Do you find yourself driven by both entrepreneurial and humanitarian interests? Is it important to you to build a business you can be proud of, knowing you are making a positive difference in people’s lives?
If any of this speaks to you, you could be an excellent candidate to start a home health care business. There’s never been a better time to do so—home health care is one of the largest growing industries, not just in North America, but around the globe.
What do we mean by “home health care”?
Home health care is a very broad industry which can mean different things to different people. For some, the term covers both skilled home health care as well as non-medical home health care.
Non-medical home health care involves assistance with daily living activities most commonly for senior citizens who wish to remain in their homes. These services can include meal preparation, housekeeping, and transportation.
Skilled home health care, on the other hand, involves nursing or therapeutic services delivered in the patient’s own home which would ordinarily be provided in a hospital or medical clinic.
This article is intended to serve as a step-by-step guide for anyone considering starting a skilled home health care business. For the purposes of this article, the focus will be limited to a business providing skilled home health care services, the most common of which are:
- Skilled nursing
- Nursing aide
- Social work
- Occupational, physical, and speech therapy
To supplement this guide, I interviewed an expert in the home health care field: Carol Byrne is the National Sales Director for 21st Century Health Care Consultants, a consulting firm which serves home health care agencies throughout the United States.
The state of the home health care industry around the world:
In the United States alone, the home health care industry is an $84 billion behemoth with no signs of slowing down.
From 2010 through 2015, the industry saw a moderate but steady four percent growth. This growth is due, in large part, to an aging U.S. population. The population aged 65 years and older is expected to increase from 12.4 percent in 2000 to 19.6 percent by 2030.
There are also societal and political factors at play including a growing acceptance among physicians of the practice of home care, as well as pressure to alleviate the demands placed on hospitals and an overall desire to find cost efficiencies in the health care system.
“In the last little while, there’s been a big uptick in the industry because of all the baby boomers flooding into the marketplace. People want to be in their homes, not in a nursing home. In-home care allows them stay in the home and have more independence in their daily lives,” explains Carol Byrne.
At present, there are more than 386,000 home health care businesses in the U.S., an industry that employs an approximate 1.7 million people. This represents both the pros and the cons of wading into these waters. With a low barrier to entry and a growing demand, it is an appealing business for eager entrepreneurs. But because of this, there is often tough regional competition which will need to be planned for if a new venture is going to be successful.
To date, North America has dominated the home health care global marketplace due mainly to a more sophisticated health care infrastructure and more resources committed to research and development. In 2013, North America accounted for just over 40 percent of the global home health care revenue.
The trend toward home health care is just as strong across the northern border. The Canadian Nurses Association (CNA) predicts that two-thirds of nurses in Canada will be working in the community by 2020, compared to 30 percent in 2006.
While North America may be the current hotbed for home health care businesses, the fastest growing region is in Asia-Pacific, where the markets expect a compound annual growth rate of 9.7 percent from 2014 to 2020. This is based on advancements in health care infrastructure in India and China, as well as a rapidly aging Japanese population.
Things to consider before starting a home health care business:
While there is a tremendous growth opportunity in this industry, it’s not a business that is necessarily for everyone. The nature of the business lends itself to intense pressure and can create a high-stress environment.
Carol Byrne believes there is a specific personality type which is best suited to this type of work.“This industry draws people who are driven by compassion and desire to care for their fellow man. It’s a great industry and there is money to be made but you need that drive to help people. If you don’t have that compassion, this is not the business for you,” she says.
Challenges in running a home health care business:
If as the business owner you are also going to be one of the key service providers, there are some unique challenges to providing home health care that should be weighed carefully before entering the field.
Long distance travel
The convenience of home health care is for the patient, not the caregiver.
Most home health care providers will see six to eight patients in a day; if the region is geographically large, that could mean lots of travel, which can cause stress and fatigue. If you are the type of person who finds travel stressful, this may be something to consider before launching a home health care business.
Technological upkeep and maintenance
One of the reasons home health care has become so prevalent in the last decade is thanks in large part to technological advances that have allowed high-tech equipment to be used in the home. Previously, this equipment was only accessible in a hospital or clinic.
However, because so much of modern home health care relies on high-tech equipment, keeping up with the latest technology and managing this equipment is something that a business owner will have to be comfortable with.
In other words, this is not the field to go into if you are a serious technophobe.
