Are you interested in starting a nursing home business? If YES, here is a complete guide to starting a nursing agency facility with little money and no experience.
Okay, so we have provided you an in-depth sample nursing home business plan template. We also took it further by analyzing and drafting a sample nursing home marketing plan backed up by actionable guerrilla marketing ideas for nursing homes. In this article, we will be considering all the requirements for starting a nursing home business. So put on your entrepreneurial hat and let’s proceed.
Why Start a Nursing Home Business?
Home nursing businesses are a growing field with increasing demand driven by an aging population. Today’s health care offers more forms of surgeries, interventions, and elective procedures–often leaving patients needing temporary home nursing care. In addition, members of the elderly population who don’t want to leave their homes for an assisted living facility or nursing home often elect ongoing home nursing care. For an entrepreneur looking to get into the home nursing market, establishing the business is usually more challenging than finding a customer base.
This is a very good business to start provided that you are skilled and have the passion for the profession. If you have determined all this, then you also can go to a nursing school so that you can have a full and rich idea on what to do and the steps to take.
Here is a comprehensive detail on how you can start a nursing home business;
Starting a Nursing Home or Agency With No Money – A Complete Guide
- Industry Overview
This industry provides living quarters, inpatient nursing and rehabilitation services for people with a chronic illness or disability. The care is usually provided for an extended period to individuals who require help with day-to-day activities but do not need to be in a hospital.
Due to the necessary nature of services provided by nursing care facilities, the industry was able to grow despite broad economic stagnation. Additionally, the continued aging of the population has spurred demand for industry services. Since the elderly are more prone to injury and illness, and therefore require more assistance with daily activities, the larger share of senior adults has propelled demand for nursing care facilities.
Interesting Statistics About the Nursing Home Industry
Despite favourable demographic trends, unsatisfactory government funding has hindered industry growth. Over the five years to 2021, the industry is expected to continue expanding. Continued aging of the population, which is expected to accelerate over the five-year period, will drive industry growth.
Based on data from the US Census Bureau, the regions that account for the largest share of establishments in the industry are the Southeast (23.9% of total establishments), Great Lakes (17.3%), West (12.9%) and Mid-Atlantic (12.7%) regions. This trend roughly reflects the age distribution in the United States. Employment in this industry is also concentrated in the Southeast, the Mid-Atlantic and the Great Lakes regions.
The largest states in terms of employment are New York, California, Texas, Ohio and Florida. The average size of establishments in this industry, as measured by average employment per establishment, varies significantly by region. Locations in the Mid-Atlantic region employ an average of 125 people, while south western locations average 75 employees.
Internationally, demand for nursing homes and assisted living services are growing along with the number of elderly people. While the number of nursing facilities varies by region, a growing number of countries — particularly those with some form of national health insurance — are experiencing an increase in demand for long-term care options for their aging and infirm citizens.
The US nursing homes and long-term care facilities industry includes about 82,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $220 billion.
Starting a Nursing Home Business – Market Feasibility Research
- Demographics and Psychographics
It is generally acknowledged that people are living longer these days. Advances in healthcare and a trend towards a healthier lifestyle have caused the older population to swell in number, and while this is obviously great news, there are some important social consequences.
Elderly people are often unable to look after themselves in the twilight years, and with more people living longer, the demand for resources to care for them is growing. Family and friends often help, but an increasing amount of the responsibility is being taken up by a growing sector of care providers. The aging and the disabled are the major identified population for the nursing home business.
List of Niche ideas Within the Nursing Home Industry
If you lie awake at night racking your brain for a fall-back plan or second-income generator, find a movement, trend or something that works in a big way, and then drum up a way to tweak it for a specialized audience. The key to turning a unique idea, skill or talent into a steady side gig is to pay attention in life–ideas are all around you like the nursing home business.
Niches in this business may include;
- Operating convalescent homes or convalescent hospitals (except psychiatric)
- Operating group homes with nursing care for the disabled
- Operating homes with nursing care for the aged
- Operating inpatient-care hospices
- Operating nursing homes
- Operating rest homes with nursing care
- Operating retirement homes with nursing care
- Operating skilled nursing facilities
The Level of Competition in the Nursing Home Industry
Demand for nursing care is linked to the demographics of the US population. The profitability of individual nursing facilities depends on efficient operations, as revenue per patient is largely controlled by the big government insurance programs (Medicare and Medicaid).
