How to Start a Home Health Care Business

Written by Dave Lavinsky

how to start a home care business
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A home health care agency provides medical, nursing, and personal care to residents at their houses. For those who cannot afford to go to a nursing home, this is the next best option. But starting one takes more than having good intentions. It requires a lot of planning and patience.

However, before you begin your company, it is critical to conduct thorough market research to make certain that your company should indeed be in demand.

In this article, we share some tips on how to successfully start a home health care business.

Importantly, a critical step in starting a home care business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

13 Steps For Starting a Home Health Care Agency

1. Determine Your Business Name

Choose the name of your home health care agency carefully. This may be among the most important decisions you have to make about your business. Make certain that any name you select is available in all 50 states so you can do business and register your company in each state if you choose so in the future.

Consider using a name that contains words like “home care” or “nursing.” This will help anyone searching online for those terms to find you quickly.

Also, choose a website domain name that is very relevant to the home health care services you provide. This way, people will be able to see your website’s URL quickly and easily.

2. Write a Home Care Business Plan

The next step in starting a home health care agency is to draft a business plan. Your business plan must be very detailed and contain all the information needed to successfully start and run your company.

Be certain to include details on how you will be able to deliver high-quality home health care for a reasonable cost, why consumers should choose your agency over others, and the benefits of going with a smaller company instead of a national or other local company.

3. Get Your Business License

File with the Secretary of State’s office for a license to function as a home health care provider in your state or city. If you are planning to start a home health care agency, find out about the rules and regulations in your area for home healthcare workers.

4. Obtain Any Other Necessary Certifications

Most states require that you have CPR, First Aid, and other types of training for your employees before they may work with clients. If you do not have these qualifications yourself, take them before beginning to recruit staff members so all home health care professionals will be adequately trained.

The Medicare and Medicaid certifications are also necessary if you want to accept payments from those government programs.

5. Register for a Tax ID

Register for a federal Employer Identification Number (EIN) or apply for an exemption from taxes if your business is considered a non-profit organization.

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6. Open a Business Checking Account

Open up a business bank account so you can deposit money from home care services rendered and withdraw funds as necessary to pay for company expenses or taxes. All transactions related to your home healthcare agency should be done through this account, not your personal account.

7. Obtain Business Insurance

Obtain commercial liability insurance, workers’ compensation, and professional liability insurance.

8. Hire Nurses, Home Health Aides, and Other Medical Professionals

Interview and hire experienced nurses, professional caregivers, personal assistants, and other home care and medical professionals to work for your company. Ensure that they are adequately trained in their respective fields and have a clean background check.

9. Market Your Services

Advertise your services by placing ads in newspapers and posting flyers around the neighborhood where you will provide home health care services. Also, create a professional website with an online presence that will attract customers looking for home care services.

10. Train Your Employees

Train your employees on the proper techniques to safely and successfully provide services to elderly people in their homes. Schedule regular meetings with your employees to discuss any problems they are having providing services and ensure that each client’s needs and interests are being met.

11. Buy Home Health Care Supplies

The things you will need in order to conduct business are only limited by your imagination. Before starting any home health care services, make sure that you have what is necessary to run your business at any given time; this includes items like paper towels, sponges, rags, brooms, and dustpans, bleach products (such as disinfectants), hand soap for cleaning these areas after using the restroom or before preparing food or drinks for patients or guests, etc.

12. Outreach to the Local Community

Contact local nursing homes, retirement centers, and churches in your area that may have elderly people who need assistance with bathing or housekeeping chores. Schedule appointments with these potential clients so you can give them a home assessment of their needs.

13. Deliver Quality Care at Reasonable Rates

Home health care services are typically delivered on an agreed-upon basis for a fixed sum of money, which is less than conventional medical insurance rates in most cases. Check with your state’s Department of Health in order to find out how much you can charge for home care in your area without running into legal trouble. Remember that the goal is to deliver quality service while ensuring that you can charge customers what they are willing to pay while still making a profit.


Tips for a Running a Successful Home Health Agency

Attend Continuing Education Classes

Attend seminars, workshops, conferences, and trade shows to learn about the latest trends and developments in home health care so you can incorporate them into your company as needed or desired.

Perform Regulatory Compliance Updates

Make sure you keep up with updates regarding regulatory compliance such as changes in privacy laws, medication administration rules/restrictions, home safety recommendations/measures, etc.

Document Everything

Keep good records for every patient seen by your agency including date of visit, problem treated, supplies used (even if it’s just gauze pads), medications given (including dosage and time administered; also include whether they were swallowed or injected if applicable) personal observations made about patient symptoms, symptoms exhibited, personal observations made about patient hygiene/personality/attitude, etc.

