What are the prospects for home care businesses?

The future for home care businesses is bright. As a result of an aging population and expanded access to Medicare and Medicaid, strong revenue growth is expected in the home care industry. Besides, patients today prefer long-term healthcare delivered in the home instead of institutional long-term care facilities.

Most home care businesses are independent companies, but franchising is becoming more popular. It’s understandable because of the growing legal requirements, a challenging labor market, and various operational issues.

What services do private home care businesses provide?

Home care businesses provide personal care and companionship services. Care agencies help patients with everyday activities like meal preparation, bathing, dressing, and light household tasks.

These services are also known as companion care, homemaker care, home health aid, senior care, non-medical care or assistive care.

Home care agencies provide services like:

  • Companionship
  • Assistance with self-care, including bathing, using the toilet, dressing, and grooming
  • Engaging in activities
  • Facilitating safety at home by fall prevention, helping with ambulation, transfer to and from bed, and transfer to and from a wheelchair
  • Helping with light housekeeping, meal planning, meal preparation, laundry, escorting to out of the home healthcare appointments, medication reminders, and errands
  • Supervising memory care patients

Medical vs. non-medical home care business

Medical and non-medical home care businesses offer very different services. Therefore, before starting a private home care business agency, you should know what care services each provides.

What services does a non-medical home care business agency offer?

Non-medical in-home care is non-clinical. It’s a very important service, but it’s unskilled. In other words, it doesn’t involve medical skills. In addition, the care is provided by senior care aides instead of licensed nurses. Therefore, non-medical care is about custodial care, personal care, homemaker services, and companion care.

What is considered non-medical home care?

Professional home care aides support and assistance with activities of daily living (ADLs), help with household chores, and provide valuable social interaction. You should check with your state for licensing requirements of your in-home care agency.

Companion care focuses on daily household tasks and social needs, whereas personal care involves hands-on care like toileting and bathing assistance.

When you start a private home care agency business, ensure you understand the services you want to offer and be clear about the state licensing requirements.

How to start a non-medical home care business?

What are the licensing requirements to start a home care agency?

Starting or operating a home care business in California requires a thorough understanding of the state’s regulatory environment. For example, California and at least 35 other U.S. states now license non-medical home care. In addition, the state of California requires licenses for home care organizations (HCOs) and independent home care aides (HCAs).

Under the Home Care Services Consumer Protection Act (HCSCPA), unlicensed aides who provide in-home care (also called “private duty” to differentiate the service from licensed home health agency care) and the registries or businesses these aides work for are required to register with Caregiver Background Check Bureau (CBCB), the California Department of Social Services (DSS), new Home Care Services Bureau (HCSB) and Community Care Licensing Division’s (CCLD).

What kind of entity should a home care agency business be?

A home care organization may be an LLC, corporation, partnership or sole proprietorship. In addition to meeting the licensure requirements, HCOs must meet specific insurance requirements, including general and professional liability insurance policy of at least one million dollars ($1,000,000) per occurrence and three million dollars ($3,000,000) in the aggregate, an employee dishonesty bond, including third-party coverage, with a minimum of ten thousand dollars ($10,000) and workers compensation coverage.

Does a home health agency business need an Employer ID Number?

A home health agency needs an Employer ID Number (EIN). You can contact the IRS to apply for an EIN. If you are the business owner, you also need a state tax permit, which you can obtain from the secretary of state’s office after registration. The state tax permit covers employment taxes and income taxes for the home health agency should it require additional assistance.

Do I need to register my home care agency business with the Secretary of State?

Registering your home health agency with the Secretary of State is an important requirement to ensure your business operates legally. To register your home care agency business (Corporation, Partnership, or LLC), you should contact the Secretary of State office. Also, check with your Secretary of State if you are required to register as a sole proprietor.

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

Understanding the costs of starting a home health care business is a critical part of business planning. Cost is a critical factor if you want to start a home health agency.

Whether you start a franchise home health care business or a business from scratch, you need to be clear about the costs. It’s is, however, less expensive to build your own brand and avoid the more costly franchise model with royalties and higher investment.

So let’s look at the costs of starting a home health care business from scratch without the cost of franchising:

  • Home health care business agency formation – The cost of forming your business entity depends on your state.
  • Home health care business licensing – Licensing costs vary from state to state. Check with your state for state licensing fees.
  • Insurance – Don’t let your home care business go unprotected. Check with your state regulators about the required insurance for your business.
  • Payroll – Staffing and payroll are among the most important aspects of starting a home health agency.
  • Office space – Having proper office space for your business is critical. The office space will help you build credibility and reputation. To save money, you could start in an executive office space.
  • Supplies – You need to invest in safety equipment, furniture, computers, printers, shredders, etc., when you start a business.
  • Marketing – Marketing is especially important when you start your business. It can be expensive to market a home health business. The marketing costs involved with starting a business are the design of your website, advertising, marketing materials, logo design, brochure design, flyers, business cards, etc.

Should I buy a home care agency franchise business?

If you are interested in starting a home health agency, there is a franchise for that. The appeal of franchising is clear—you become the owner of a home care agency virtually overnight. In addition, buying a franchise business helps you bypass some of the toughest parts of starting a business.

On the other hand, owning a franchise business can be limiting. A franchise business limits your autonomy and ties you to a brand whose reputation is out of your control. If the franchise makes a mistake, it hurts all. Although when you are sold a franchise business, they tell you that owning a franchise business is easier than starting one from scratch, success is never guaranteed.

Do I need an office for my home health care business?

You are not required to have an office for your home health agency. However, it’s difficult to imagine a reputable home health care company without an office.

You could start with an executive office when you just start your business. It’s much less expensive than signing a long-term lease on office space. You could also partner with another business to save money on office space.

Do I need a bank account for my home care agency business?

You might be wondering: “Do I need a bank account for my home care agency?” You most likely need a bank account, especially to keep your personal and business finances separate.

A bank account will help you keep your records organized, project cash flow, reconcile bank statements, and avoid overspending.

What types of insurance does a home health agency need?

There are two major types of insurance to consider for your home care agency:

  • General Liability insurance – This type of insurance can protect your business against property damage or bodily injury lawsuits from outside parties.
  • Professional Liability insurance – This insurance product can protect home care service providers from potentially devastating financial damages resulting from an error in delivering your services or alleged negligence. If your business is, professional liability insurance can pay your legal costs, including the cost of an attorney and a potential settlement.

What to include in a non-medical home care business plan?

You might be wondering: “What to include in a non-medical home care business plan?”

  • Starting expenses – marketing, office space, equipment, supplies
  • Financing – How are you going to finance your home health business?
  • Cash flow – How are you going to manage your cash?
  • Market research – Analyse the market to understand your industry and the competitive landscape.
  • Staff – How will you hire, train, manage, and retain your employees.
  • Marketing strategy – How are you going to market your services?