Large companies have some economies of scale in administration and purchasing, but small operators can compete effectively by offering better service. The US industry is fragmented: the 50 largest companies account for about 20% of revenue.
List of Well Known Brands in the Nursing Home Industry
- Brookdale Senior Living (US)
- Golden Living (US)
- HCR Manor CARE (US)
- Kindred Healthcare (US)
- Bupa (UK)
- ExtendiCare (Canada)
- Korian-Medica (France)
- Orpea (France)
- Grace healthcare of pleasant Hill (US)
- Mary Health of the Sick Convalescent & Nursing Hospital (US)
The ability of the elderly to buy long-term care services with private resources largely depends upon their personal income and assets. As among the non-elderly population, there is considerable economic diversity among the elderly. Some are very well off, others live in poverty.
Although users of long-term care are generally disabled (particularly the oldest old), it is important to examine the financial resources of both the entire elderly population and the disabled elderly because most users of long-term care have not always been disabled. For example, approximately one-half of all persons entering nursing homes over a two year period were not disabled up to 24 months prior to their entry.
The financial circumstances of the elderly are highly diverse, although elderly persons at the highest risk of needing long-term care are more likely to be poor or near-poor. But what is the actual impact of long-term care use on the elderly? For many, the use of long-term care has minor financial impacts.
For others, the impact of long-term care use can be catastrophic. It can cause the depletion of lifetime savings, dramatically reduce one’s standard of living, or force someone to purchase less care than they need. Economic considerations also sometimes force people to enter a nursing home even though they would rather be home, just because it is easier to qualify for Medicaid coverage in a nursing home than at home.
Is a Nursing Home Worth Starting from Scratch or is Buying a Franchise Better?
The nursing home business is a business where the big Fishes are dominating the ocean due to brand awareness and corporate identity. Buying into a franchise is a better option than starting from the scratch.
What the rapidly growing senior demographic means is an equally growing need for home health care services to keep these people at home. And of course with that need comes an unparalleled home health care business opportunity for entrepreneurs across the United States and Canada.
The home care franchise market is expected to grow for at least a generation. The demographics tell the story: In the United States, seniors made up 12.9 percent of Americans in 2009, roughly one out of every eight Americans. By 2030, that percentage is projected to hit 19, or nearly one in five.
Possible Challenges and Threats of Starting a Nursing Home
It’s no secret that the home health care industry is booming. In fact, it’s one of the largest growing trades nationwide, with individual and franchise businesses popping up from coast to coast. But it’s also one for the most difficult business opportunities to get a handle on.
Partly because of the tremendous growth and partly because of the numerous fundamental changes occurring simultaneously, the nursing home business industry could be classified as particularly volatile.
- Increasing demand
- Finding qualified staffs
- Regulation/Classification of Health Care Agencies
- Advances in Technology
- Keeping qualified staffs
- Political pressure
Starting a Nursing Home Business – Legal Aspect
- Best legal entity for a nursing home
Corporations, limited liability companies and limited liability partnerships can offer you and any investors or partners personal liability protection. All of these business entities are created via your state’s secretary of state’s office. You may want to consult an attorney or accountant to figure out what makes the most sense for you. For the sake of this article, the LLC is the best entity for a nursing home business.
The owner of a single member LLC doesn’t have to file a tax return for the LLC, as they only report the activity on their personal tax return. Forming an LLC provides your nursing home business with the following;
- Ease of setup-: Most LLC forms are only a single page for single member LLCs.
- Inexpensive start-: The cost of setting up an LLC is also inexpensive, usually just a couple hundred dollars.
- Guidelines-: The red tape involved in forming an LLC isn’t as stringent as that involved with S corps, which also leads to savings on accountant and attorney fees, among others.
Catchy Business Name ideas for a Nursing Home
A business without a name is a sign of no business.” The truthfulness of this connotation is indeed undoubted. Your nursing business should have its own trade name or business name for customers to distinguish you from other businesses. It is also a factor of customer’s recall to your healthcare business. But how can you say that your nursing business name is effective to the business.
The effectiveness of a business name is at the highest degree if it is easy to recall. Aside from that, it should be spelled easily so that your prospective clients can easily locate your name on their address book, on the business directory or on the web.