Build a Strong Team

A home care agency is only as good as its team of caregivers. When hiring caregivers, be sure to screen candidates thoroughly and look for people who are compassionate, patient, and reliable. Implement a clear and detailed hiring process that all employees must go through to ensure that the people you bring on board are qualified for the job.

Work in Close Collaboration with Patients and Their Families

Make sure that when working with patients, you keep everyone close by involved in making decisions about care. Keep them informed of any changes in their health status so they feel included in all aspects of treatment. Ensure they understand why specific things are done during treatment so there is no confusion or misconception regarding whether or not something was necessary or if it even happened at all.

Meet with family members to create a good rapport with them early on so they will be more likely to approve of your services if they believe you are competent enough to handle their loved one’s care needs. Additionally, this may help discourage family members from switching providers if they are dissatisfied with your services since there is already a good relationship between you.

Be Assertive but Not Aggressive About Office Finances

You should never be afraid to ask for payment from patients, but do not be too pushy about it either.

If someone is on a fixed income or has had an unexpected financial hardship, let them know that you are willing to work something out instead of demanding full payment or refusing service if they cannot afford to pay in full at that time. You can offer discounts or provide alternative arrangements such as allowing the patient to assist with office upkeep and cleaning in exchange for reduced fees.

Make sure to set firm boundaries ahead of time so your patients know what will and will not happen when they cannot pay their bills in full.

Train Your Employees Thoroughly

Create training manuals for each new hire so that they know exactly what procedures are to be followed when providing home care services to elderly patients. Take time every day to have employees practice what is taught in their training sessions so that it becomes second nature and they begin to feel comfortable providing home care services unsupervised. Also, use the manuals as a guide for regular meetings so that employees know what they should be covering and can refer back to them when needed.

Remember This Is People’s Lives You’re Handling

It may seem like just another day at work, but you are dealing with people’s lives here. Always ensure that you are treating patients with the utmost respect, showing empathy towards their situations, and being patient with them even during rough times. It is important to remember why you are doing this job in the first place — because you want to help others.

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How Big is the Home Care Provider Industry?

The home health care industry accounts for $109.6 billion in yearly revenue and is projected to grow to $134 billion in the next five years.

Home care currently employs over 1.9 million workers nationwide. The home care providers industry, according to the U.S. Bureau of Labor Statistics, is expected to grow by over 20 percent in the next ten years, adding about 300,000 new jobs.


What are the Key Segments of the Home Care Provider Industry?

The home care industry has 4 main sectors including:

  1. Home Support Services: These are non-medical support services that are provided in the homes of patients or clients rather than hospitals, nursing homes, or other medical facilities. Home support services include assistance with Activities for Daily Living (ADLs) such as eating, bathing, dressing, grooming, personal hygiene activities like toileting, positioning or transferring from bed to chair, etc., Instrumental Activities of Daily Living (IADLs) such as meal preparation, transportation, phone services, light housekeeping, etc.
  2. Home Nursing Services: Home nursing care is provided by registered nurses and certified nursing assistants who are licensed to provide all types of health care. Home health care companies are the ones that provide these services to patients upon referral from a doctor or medical professional. These services can be extended to include administering medications, supporting mobility issues, teaching families about the special needs of the patient and providing emotional support for family members. Home nursing services are typically more expensive than home support services because of the expertise involved with their provision. 
  3. Home Therapy Services: Home therapy is physical or occupational therapy conducted in a patient’s home instead of a clinical setting. Home therapy services are provided by home health care agencies that employ physical or occupational therapists for patients who would benefit from such therapy. 
  4. Home Relief Services: Home relief services is an umbrella term for home-based services including counseling, personal care, homemaking, and minor medical services as prescribed by a physician. Home relief services may be provided under this category not only to elderly people but also to those with disabilities, mental health or chronic conditions.


What External Factors Affect the Home Care Industry?

A home health care agency is an industry that is regulated by many different external factors. There are three external factors that affect the home care provider industry:

Increased regulations and certifications: The federal and state governments require that home care agencies comply with laws and regulations to ensure that both patients and employees receive quality services. Agencies must follow strict HIPAA (Health Insurance Portability and Accountability Act) guidelines for patient confidentiality protection, maintain detailed records of patient treatment plans, provide detailed training for employees such as initial and ongoing training on safety protocol, etc. These rules need to be followed whether the agency is a large one or a small one because it provides clarity about acceptable standards of inpatient care.

