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How to Start a Home Healthcare Business

How to Start a Home Healthcare Business

For many people, aging well increasingly includes staying at home and doing so safely for as long as possible. 

According to the US Census Bureau, our country is continuously growing older. By 2030, 73 million people in the United States will be 65 years of age and older. Compared to recent figures, that’s an increase of over 17 million for that age e senior citizen age group alone, making home healthcare a sought-after service.

If you are a compassionate, caring, and patient person, have a background in health care, and are looking for a way to be your own boss, home healthcare will give you a realistic opportunity to realize your dream.

Business Description

A home healthcare business may provide quite a range of patient services and assistance, always at the client’s home. The most significant market segment is the elderly wishing to remain in their own place for as long as possible. 

Professional services may include caregiver assistance, skilled medical care, medical and psychological assessments, pain management,  companionship, speech therapy and physical therapy, hospice care, help with meals and dietary requirements, or transportation to appointments. 

In the US, the average business operates out of a single location and employs 61 staff.

Industry Summary

Like many other countries, the USA experiences a real shortage of qualified professionals across the entire health sector. Retention of good staff is difficult, and demand far outstrips supply. Yet, according to IBISWorld, the increasing need for these services and a relatively low barrier to entry have kept this sector competitive. 

The home healthcare industry is quite fragmented. The largest business in the US is currently Kindred Healthcare Inc., according to IBISWorld, and Florida, California, and Texas report the highest number of home care businesses. Nationwide, it employs over 2 million people and holds a market size of $120 billion.

Industry Trends

An estimated 90% of the 50+ age group have stated they would like to stay at home and “age in place.” Given that the US population is forecast to grow older, the home healthcare industry will remain in hot demand. 

The Preserving Access to Home Health Act was recently introduced to the US Senate and, if passed, will help prevent cuts to the CMS (Centers for Medicare and Medicaid Services) home health payments until 2026, allowing the industry to operate in a relatively stable environment.

Target Market

Your target market will be any person who needs regular health- and wellness-related assistance at home, such as people with chronic conditions, the elderly, people with disabilities, and people recovering from an injury or an illness. 

According to the US Census Bureau, traditional care with rehab and hospice care makes up almost 60% of the professional home healthcare market. However, the sector covers a wide range of specific needs, requiring a highly skilled workforce. Consider specializing in a particular area or expanding your team to be able to offer a broader range of services. 

Checklist for Starting a Home Healthcare Business

Starting a home healthcare business can be a great way to make an impact in your community, as well as build financial independence. But before you start this journey, it’s important to have a solid understanding of the basics and create a checklist for success. Whether you’re just getting started in the home healthcare industry or switching gears from another venture, we have an essential checklist of must-haves so that you stay on track and ensure that both yourself and your clients are protected.

Step 1: Decide What Services To Offer

There are a number of services that a home healthcare business can offer. Non-medical home care business services such as personal care, transportation to doctor’s appointments, meal preparation, or housekeeping will require much less licensing than those that offer skilled care such as nursing care and physical therapy.

Step 2: Write a Business Plan

Writing a business plan for a home healthcare business is essential to the long-term success and longevity of the company. It not only helps with the feasibility of the idea by researching the local market to determine whether there is a need for such services, but it also helps with planning by outlining your goals and objectives, creating a marketing strategy, obtaining funding, and more.

Related: How to write a business plan

Step 3: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

A sole proprietorship and partnership open the owners up to unnecessary personal liability because if the business is sued, all of the owners are personally liable.
 
The corporation and LLC are good choices because they separate the business assets from the owner’s assets. If the corporation or LLC is sued or certain business debts can’t be paid back, the owners aren’t personally responsible for repaying them.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Apply for Business Licenses and Permits

Registering a home healthcare business is complicated because of state regulations and receiving reimbursement from Medicare and Medicaid. Every state is going to be different, but in general:

State Home Care License: Most states require licensing for home healthcare licenses through their Department of Health. Only Iowa, Ohio, Massachusetts, and Michigan currently don’t require licensing home healthcare businesses.

Just because you want to open a home healthcare business may not mean the state will allow you to, as some states limit the number of companies based on need in the community.

Additionally, most states require annual training to maintain licensing.

Specialized Certifications: In addition to registering with the state, depending on the skilled services that are offered, staff may also be required to have specialized certifications.

Medicare and Medicaid Certification: After registering with your state, you can become accredited to receive Medicare and Medicaid payments by registering with the Center for Medicare and Medicaid Services (CMS).

Local Business License: In addition to home healthcare related licensing, a general business license may be required by the state or city before opening a business.

Federal Employer Identification Number: In order to hire staff, a Federal Employer Identification Number or FEIN will be required, which is a unique number that is issued by the IRS to identify a business.