Some catchy names for a nursing home business include;
- Global cares
- Prudent Nursing home
- Fidelity Hospital and care home
- Mary grace home
Choosing the Best Insurance Policy for your Nursing Home
Nursing homes, assisted living centres, and senior living facilities help the country’s oldest citizens live in dignity in their final years. By providing health care, food, lifestyle support, and community, they are important resources for the country’s aging population.
But offering those services also exposes nursing homes to a number of risks. Lawsuits alleging injury, neglect, and even wrongful death are – if not common – not out of the realm of normalcy in today’s litigious climate.
To prevent such lawsuits from causing financial distress, assisted living centres and nursing homes can invest in liability insurance, which can cover the legal costs associated with being sued. In addition to attorney’s fees, liability insurance often covers court costs and judgments or settlements. These Insurances may include
- General liability insurance
- Professional liability insurance
- Property insurance
- Business owner policy
- Worker’s insurance policy
- Umbrella insurance
- Sexual misconduct insurance
Is Professional Certification Needed to Start a Nursing Home?
There are various certifications that are needed when you are looking at starting a nursing home. Why is this important? This is especially important because of the need to operate as an expert.
Here are some certificates to acquire:
- Certified Nursing Home Administrator
- Nursing Home Management Degree and Certificate Programs
- Nursing Home Administrator
- Nursing Home Administrator Earned Professional Certification
- American nurses credentialing centre
- Certified Nursing Home Administrator Career and Certification
Legal Documents Needed to Start a Nursing Home Business
The need to have all the necessary legal documents cannot be over emphasized. This is one of the reasons why you have to make sure all papers are in place. What are these papers?
Here they are below;
- federal tax ID number
- Business license
- Employment agreements
- Federal license
- State license
- professional license
- Proof of Insurance
Writing a Business Plan for your Nursing Home
The first step towards starting your nursing home is to create a plan that lists what services your nursing home will provide to clients. You can choose to provide short-term services only such as basic rehabilitation care. Alternatively, you can choose to cater to those who require long-term care such as Alzheimer’s disease patients, arthritis patients, and those who have suffered brain injury or some other injury that have irreparable damage.
Most nursing homes provide services that include personalized individual nursing help, feeding, outside trips, medication, administration, and recreational opportunities. Whether or not you will be rendering all of these services, you should clearly highlight the services your nursing home will provide to clients. Easy ways to write your nursing home business plan include;
- Use the resources provided by websites, such as the Business.gov and the Small Business Administration Small Business Planner websites, to get started.
- Download a template or open a new document to set up your own format.
- Write a description of your nursing home business.
- Add a section listing your marketing strategies.
- Add a section describing how you intend to organize your nursing home business.
- Create a section to include your financial and strategic goals.
- Save your document and use it to obtain financing, such as loans or grants, to start and run your nursing home business.
A Detailed Cost Analysis for Starting a Nursing Home Business
There are a few options to getting started with a nursing home business. The financial requirements vary between the options and the one you choose could make the difference between your ability to take the plunge or not. Since this article due suggest that buying into a franchise is better than starting a nursing home business from the scratch, the cost of buying a nursing home franchise will be discussed extensively.
The purchase of a home care franchise or membership organization involves several steps. First is the application and approval process with a franchisor. Once approved, the second step includes the purchase of a license, followed by training and setting up of your business.
You’ll be confined to operate your business within the territory your franchise license grants you. Finally, once operational and gaining clients, the payment of ongoing royalty costs for the duration of the franchise contract.
In the application process, the franchisor will ask for proof of your financial capability. With varying degrees of verification, expect to prove a financial net worth of roughly between $40,000 and $260,000 and liquid capital amounts ranging from $25,000 to $150,000. Suddenly, the costs to start a home care business have just ballooned!
Once you’ve proven your net worth, the franchise license is an investment of between $20,000 and $90,000. Some franchisors will finance a portion of this. Most nursing home care service franchises run the midpoint at $35,000 to $48,000.
The upper end ($49k-$90k) offer both non-medical and medical care services. The franchise license grants you the ability to use the home care franchise name, assigns a territory that the franchisor and you negotiate. Keep in mind this could limit your service coverage area, a consideration for long term growth.
After you’ve signed the check, your license should also include training for you and another business partner – typically 5-7 days held at their headquarters. Travel expense around the training is often at your expense. Then it’s up to you to use the training, take massive action to make your business happen.
