How to Start a Nursing Home

start a nursing home

Starting a nursing home can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful nursing home.

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

14 Steps To Start a Nursing Home:

  1. Choose the Name for Your Nursing Home
  2. Develop Your Nursing Home Business Plan
  3. Choose the Legal Structure for Your Nursing Home
  4. Secure Startup Funding for Your Nursing Home (If Needed)
  5. Secure a Location for Your Business
  6. Register Your Nursing Home with the IRS
  7. Open a Business Bank Account
  8. Get a Business Credit Card
  9. Get the Required Business Licenses and Permits
  10. Get Business Insurance for Your Nursing Home
  11. Buy or Lease the Right Nursing Home Equipment
  12. Develop Your Nursing Home Marketing Materials
  13. Purchase and Setup the Software Needed to Run Your Nursing Home
  14. Open for Business


1. Choose the Name for Your Nursing Home

The first step to starting a nursing home is to choose your business’ name.  

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your nursing home:

  1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
  2. Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
  3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your nursing home.


2. Develop Your Nursing Home Business Plan

One of the most important steps in starting a nursing home is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  1. Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your own assisted living facility.
  2. Company Overview – this section tells the reader about the history of your nursing home and what type of nursing home you operate. For example, are you a long-term care facility, assisted living facility, or an independent living facility?
  3. Industry Analysis – here you will document key information about the nursing home industry. Conduct market research and document how big the industry is and what trends are affecting it.
  4. Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
  5. Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
  6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
    • Product: Determine and document what products/services you will offer 
    • Prices: Document the prices of your products/services
    • Place: Where will your business be located and how will that location help you increase sales?
    • Promotions: What promotional methods will you use to attract prospective customers to your nursing home? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
  1. Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  2. Management Team – this section details the background of your company’s management team.
  3. Financial Plan – finally, the financial plan answers questions including the following:
    • What startup costs will you incur?
    • How will your nursing home make money?
    • What are your projected sales and expenses for the next five years?
    • Do you need to raise funding to launch your business


3. Choose the Legal Structure for Your Nursing Home

Next you need to choose a legal structure for your nursing home and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the nursing home and the business are the same legal entity. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a nursing home together. The partners share in the profits and losses of the business. 

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a nursing home include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a nursing home is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your nursing home, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.


4. Secure Startup Funding for Your Nursing Home (If Needed)

In developing your nursing home business plan, you might have determined that you need to raise funding to launch your business. 

If so, the main sources of funding for a nursing home to consider are personal savings, family members and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a nursing home that they believe has high potential for growth.


5. Secure a Location for Your Business

The first step in finding a location for your nursing home is to decide what kind of environment you want for your nursing home residents. Do you want a rural setting with plenty of open space, or a more urban environment with easy access to medical care and other amenities?

Once you’ve decided on the environment, you’ll need to research the locations that fit your criteria. There are many online databases of nursing homes. You can also contact your state’s department of health for a list of licensed and skilled nursing facilities in your area.

Your next step is to take a tour of the homes on your list. The right location should feel like a home, not only for you but also for your potential residents and other employees.


6. Register Your Nursing Home with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.


7. Open a Business Bank Account

It is important to establish a bank account in your nursing home’s name. This process is fairly simple and involves the following steps:

  1. Identify and contact the bank you want to use
  2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  3. Complete the bank’s application form and provide all relevant information
  4. Meet with a banker to discuss your business needs and establish a relationship with them
If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your business plan and financial model in hours.

8. Get a Business Credit Card

You should get a business credit card for your nursing home to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.


9. Get the Required Business Licenses and Permits

Assisted living facilities provide residence and care for the elderly population or disabled people who can’t live independently. To start a nursing home, you’ll need a business license and a permit to operate a healthcare facility. You’ll also need to meet several requirements for staff, patient care, and the facility itself.

If you live in a state that requires inspections, nursing facilities are licensed by each state’s department of health. In states where there isn’t a licensing requirement, nursing care facilities are regulated by the Centers for Medicare & Medicaid Services (CMS). Either way, you’ll need to obtain a license or a state permit.

In most cases, your facility will also need to meet requirements for staffing levels and staff training, patient care records, fire safety procedures, and building safety that are established by the state’s department of health or state legislature. In addition, nursing homes have federal standards they must follow including the CoP (Conditions of Participation), which details requirements for all healthcare facilities. All of these standards can be found on the CMS website.

If you plan to offer specialized care, such as a skilled nursing facility care for people with Alzheimer’s or dementia, your facility likely needs additional licensing or certification. For example, in order to receive reimbursement from Medicare or Medicaid, a facility that specializes in dementia care must be a Dementia Special Care Unit certified by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).


10. Get Business Insurance for Your Nursing Home

There are different types of insurance that are necessary for the operation of a nursing home. 