Economic slowdown: A global economic slowdown has an effect on healthcare service providers who rely on companies to reimburse their expenses for providing care to their employees. When companies are in financial trouble or revenues drop, home care providers could see a decrease in the number of services requested by these same companies because they do not want to pay for costly therapy services that are not required when layoffs occur.

Statutory changes: Since legislative rules can change with each election, home care agencies must be aware of possible statutory changes that affect how they conduct business. For example, if state laws require agencies to hire at least one nurse per five patient visits, but the law is reversed after an election and now states one nurse is required for every ten patient visits, this will affect all home care agencies who do not comply with this new requirement. Larger home care agencies may be able to absorb these types of changes but smaller providers may not be able to do so.

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Who are the Key Competitors in the Home Care Industry?

When starting a home care agency, it is important to know who the key competitors are in the industry. Some of the major competitors in the home care provider industry include:

Amedisys is a home health care company founded in 1995. Amedisys operates by providing comprehensive health care for patients for up to 90 days after they are discharged from the hospital. The Home Health Center is equipped with state-of-the-art technology and medical equipment, including oxygen concentrators, nebulizers, infusion pumps, suction machines, CPAP/BiPAP supplies, and Telemetry monitors.

Gentiva Health Services provides services at home that range from medication management to personal hygiene assistance. It also includes skilled nursing support if necessary. Their mission statement states that their goal is to provide quality care to those who need it most.  

Home Instead Senior Care franchise provides home health care services to senior citizens who want to maintain their independence while living at home. Home Instead offers non-medical in-home help with a variety of tasks including medication reminders, bathing assistance, meal preparation/feeding assistance, grocery shopping, and transportation.

Kindred Home is one of the largest home care companies in America, with nearly 100 locations. Their services include home health care, hospice care, and palliative care. They aim to provide medical care in a compassionate environment that promotes independence and wellness for clients. 

It is important to research these if these businesses are in your target area and understand their strategies in order to stay ahead of the competition.

What are the Key Customer Segments in the Home Care Market?

Home care providers need to know who their customers are in order to serve their needs. Some of the key customer segments that home care agencies target include:

Aged/Elderly Population – Home health agencies typically provide patient services for this demographic because they are less mobile, have chronic illnesses, and sometimes need assistance with activities of daily living.

Children – Children may require home health care services due to conditions such as autism, cerebral palsy, spina bifida, muscular dystrophy, and cystic fibrosis. They often have extensive therapies that need to be performed in the home under the supervision of a qualified therapist.

Workers’ Compensation Patients – These are typically short-term patients who are injured/disabled due to an incident at work and are unable to perform their job duties for an extended period. If they are not allowed to return back to work after recovering from injuries or disabilities, they could potentially be eligible for permanent disability benefits through workers comp claims.

Patients with Disabilities – Those with disabilities may seek out home health care services if they cannot access transportation or cannot afford transportation, take advantage of community resources, or require help with activities of daily living.

Veterans – Military veterans may receive in-home care services if they are unable to perform their regular household duties due to mental/physical disabilities. They could also use this service if they do not have an in-home caregiver (partner, family member) available to provide them with aid in the home during recovery/treatment.

These are some key customer segments that home care agencies typically target in order to serve the needs in the market.


What are the Estimated Start-up Costs for a New Home Health Care Business?

Some of the biggest startup expenses for home health care businesses include:

Office Furniture – If you decide that an office is necessary for your business (to act as a central location where all employees report to work), it may be necessary to rent/buy furniture such as desks, chairs, filing cabinets, etc. The cost of renting or buying office furniture will depend on what kind of furniture you require and the terms in your lease/purchase agreement.

Office Equipment – Office equipment may include PCs, laptops, printers, copiers, etc. The cost of purchasing these items will depend on what type of equipment is needed for your business and how much money you have to spend.

Medical Equipment – If you plan to service clients in their homes using medical equipment such as wheelchairs, walkers, etc., you will need to purchase this equipment upfront or finance it through a vendor (in which case there would be additional fees associated with the financing). It’s important to consider costs like insurance and costs related to shipping when evaluating financial options (if applicable).

Licenses/Permits – Home care businesses typically need to be licensed in the state where they operate. There may also be additional permits/certifications required by your city, county, etc., which will require a one-time fee paid to the appropriate agency.

Insurance – Depending on what kind of insurance coverage you decide to offer, there may be additional costs associated with buying the necessary general liability insurance policy(ies). One-time premiums may be paid by the homeowners directly to you, or paid to an insurance agency (in which case there may also be additional fees associated with the service).