One big consideration of ongoing costs to start a nursing home business using a franchise are the ongoing monthly royalties you’ll pay, ranging from 3% to 7%, average is 5-6%. Most royalties are based on your gross revenues not net profit for the duration of the Terms of the Franchise Agreement typically between 5 and 10 years.
For this ongoing royalty, you should have access to ongoing business development support and some franchisors provide co-op marketing budgets which can assist with your marketing efforts.
Financing your Nursing Home Business
Although companies in the healthcare industry have seen a rise in demand, they have also experienced a rise in financial problems. These problems stem from the fact that most healthcare businesses have a number of immediate expenses. Unfortunately, attending to patients is expensive. The healthcare provider must pay for Office space or a clinic, Day-to-day expenses, Salaries, Supplies, Vendors, Equipment etc.
- Small business loans
- finance your medical receivables
- Nursing Home real estate loans
- Medical factoring
Choosing the Best Location for your Nursing Home business
The success of your business hinges largely on the location you choose. You can build your own facility, buy a pre-existing building, or acquire one on lease. Note, however, that your location and facility must meet all medical codes and requirements that apply in your state or country.
If you are buying an already existing facility or acquiring one on lease, you must make sure to have it inspected by a seasoned inspector to ensure that there are no problems that could pose threats to your clients. And if there are any such problems, you must find out how to rectify them before you make payments or sign any lease.
In case you would build your own facility, then you need to choose a location that has one or more hospitals around. The more hospitals you have close to your chosen location, the better.
Starting a Nursing Home Business – Technical and Manpower Requirements
After putting your building in good shape, you will need to stock your nursing home with necessary items and equipment. These include wheelchairs, medical beds, desks for staff, stretchers, cabinets, bedding supplies, and so on. Medications, intravenous tubing, bandages, syringes and needles, and cleaning supplies should also be in a fully stocked cabinet where staff members can easily access them.
You must ensure that all items and supplies are labelled clearly. And you should have solid arrangements for easily ordering additional supplies whenever you run out of them.
For your nursing home, you will need both medical and non-medical personnel. Medical personnel include a doctors (particularly geriatricians), nurses, and physiotherapists. The nurses should have experience working with elderly patients (since most of your patients will be seniors) and those with conditions like stroke and Alzheimer’s disease.
The non-medical personnel will require include those who will assist patients with basic tasks such as eating, dressings, cleaning up, and so on, as well as those who would provide clerical services and help to maintain the physical parts of the physical facility.
You will also need to hire experienced staff to run the financial and legal aspects of your business. So, hire a seasoned accountant, and work with an experienced lawyer to ensure that all your contracts with clients are legal. And you will need to hire a director of services whose job will be to ensure that the whole facility runs effectively. Most importantly, you must ensure that all your staff members are highly qualified for their respective positions.
The Service Process Involved in a Nursing Home Business
Life expectancy is increasing in most countries of the world, thanks to technological advancements in medicine and increased health awareness, both of which have led to improved healthcare. With this increase in life expectancy comes a proportionate increase in the demand for nursing care.
Nursing homes offer the most extensive care a person can get outside a hospital. Nursing homes offer help with custodial care — like bathing, getting dressed, and eating — as well as skilled care. Skilled nursing care is given by a registered nurse and includes medical monitoring and treatments.
Skilled care also includes services provided by specially trained professionals, such as physical, occupational, and respiratory therapists. The services nursing homes offer vary from facility to facility. Services which you can choose to offer often include:
- Room and board
- Monitoring of medication
- Personal care (including dressing, bathing, and toilet assistance)
- 24-hour emergency care
- Social and recreational activities
Starting a Nursing Home Business – The Marketing Plan
- Marketing ideas and strategies for a nursing home business
Anticipating customer needs by identifying what the consumer wants in a product or service will help you to tailor both the services your organization offers as well as help you to tailor a marketing plan. A marketing plan and materials should highlight the benefits and qualities of your services.
It is an essential part of the business plan, which helps you communicate the attributes of your program and establish distribution channels. People who are looking into nursing homes usually need good healthcare by qualified personnel and are looking for a pleasant environment.
- Identify the services your organization offers
- Anticipate customers needs
- Match customer needs with your organization’s services and benefits
- Develop advertisement for your identified target population
- Implement and post marketing advertisements
- Start a blog
- Event marketing
- Social media
- Cold calling
- Encourage referrals
- Follow your customers up
Choosing the Right Pricing for your Nursing Home Services
The cost of a stay in a nursing home is dependent upon the circumstances of an admission, particularly whether care is needed on a short-term or long-term basis. While short-term care is almost always covered by Medicare for those who are eligible to receive benefits, long-term care requires alternative payment methods and the costs can be very expensive.