Related: Common business licenses, permits, and registrations by state

Step 5: Set Up Your Location

Whether you will work from home or have commercial office space, you may be required to obtain a Certificate of Occupancy in order to operate a business. Additionally, since you will have access to patient information, proper HIPAA compliance will need to be in place.

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a home healthcare business is another.  Fortunately, the cost to start a new home healthcare business can be relatively low; however, funding to start a business can be difficult if it is needed.  In addition to a good financial plan, banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

A solid marketing plan is critical to ensure the long-term success of your home healthcare business. Developing a marketing plan will be centered around the services offered and the target market, but a few common tactics include:

Online presence: Creating an effective website and using social media platforms are two simple elements to attract customers.
Traditional advertising: Placing ads in the local newspaper and radio, along with billboards, can be an effective promotional strategy in many markets.
Word-of-mouth: Networking and handing out brochures and business cards to medical professionals will help to get referrals.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.

Step 9: Get Business Insurance

Home healthcare businesses require a unique set of insurance that is tailored to their unique needs.

Some kinds of insurance that are necessary for home healthcare businesses include: general business liability insurance, professional liability insurance, and worker’s compensation insurance.

General liability insurance can protect a home healthcare business from many potential liabilities, such as property damage or bodily injury caused by the operations of the business.

Professional liability insurance can provide your home healthcare business with protection in claims of medical malpractice or negligence related to services provided.

Worker’s compensation insurance will provide coverage in the event an employee is injured while on the job.

Related: Types of insurance your business may need

Step 10: Hire Employees

When looking to build a successful home healthcare business, it is important to hire the right team. Depending on the employees needed, professional development opportunities are often required as well.

Additionally, clerical staff with good customer service skills should be found to help coordinate scheduling, handle billing, and manage overall operations.

By forming an experienced, fully informed team that is passionate about providing excellent patient care, businesses can ensure that clients feel secure knowing their needs are well taken care of.

Related: Hiring your first employee

Common Questions When Starting a Home Healthcare Business

How much does it cost to start a home healthcare business?

You can start your own home healthcare business on a relatively low budget. Your main cost will be licensing, insurance, and labor. 
Licencing differs from State to State, but you will likely need to budget for an initial licensing fee (per delivery site) and a renewal licensing fee. Using the State of California as an example, here is a good breakdown of potential licensing costs.

Your biggest expense will be labor – hiring and retaining qualified and reliable staff with the skills to cover a range of home healthcare services will be critical to the success of your business. Skilled professionals are in high demand, and you will compete with doctors’ offices, hospitals, and other healthcare providers. The US Bureau of Labor Statistics has comprehensive data on annual salaries across the healthcare sector.

How profitable is a home healthcare business?

Your income will depend on the size of your business and the range of services and specializations it offers. Profit margins will also depend on current US and State legislation relating to home healthcare access and subsidies and insurance trends. 

A recent article published by Homehealthcare News lists various profit margins for home health agencies depending on business models and/or associations. They ranged from as low as 3% to 24.5% in 2019.  

What skills are needed to run a home healthcare business?

Professional certification. When you are offering home healthcare – as opposed to home care – you will need medical training and meet certification requirements. These requirements might differ from State to State and depend on the healthcare services you provide, but must always verify your competency as a healthcare professional. Home healthcare approval may take up to one year, so ensure you incorporate a realistic timeline into your planning.
 
Relevant Resources:
National Association for Home Care & Hospice
CMS – Centers for Medicare and Medicaid Services

Interpersonal and problem-solving skills.
Empathy, patience, and excellent communication skills are as essential as your professional medical skills. You will be working alongside patients who are grappling with losing independence or may be in considerable pain. You will need to be able to discuss treatment plans in a way that is understandable to patients. Good listening skills, adaptability, and professionalism will be equally important. 

Business management experience.
Business management skills are a definite advantage when starting a home healthcare business. It will support managing staff and contract care aids, adhering to all regulations and requirements, and communicating with private insurers, therapists, other healthcare providers, social services, etc. You may also be dealing with medical equipment distributors. Taking specific business classes may be a great way to help you with these skills.

Final Thoughts

Home health care is undoubtedly a viable business opportunity if you are a health care professional looking for more flexible work hours and options. With low barriers to entry, you can start your home healthcare business as an owner-operator and gradually grow it as you become more confident and the range of services expand. It is certainly not an easy job, but an extremely worthy one that helps improve your client’s life and those around them. 

Greg Bouhl

Greg Bouhl

Welcome! My name is Greg Bouhl, and I have over 21 years as an entrepreneur, educator, and business advisor, where I worked with over 1,600 entrepreneurs to help them start and grow their businesses.

As a small business advisor, I got fed up with clients finding inaccurate and outdated information when they were researching how to start a business online, so I launched StartingYourBusiness.com to be a trusted resource.

I'm constantly adding and revising this site, but if there is a question you have about starting a business or need help finding something, please ask!

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