Staff Training – Staff training doesn’t usually cost anything upfront, but it’s something that should be considered in terms of lost productivity if employees aren’t properly trained before starting to service clients. It may also be important to consider how long it takes for employees to complete training programs and what the total cost of this time is.

Networking/Commission Fees – Some home health care agencies choose to pay their employees a commission or bonus for contacting potential clients, which can help generate revenue faster. The cost of this type of compensation structure is typically included in the client’s fees (as opposed to an outwardly visible cost to customers).

Marketing – Marketing is often seen as one of the start-up costs because it requires money before you make any revenue for your business. Marketing costs can vary significantly depending on what type of marketing activities are done (online vs. print vs. radio).

Marketing materials – Marketing materials include brochures, business cards, etc., which you may utilize when marketing your services if they are not provided by third-party vendors. These items will require upfront costs that must be accounted for when looking at start-up costs.

Is a Home Health Care Business Profitable?

For home health agencies, the profit margin is estimated to be between five and seven percent of total revenue. This number changes depending on how many patients you are able to serve per visit, as well as how much it costs you to provide each service. The best way for home health care professionals to increase their agency’s profitability is by building strong relationships with their clients and providing high-quality care in a cost-effective manner.


What are the Keys to Launching a New Home Care Business?

1. Continuing Education

Home health care nurses and therapists make a commitment to our patients’ well-being, but they also need to be committed to their own continuing education. New home care providers are encouraged to visit local continuing education workshops that are offered throughout the year.

2. Good Communication Skills

The demands of the job require that home care providers have good communication skills with patients and families or caregivers. Providers must be able to get on the same page quickly when it comes to establishing roles, routines, guidelines, and parameters for treatment.

3. Employee Training & Leadership

Home care business owners often start out as employees in their own businesses before they begin to grow beyond two or three people on staff. As a result, there is a need to develop strong leadership, delegation, and coaching skills along with understanding how to monitor progress while still allowing team members some level of autonomy.

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4. Strong Ethics & Values

Home care providers are responsible for providing appropriate, high-quality medical treatment. As a result, it’s important for business owners to have strong ethics and values so that their patients receive the best possible care.

5. Talent Acquisition

Good home health care nurses work well with others, but they often need to hire other people who can do the same thing in order to grow their businesses. Providers must be able to attract talent that reflects company culture, mission, vision, and brand standards – all of which play into talent acquisition strategies.

6. Business Acumen

Home care business owners need to have knowledge of how to manage administrative tasks, such as billing and financing, in addition to overseeing the business operations of the business. As a result, they need to develop broad business acumen, which can be accomplished by taking courses at local colleges or universities where continuing education opportunities are available.

7. Solid Marketing Plan

Successful home care business owners work with marketing experts to develop strategies that will help grow their businesses and increase awareness about the services they provide.


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How to Start a Home Health Care Business FAQs

A home health business provides in-home medical care for patients who are unable to visit the hospital due to an illness or injury. These businesses typically specialize in certain areas such as nursing, physical therapy, occupational therapy, social work, etc., and offer services such as medication monitoring and support, treatments such as wound care and IVs, and life assistance such as mobility support.

The main goal of home health care is to provide short-term nursing care in order to help maintain independence within the patient's own home or community for as long as possible. They are generally not intended to cure illness but rather help improve a patient's quality of life and ability to function in a home environment.

The requirements to start a private home care business can vary depending on the state or country in which you reside. Typically, you will need to have a business license and insurance. You will also need to have a list of qualified caregivers who can provide home care services. You can learn more about the requirements in your area by visiting the website of the Department of Health and Human Services.

Home care agencies get clients by marketing their services. The best way for home health care professionals to get their agency's name out there is through networking with other business owners and attending events that are related to the industry. Other strategies include advertising through social media, online directories, in-home flyers, and direct mail campaigns.

When starting a home health care business, it's important to have strong leadership, delegation, and coaching skills along with understanding how to monitor patient progress while still allowing team members some level of autonomy. In addition to these things, home health care providers also need strong ethics and values so that patients can receive proper treatment. Lastly, talent acquisition is important, so it may be useful to have knowledge regarding how to properly train new hires.

Home health care professionals can gain the skills they need by taking courses at local colleges or universities where continuing education opportunities are available. It's also important for them to keep an open mind and take advantage of on-the-job training opportunities that allow them to develop their leadership, coaching, and monitoring abilities.

When starting a home health care business, it's important not only to learn about all of the necessary skills required but also how strategy fits into building a sustainable business model. There are many different aspects of running a company; however, developing marketing strategies will help increase awareness about the services you provide which can lead to more clients in the long term.


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