Working in isolation
A key advantage of providing health care in a hospital or clinic is that you have colleagues with whom to consult or otherwise ask for assistance. Home health care providers almost exclusively work on their own, without that support network around. This type of work environment is something that one would need to be comfortable with in order to do the job successfully.
If you’ve studied the industry at length, analyzed the market opportunity, considered the unique challenges, and are excited to move forward, the following steps can help you navigate this often tricky process.
Step 1: Formulate your business plan
Home health care is unique in many ways, but the one thing it has in common with every other new business venture is that a lack of adequate planning and forecasting is a sure way to undercut its potential success. You’ll want to make sure you carefully plan out every detail of the logistics in getting the business off the ground and past the troublesome first couple of years.
Carol Byrne stresses the importance of business savvy in achieving long-term success. “It’s important to have clinical knowledge, but it’s just as important to have business sense, because at the end of the day it’s still a business and it must be run like a business to be effective at generating a profit. It requires a balance of skills.”
If you’ve never written a business plan before, you can find out more about the process here on Bplans. Start with a lean plan if you’re eager to get up and running fast or if you’re simply interested in validating your idea. If you’re seeking funding, or would prefer to work through the finer details, a traditional business plan should work for you.
What to include in your business plan:
Regardless of the format you choose, there are some things you’ll need to keep in mind as you write. These include:
Equipment and starting expenses
Providing top quality home health care requires sophisticated and expensive medical equipment. You’ll require a detailed list of everything you need to hit the ground running.
That list of key starting expenses will include:
- Business development
- Rental expenses
- Office equipment
- Office supplies
- Nursing supplies
Financing and cash flow
Once you compile your list of starting expenses, you need a plan to raise the capital. The most traditional routes are bank loans, small business loans, or angel investors. There may be state level grants geared toward emerging businesses in the health care field as well.
It is almost a given that your business will operate at a loss for the first three to six months while your client base grows and you get on a regular billing cycle with Medicare and Medicaid. This means a carefully thought out cash flow management plan is required to ensure you can get through these key first few months.
Additional resources to help you write the financial section of your plan:
Market research and your competitive landscape
The greatest weapon you can have in your arsenal when it comes to raising capital is a bullet-proof analysis that yours is a great local market for this type of business, and that you can serve a need currently unmet by competitors.
There is no question this is a growing industry on a national and global level; however, if your community is currently over-saturated with home health care businesses, you will have a hard time making it work.
Also, a strong competitive analysis will help direct you with marketing and recruitment strategies when you identify where others have fallen short in their attempts to penetrate the market.
Additional market research resources include:
- Practical Market Research Resources for Entrepreneurs
- How to Do Market Research
- How Do You Know If You Have a Good Idea for a Business?
Step 2: State and Medicare/Medicaid certification
In the United States, the first step in navigating the certification process involves completing your state’s home care license application and all of the required home care business license paperwork.
This includes incorporating your business and obtaining a Tax ID and NPI number for your home health care business. The home care license and operation requirements and standards will vary from state to state. The best way to make sure you have your bases covered is by contacting your State Department of Health for assistance.
Medicare Part A (Hospital Insurance) and/or Medicare Part B (Medical Insurance) will cover a patient’s eligible home health services such as skilled nursing care, physical therapy, speech-language pathology services, occupational services, and others.
Unless you have an unorthodox business model, Medicare and Medicaid will be your primary source of revenue. It is critically important that your business obtains all the proper Medicare and Medicaid certifications.
To complete the process of Medicare accreditation, you must complete a three-day Medicare survey which is an audit of your business’s operations and patient clinical records. Carol Byrne cautions prospective business owners about the length this part of the journey can take.
“In the United States, it can take a year or longer to open a fully licensed and certified business. It can be a long path,” she says.
In order to be eligible for Medicare coverage for home care services, the patient must meet the following criteria:
- They must be under the care of a physician and receive the treatments as part of a treatment plan prescribed and reviewed by the physician
- The physician must certify that the patient requires at least one of the following services:
- Continued Occupational Therapy
- Speech-Language Therapy
- Physical Therapy
- Intermittent Skilled Nursing Care (more than drawing blood)
- The home care business responsible for their care must be Medicare-certified
- The physician must determine that the patient is “homebound”
- The patient may not require more than part-time or intermittent nursing care
Some states will require a new home health care business owner to complete a state jurisprudence exam before granting a license to operate, so be sure to do additional research for your own state.
