Home Health Agency Start Up: The Dos and Don’ts of Starting Up

We get a lot of calls from individuals wanting  a new home health agency start up. With the baby boom population aging at the rate of between 3 and 4 million a year, or 57,692 to 76,923 each week, the rise in home health agency startups quickly follows. As a consultant specializing in the home health agency start up industry, the number of inquiries we receive is on the increase. Some of the callers are striving to become Medicare Certified Home Health or Hospice; others aspire to become licensed Private Duty Home Health, while others want to provide non-skilled Private Pay Home Care. Regardless of the type of agency and the services offered, there are some basic questions that need to be answered before investing your money and time.

One of the first and most important questions to ask yourself is why do you want to get into this business? There are many reasons to start a business, and, at the core of every business venture, no matter what kind of a business you choose, is the passion for what you do. If you see starting up a home care agency as a good investment and have a passion for making money, that will help you in the short run. But to really enjoy long-term success, you have to be passionate about the home care industry, the people you’ll serve, and the rewards it gives you emotionally as well as financially. When you are passionate about what you are doing, you are more able to effectively sell your services to customers.

Second, where will you locate your home health agency start up? Location! Location! Location! Although you’ve likely heard it before as it refers to a specific site for a store, in the home care industry it applies to the geographic area in which you will be selling your services. It is critical to do a community assessment of existing home care businesses to determine how many currently exist in the geographical area you are targeting that are offering the same or similar services you plan to offer. A community assessment will also provide vital information, including prevailing charges and employee compensation. If you discover a large number of other providers in your targeted area, you may want to rethink the area or decide you want to specialize in a certain area the others do not. Competition should not stop you if you really want to do business. If you have structured your business correctly and have a solid sales plan, you will most likely be successful.

Third, does your state require that you become licensed to provide the services you plan to offer? Failure to ascertain this up front can cause a major setback in your plans and add considerable unplanned expenses. If you are in a licensed state, you likely will be required to have a policies and procedures manual that is compliant with the state rules for your home care agency. If you have never written policies and procedures, it can be a daunting task. You may need to seek the services of a qualified home care consultant to write the policies and procedures manual and assist you through the licensing process. A good consultant will be able to do this and ensure you get licensed in a timely manner. An additional consideration is Certificate of Need. If your state has a Certificate of Need requirement, you will need to be sure that the business you are starting is not governed by it.

Finally, do you have enough resources, including time and money, to ensure your home care agency gets off to a successful start? As with any business startup, lack of sufficient capital to launch the business is the number one cause of business failure. Currently, it is estimated that a non-skilled, non-Medicare home care agency may cost between $45,000 to $60,000 to start. For a licensed home health agency start up, the costs can run between $55,000 and $65,000. For a Medicare Certified agency, startup costs can range from $75,000 to as high as $200,000. The second resource is time. Time is another form of capital and, as with money, inadequate investment will doom the venture to failure. Sometimes people try to start the business up while still working full or part time at another job. To really make your home care agency a success, you need to invest your full time and energy to get it started and nurture its growth.

A home health agency start up is exciting and tiring, at the same time. It requires energy, time and money to make it successful. Careful upfront planning is critical to the success of any business and home health is no different. If starting up a home health business is in your future, call Kenyon HomeCare Consulting at 206-721-5091 or email gkenyon@kenyonhcc.com for a free initial consultation to determine if this is the business for you.

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