existing agency or starting from the scratch. Also, another major determinant will be on the scale you want to start off with, small, medium or large scale; as each scale would cost differently when starting off.
Going into the business requires you to be self disciplined and honest with yourself as regards the business and your finances. The biggest killer of any business is when they run out of cash before the business starts being profitable. Your start-up can be low or high but there must be a detailed plan of where your money would be going into.
Basically, you would need to ensure that the listed items below are taken care of if you want to start off your own home care agency in the United States of America:
- Obtaining proper license would cost $1,500
- Setting up your entity would cost $1,500
- Setting up your office which included rent and utilities, phones and communication tools, computers, internet connectivity, back office systems. Forms preparation would cost $35,000
- Uniforms for your staff would cost $2,000
- Insurance coverage would cost $3,000
- Hiring and training of caregivers would cost $3,000
- Marketing for clients would cost $2,000
- Launching an official website would cost $1,000
- Additional expenses like business cards, signage would cost $1,000
Going by the above report from different detailed sources, you will need at least $50,000 to start the home healthcare agency business on a small scale in the United States.
If you want to start a medium scale home healthcare agency business in the United States, you would need nothing less than $120,000. And if your intention is to start the home healthcare agency business on a large scale in the United States of America, then you should look towards getting well over $250,000 as your start – up capital.
Financing Your Home Healthcare Agency Business
Managing your finances is one of the most important tasks of running a home healthcare agency. No matter how much you love caring for senior citizens, it all comes to nothing if your business does not have the required finance needed for it to start-off.
Therefore, sourcing for funds for your business is a task that every entrepreneur must go through. Improving the quality of life for those like senior citizens that cannot help themselves requires highly developed skills that do not come cheap; however a sustainable business model through the use of funds is essential.
This is why it is very important to have a business plan, as they make the task of sourcing for funds easier and less complex, and makes gives your business the professional look. There are several options available depending on the type of home healthcare agency business you intend to go into:
- Funding can be gotten through working with insurance companies
- Government funded programs
- Private pay patients
- Personal savings
- Applying for loan from the bank
- Sourcing for loans from friends and family members
Choosing a Suitable Location for a Home Healthcare Agency
The business of the home healthcare agencies is an ever-growing one as the population of age diversity and senior citizens continue to increase in the United States. In looking for a place to determine the most suitable location for your business, it would help to consult the United State Census’ website. You can use the website to search by age demographic for areas near you where there is a high population of senior citizens.
Apart from using the website, you could also look for suitable locations in local publications, such as newspapers so as to find local retirement communities. These should then be your target areas when looking for a suitable place for your business.
If you do not carry out these checks and locate your business anywhere, it might be difficult for you to do business, as you or your employees might have to commute for a long distance before getting to a patient, which will automatically make your operating costs higher than it should be. Also apart from commuting, the relative of your patient might wish to get in touch at your office, and would not appreciate having to drive very far.
After finding the suitable location, you should then look for a professional office space. The ideal leasing you should consider should be between 600 square feet and 700 square feet; this is so that you would have enough room for a reception space, an office and a small conference space.
This does not mean that you go bankrupt, as you might decide to go for something smaller depending on your budget. The reason why an office is needed is due to the employees you would have as well as having clients come over or the different agencies of the government or insurance companies.
Technical & Manpower Details
The home healthcare agencies that require certain tools and equipment are those that are in the medical line, and so they might procure stethoscopes, Blood Pressure Cuffs, oxygen tanks, and first aid kits that would enable them look after their clients efficiently; you could also to keep your operating costs down, purchase some of the equipment as fairly used.
However, if yours is a non-medical home healthcare agency, you might not need all those kind of equipment except those that would help in record keeping both for your benefit and that of insurance and the health care that might be funding you like Medicaid.
These are some of the equipment that would be needed by you to start and operate your home healthcare agency business successfully:
- Home healthcare software
- First Aid Kit
Some caregivers actually operate from home by using the garage especially when they are the only ones at first or just have one or two employees. If you decide to get an office facility, especially one that can accommodate all you would need to store (filing cabinets, lockers for uniforms and so on), ensure that you get one that isn’t too far that your employees would not be able to access it as they should.
Regarding the number of employees needed to run a home healthcare agency business, it can vary depending on how you want to start off. If you want to be the only one attending to clients it at first perhaps due to finance, then you would need to scale back on the marketing, till you are able to employ more hands.
If though, you intend starting on a scale that can employ certain people, then you would need to employ an accountant, secretary, security, home care aides. This is about 5 to 10 staff.
The Service Process in a Home Healthcare Agency Business
There is no production process involved in the home healthcare agency business as this is a business where service is provided. The service process can range from providing personal care like bathing, assisting with daily living activities like dressing and feeding, preparing meals, transporting the clients and housekeeping.
The other processes involve physical therapy, occupational and speech therapy; diet plan management and education and visually impaired services.