Nursing Home insurance policies that you should consider include:

  • General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
  • Workers’ compensation insurance: This type of policy works with your general liability policy to protect against employee workplace injuries and accidents. It also covers employees’ medical expenses and lost wages.
  • Professional liability insurance: This protects your business against claims of professional negligence such as incorrect medication or medical treatment.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs. 


11. Buy or Lease the Right Nursing Home Equipment

To run your nursing home successfully on a day-to-day basis, you will need the following equipment: 

  • defibrillators
  • stretchers
  • induction loops
  • wheelchairs/walking aids
  • wardrobes (for uniforms)
  • medical beds (of various sizes depending on the number of patients)
  • cots (for newborns or short-term stay patients)
  • medical records storage facilities
  • feeding equipment

The equipment that you need will vary depending on the size of your nursing home. You can run a small facility with less than fifty patients, but you still need to be able to provide round the clock care. A larger nursing home will need more staff members to keep it running smoothly.


12. Develop Your Nursing Home Marketing Materials

Marketing materials will be required to attract and retain customers to your nursing home.

The key marketing materials you will need are as follows:

  1. Logo: Spend some time developing a good logo for your nursing home. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  2. Website: Likewise, a professional nursing home website provides potential customers with information about the services and/or medical care you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
  3. Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media platforms will help customers and others find and interact with your nursing home.


13. Purchase and Setup the Software Needed to Run Your Nursing Home

The software you need to run a nursing home may vary depending on the type of nursing home. In general you’ll need software that can track patient information and manage medication schedules. If you are running a long-term care facility, you may also need software that can track resident information and manage billing and payroll.

The software you need to run a nursing home will vary depending on the specific needs of your home, but some common options include electronic health records (EHR) software, patient tracking software, and nurse scheduling software.


14. Open for Business

You are now ready to open your nursing home. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.


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How to Start a Nursing Home FAQs

Starting a nursing home can be difficult, but with the right planning and execution it can be a successful endeavor. There are a few key things you need to do in order to get your nursing home up and running: 

  1. Plan your business carefully. This includes creating a comprehensive business plan and strategizing how you will market and run your nursing home. 
  2. Find the right location for your home. You'll need to consider factors such as zoning, accessibility, and the needs of your target population. 
  3. Establish good relationships with local healthcare providers. This will help you attract residents to your home and ensure that they receive quality care. 
  4. Manage your finances carefully, including the hiring and training of staff members. 
  5. Once you acquire residents, be sure to provide quality care and establish a strong culture within your home. By properly planning and executing these tasks, you will have a successful nursing home in no time.

There are a few ways to start a nursing home with no experience. First, you may want to research the process and startup costs. You may also want to find a partner who has experience in the nursing home industry. Finally, you could also attend a seminar or workshop on starting a nursing home.

There is no one-size-fits-all answer to this question, as the profitability of nursing homes can vary depending on many factors. However, in general, for-profit nursing homes are often more profitable than nonprofit nursing homes. This is because for-profit nursing homes typically have lower overhead costs and can charge patients more for their services.

The cost to start a nursing home can vary depending on the size and location of the home. Typically, startup costs can range from $200,000-$250,000 for a small nursing home business, with costs starting as high as $750,000 for a medium sized business. 

The following are some factors that contribute to startup costs in opening a nursing home: 

  • Initial licensing fees 
  • Building renovation and construction 
  • Equipment (necessary medical equipment, furniture, kitchen utensils) 
  • Landscaping (fencing, garden) 
  • Business license 
  • Advertisements 
  • State and federal survey compliance (filing fees) 
  • Professional services (architect/engineer/surveyor fees)
  • Insurance fees
  • Legal fees

The ongoing expenses for a nursing home can vary depending on the location and the services offered. However, some of the more common expenses include room and board, medications, medical supplies, physical therapy, and occupational therapy. Depending on the needs of the patient, these expenses can range anywhere from $6,000 to $10,000 per month.

Nursing homes make money by providing room and board, medical care, and other services to residents. The cost of these services is usually more than the resident can pay out-of-pocket, so the nursing home collects payments from insurance companies, Medicaid or Medicare, or the resident's family. Some nursing homes also have income from investments or rental properties.

The nursing home industry is one of the most profitable industries in the United States. There are several reasons for this, including the following:

  1. The demand for nursing homes is high. As the population ages, more and more people will need nursing home care.
  2. The cost of nursing home care is high. This means that there is a lot of money for nursing home administrators to make in the industry.
  3. The quality of nursing home care is often poor. This means consumers will pay higher prices for quality care.
  4. Government healthcare programs pay for a lot of nursing home care. This allows nursing homes to receive money from the government.

Nursing homes fail because they are often understaffed, which can lead to residents not getting the care they need. They may also be underfunded, which can limit the quality of care that residents receive. Additionally, nursing homes can be unpleasant places to live, which can cause residents to feel unhappy or isolated. If a nursing home is not financially stable, it can lead to staff quitting and residents being forced to move. All of the above issues lead to nursing homes closing down.


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