Other factors influencing nursing home costs include the geographic location of the facility and whether a patient has a private or semiprivate room. In other to ascertain a good price that favours both you and your clients, consider the fact listed below.
- Ensure the pricing structure is logical
- Make your pricing visible and understandable
- Understand how much it costs the organization to provide services
- Establish a proactive process to maintain margin
Possible Ways to Win Competitors in the Nursing Home Industry
With market competition increasing within the nursing home industry, successful marketing campaigns have become essential aspects of doing business even for smaller nursing homes with fewer beds. Despite the size of the facility, the quality of the customer service a nursing home provides in addition to the efforts put into establishing relationships are key components for marketing long-term care services.
Here are some ways to win competitors:
- Successful differentiation in the nursing home business can give a facility the competitive edge.
- Identify a market niche and target people who need those particular services.
- Before a facility decides to invest in developing specialized services to increase its census numbers, find out if a program is viable.
- Although nursing facility managers are under greater pressure to increase census to raise revenue, it never pays for a facility to promise more than it can deliver. In the nursing home industry, what looks good on a marketing brochure isn’t always possible
Possible Ways to Increase Client Retention for your Nursing Home
Quality levels and customer satisfaction levels continue to improve in skilled nursing facilities, although increasing retention levels in certain positions remains a challenge. According to a study by the Harvard Business School, “increasing customer retention rates by 5% increases profits by 25% to 95%.” Despite this, many leaders neglect to make customer retention a major part of their business plans. Luckily, there are a few simple ways you can increase yours.
- Use your customers testimonies
- Provide substantial customer service
- Personalize your customer experience
- Building Relationships with the Family Members of Your nursing home Clients
Strategies to Boost Brand Awareness and Create a Corporate identity for your Nursing Home
The rise in popularity of social networking and social media has created the ideal climate for nursing home business to boost its brand awareness online. There are several ways that social media platforms can be leveraged to help find new customers and to firmly cement your brand in the minds of consumers
- Find your identified target population
- Connecting Directly With Consumers
- Providing High-Quality Content
- Be eager to help
Creating a Supplier/Distribution Network for a Nursing Home
Supply chain management efforts on behalf of nursing home business and the whole healthcare industry are focusing on notions of price transparency and disciplined accountability. Supply chain market growth is expected to jump from 2014’s projection $13.8 million to nearly $14 million by 2019 because of healthcare costs’ continuous escalation.
- Partner with customers to jointly assess waste in the supply chain from manufacturer all the way to patient (e.g., logistics, inventory management, data management, formulary development, customer demand management).
- This will require more data sharing and “hand-in-hand” partnership.
- Enable and promote shared savings goals that generate savings from both physical and data standards
- Join professional associations that connect you with other nursing professionals who have nursing homes. This will help you get ideas on how to grow your business and keep abreast of latest changes in the industry.
Tips for Running a Nursing Home Successfully
To evaluate an elderly resident’s daily needs, you should possess a working knowledge of the physical and psychological effects of the aging process. This knowledge allows you to implement the necessary nursing care, drug administration or rehabilitation to successfully treat a resident or improve their standard of living.
With a deep understanding of a resident’s physical limitations, you can assess where and how that individual might benefit from assistance with daily activities, such as bathing or eating. Communication skills and previous clinical experience in bedside manners are essential for working with residents with possible mental impairments.
As a resident’s primary advocate, you should act as the patient’s liaison between staff and doctors. You must ensure quality care for a resident by communicating instructions or results as needed from both parties, while also ensuring frequent visits by nurses and physicians.
As a nursing home business owner you must also utilize their effective communication skills to navigate the emotional dynamics associated with counseling residents and their families in the transition to nursing home care. You will have to collaborate with families on a care plan and its associated costs while providing resources needed for the grieving process.
If you lack the knowledge to start a nursing home business it doesn’t mean you can’t invest in the business. You can employ a nursing home Administrator to oversee those agendas you can’t. While the decision-making processes of nursing home administrators tend to revolve around the needs of senior residents, they must also be in charge of all other employees and balance the needs of personnel to be equally effective.