Step 3: Staffing and management structure
Unlike most other businesses where your employees sell or facilitate your product, with a home health care business, your staff is your product.
The best way to retain clients and get referrals for others is to build your reputation of providing top-quality professional medical services in a personable manner. This means finding the absolute best of the best to work for your company and serve as the face of the company at the front line level.
“The most challenging part of this business is staffing,” says Carol Byrne. “Finding the right people is critical, because ultimately the person who walks into the home is your representative and they are the face of your business. Finding good staff is by far the greatest challenge a home care business will face.”
What kind of staff will you need?
If you are not a physician or medical professional yourself, your first hire will be a qualified clinical supervisor. It is a requirement of Medicare (and most states) that a physician or a registered nurse with more than one year of experience be in place as a clinical supervisor. The supervisor must be available as a resource at all times for the front line employees providing home health care services in patient homes. Most states also require a certified administrator be in place, although this position can be doubled by the clinical supervisor if that person is certified for both roles.
When it comes to the front line service providers, there are two routes you can explore. If you have the resources starting off, you can simply hire your staff and keep them in-house. This will require a significant cash infusion from the start as your salary demands will outweigh your revenue in the first months of operation.
The other option is to contract the work out to another agency or association of professional physiotherapists, occupational therapists, or skilled nurses. The most common approach is to specialize with one or two in-house professionals (skilled nurse and physiotherapist) and contract out the other fields on an as-needed basis.
Be sure to conduct a thorough background check for all hires. Your business could be liable for crippling legal action if it is discovered there was a problem with the treatment delivered by someone who had been sanctioned or suspended for similar malpractice issues in a previous job. It should go without saying that this is more important in this field than most.
Step 4: Developing your marketing strategy
You’ve developed a bulletproof business plan, navigated the tricky process of state and Medicare certification, and have a top quality professional staff in place.
Now, the only question remaining is: “How do I get my first clients?”
This is where the home health care business starts to resemble many other businesses—success will depend on effective marketing strategies and some good, old-fashioned hustle.
Marketing strategies for home health care businesses:
The following are some of the most effective strategies for recruiting clients for a new home health care business:
- Set up a website: Your client base may not be as internet-savvy as most; however, their family and loved ones will likely use the internet as the first place to find a qualified business.
- Reach out and network: Contact local physicians, senior centers, long-term care facilities, hospital discharge social workers, and rehab outpatient centers to reach prospective clients.
- Set yourself apart: Establish expertise credentials in certain areas of service to differentiate your business from your competition.
- Join local business groups or organizations: Groups like your Chamber of Commerce or The National Association for Home Care & Hospice (NAHC) offer opportunities for agencies to reach home health care decision makers.
- Attend as many trade shows and events as possible: Events like these give you an opportunity to meet with physicians, nurses, social workers, vendors of home health supplies, and the owners of related businesses who may have their own network of people in need of your services.
Below you’ll find a list of resources that can help you find out more about what goes into getting your home health care business off the ground.
21st Century Health Care Consultants: A consulting firm that specializes in assisting new home health business ventures in the United States. The website offers plenty of resources to help with questions of licensing, certification, staffing issues, and much more.
Home Care Association of America: The Home Care Association of America (HCAOA) is the nation’s first association for providers of private duty home care, which includes non-medical home care services. The HCAOA is the recognized resource for information and definition of private duty home care practice.
The National Association for Home Care & Hospice (NAHC): A nonprofit organization that represents the nation’s 33,000 home care and hospice organizations. NAHC also advocates for the more than two million nurses, therapists, aides, and other caregivers employed by such organizations to provide in-home services to some 12 million Americans each year who are infirm, chronically ill, and disabled.
Canadian Home Care Association: As a national association, the CHCA acts mostly as a professional development and political institution. It boasts an extensive resource library which could be helpful to new or prospective business owners.
Traditional publishing: One visit to Amazon or your nearest bookstore will give you numerous options for published guides on starting a home health care business.
Some of the titles you’ll find include:
- “Home Care Business” by Eve Pierre and Ruth Woods
- “How to Start a Home Health Care Business: Medical Start Up 101” by Albert Aaron
- “Home Care How To—The Guide to Starting Your Senior In Home Care Business” by Brendan John
- “Home Health Agency Startup Guide: Step-by-Step Guide to Build a Successful Home Health Agency Business” by Janet Brown and Kathyrn Keenan