Marketing ideas and Strategies for a Home Healthcare Agency
If you want to generate income for your business, then you must market your products and services. It is important for an entrepreneur to take this aspect seriously, by either researching deeply and widely, seeking the help of experienced owners in the same industry, and/or seek the help of a consultant that would help make marketing ideas workable for the intended target market.
Marketing your business achieves two things; it generates income for your home healthcare agency business, and also boosts publicity for your company or business. The right marketing strategies and ideas for a business are necessary and might sometimes be tweaked to suit a particular business such as the home healthcare agency business.
This is why a business plan helps articulate the marketing strategies and ideas that would be used for a business. Here are some tips that you can adopt to market your landscape and lawn care business;
- Send sales letters and brochures introducing your business to hospitals and doctors that specialize in geriatrics, cardiology and other diseases that affect seniors
- Reach out to local health care agencies, senior centers and even emergency medical services
- Place advertisements in local newspapers
- Get your business written about in local publications
- Follow up with phone calls to reinforce the image of your business
- Use your website to give out information and tips that could help senior citizens
- Use social media platforms like LinkedIn, Facebook and Twitter to connect with those that might act as a source of referral
- Sponsor shows like that of children as their parents might refer their own parents, or shows for pets as the elderly own pets.
Factors That Will Help You Get the Right Service Pricing
The factors that will enable you get the right price quotation for your services; prices that will be pocket friendly to your client will solely depend on the payment method your client has chosen, as this can only work if your client is paying you out of their own pocket, as payment from healthcare funders are usually determined.
If your client is paying out of his own pocket, then determining the right price would be in seeing that your operational costs aren’t more than the revenue, and also ensuring that you keep your costs at a minimum, so as not to be seen to exploit.
Possible Competitive Strategies for Winning Your Competitors
Home healthcare agencies have the same challenges, how to provide quality home care without running at a loss. There is no consensus as to how much competition is required in this sector, as some find it distasteful. However, those that don’t, see competition as a way to deploy potent incentives that will encourage them to innovate so that they can deliver higher quality at a lower cost.
Part of the competitive strategy that can be adopted in order to favorably compete in the industry is to design your business in such a way that you can comfortably work with all kinds of clients; not only high or low end kinds of clients, but those that might require long term care as well.
Another competitive strategy that you need would be to ensure that you have some competitive advantage in place that would give your business a boost over the others.
Possible Ways to Increase Customer Retention for your Home Healthcare Agency
In trying to retain customers for your business, you need to make your current clients and their families happy and extremely satisfied with your services. This is done when their needs are being met, and their concerns are addressed immediately.
Also, the caregivers you send to clients must be trained, knowledgeable as well as friendly. Before your caregivers can project happiness to your clients, they themselves have to be happy as well. Happy clients will ensure that they refer others to your home healthcare agency business.
If your clients need a nudge in sending referrals your way, remind them and they would gladly oblige if your services are very okay for them to their friends, a referral from a trusted friend is the best kind of referral for your business.
Strategies to Boost your Brand Awareness and Create a Corporate identity
It is important to create strategies that will help you boost your brand awareness and to create a corporate identity for your business. Anyone that sets up a facility to run a business has to look for ways to promote their brand and if possible, hire brand experts to help handle that aspect of your business.
Below are the platforms you can leverage on to boost your company’s brand and to promote and advertise your business;
- Develop a website to promote your business
- Write news stories for local publications
- Attend local health fairs and shows
- Write and distribute press releases
- Connect with referral sources such as hospital discharge planners, support groups, adult protective services, community groups, religious leaders, physicians and clinic staff, elder care attorneys, senior centers, and nursing home social workers
- Leverage on social media platforms like Facebook, Twitter to promote your services
Creating a Suppliers/Distribution Network
Anyone that runs a standard home healthcare should be ready to source for appropriate solutions products that can only be gotten through distributors or suppliers, as they have a direct relationship with manufacturers.
If you are in a good business relationship with the vendors of all that you need, it will really help your business and help you execute jobs for even faraway clients without delay. It will also ensure that you get industry tips on the best products for your patients, at affordable prices, allowing your clients the option of choosing what they can best afford.
Tips for Running a Home Healthcare Agency Successfully
Home Healthcare Agencies offer a critical service that involves the care of an elderly person mostly in the homes of their clients, and getting paid for it. A home healthcare agency business can be very lucrative and fulfilling for the right person who truly loves to take care of those who cannot do anything for themselves.
Experience is not required to run a home healthcare agency business, but certifications give employees in the industry an edge over others. In order to be successful as a home healthcare agency owner, one must first have the right personality by being friendly, patience and good at communication. They also should be approachable, and open to clients.
Apart from a good personality, a keen sense of business is required plus a certain amount of assertiveness. As a business person, you will also need to track your clients’ progress through notes, so that others like Medicare, insurance companies, physicians and even other home healthcare agencies can understand and rely on.