Working intimately with home health care agencies throughout the U.S. has given us many insights into what it takes to start a successful home health care business. While we only handle the marketing and caregiver recruitment side of things for our home care clients, we have come to see what is involved with making a home care agency successful; these include factors such as licensing, costs, hiring caregivers and developing a sound marketing strategy. Below are the seven steps you need to take to successfully start your home care agency.
If you’re starting a new home care business and need help setting up a website and getting your marketing started, click here to schedule a time to discuss your needs and see if we may be able to help.
Steps to Start Your Home Care Business
1. Create a Business Plan
The first step when starting a home health care agency is to create a business plan. While this may feel daunting, it is crucial for your agency’s success. A business plan is a document that describes a new business, its goals, and its methods of achieving those goals. This is an important step for future success because it’s focused on organization and preparation which will keep your agency on track and growing. Think of it as a roadmap.
More than just personal use, a business plan is also how your business will receive funding. This is the step where you convince banks and investors to invest in your home care business.
While there’s no one way to create a business plan, there are several key components to focus on. These include an executive summary, company description, market analysis, customer analysis, operations plan, marketing plan and financial projections. Below is what you should discuss in each section.
Executive Summary: Much like the first chapter of a book, this section is critical in capturing the attention of investors. The executive summary is used as an overview to convey the key points of your business plan. For your new home care business, be sure to include the need for your specific services, the target market, business model, marketing strategy and competition.
Company Description: This section of the business plan will go into more specifics about your home health care agency. Where are you located? When were you formed? Who will you serve? Who will be on your team? The company description is where you paint a picture of your business so your investors can accurately envision its function and place in the market.
Market Analysis: Here you will outline the market you will serve. The market analysis should include market trends, size and behavior as well as economic conditions and your potential competition. The goal of this section is not only to uncover truths about the market that you may not have been aware of, but also that the market will allow your business to be successful.
Customer Analysis: This section is used to go into specifics about who your clients are, what they need and how your home care agency will satisfy those needs. The customer analysis will include key demographic data such as age, occupation, marital status and location. The needs of your customers can be expressed through past actions, future projections or implications. Don’t forget to outline how your home care business in particular will address the needs of these customers.
Operations Plan: This section of the business plan is all about tactics and deadlines. The operations plan is where you will discuss your goals, procedures for achieving those goals and the timeline needed. Include information about your caregivers, their specific tasks and roles in your home care agency, what operations will take place daily, where they will take place, when to expect completion of operations and how much these tasks will cost.
Marketing Plan: The marketing plan is an essential part for outlining your home care business. This should include the ways in which you will attract customers to your home care agency and get them to buy your services. Describe your services, pricing, sales plan and advertising plan. Will you use traditional marketing, SEO or PPC? This section is intended to show your investors that your agency has the capability and plan to attract paying customers.
Financial Projections: Often included in the appendix, the section about financial projections is used to show the financial stability of your health care agency. Include information for both the short and long term including sales forecast, budget, balance sheets and cash flow statements.
2. Acquire Licensing
Does a Home Health Care Agency Need a License?
In short, yes, a health care business does need a license to operate. However, there are exceptions to this rule. While most states require a license, the following states do not:
If you are outside one of these states, you will need to complete an application to receive a state license. This is for both medical and non-medical agencies. The process of approval is not guaranteed but often easy to obtain. However, some circumstances will warrant a rejected application such as the administrator or Director of Nursing lacking the right qualifications.
It’s also best to note that each state has different application requirements. You may need to submit a business plan, adhere to state regulations or pay a specific fee to apply. If your application gets approved, you could receive your license as soon as two months or as long as a year. It all depends on your state of origin and the number of applications they have received.
The licensing process for your home health care business will often include inspections. These are on-site and could take place before or after you receive your license. The inspections will be completed by inspectors of the state or an accredited body. Additional inspections may occur on a yearly basis and they could be scheduled or unannounced.
Renewing a License
Home health care agencies will need to renew their state license after an initial period of operation. After this, you will need to renew your license every one to two years. This can be done through submitting a renewal application and often paying an accompanying fee.
Certificate of Need (CON) Application
In addition to a general state license, you’ll often need to complete a Certificate of Need (CON) application to start your home health care agency. A CON is additional legal documents intended to regulate the U.S. healthcare system to avoid excess supply of health care agencies in specific areas.
In this application you’ll need to make a case as to why your caregiver business is needed in the community. 35 states require a CON and the process of receiving the certificate is determined by which state your business will operate.
3. Creating a Website for a Home Care Business
While a home aide agency may feel like a human connection based business that doesn’t need a website, you must meet the people where they are—online. A website is necessary to display your services and brand to potential clients and market your business. Without a website, you won’t be found online which could do great harm to the potential success of your agency.
However, web design is no simple task. It’s one thing to simply create one and another to craft a website that will bring traffic and turn visitors into customers. This type of success is reached through factors such as design and user experience.
If you are interested in having a clean website designed specifically for your home health care business, we’d love to help. Talk to us today about how you want to build your agency’s presence online.
4. Marketing a Home Care Agency
Once your caregiver business has a website, the next step is helping direct potential clients to this website. This is done through digital marketing with techniques such as PPC, SEO and traditional marketing. We go in depth into each home care marketing strategy in a separate article, but let’s briefly break down each one.
Pay Per Click (PPC)
PPC stands for pay-per-click. This is when you pay a search engine to display your home care agency’s website at the top of specific search results. Every click you receive because of this ad placement, you will pay the search engine. This is the fastest way to get leads for your business.
SEO stands for search engine optimization and is the process of organically increasing the quality and quantity of your home care agency’s web traffic from a search engine. This encompasses many factors that all play a role in helping your pages rank higher on Google. The higher your page is on a search result, the higher your caregiver agency’s potential traffic will be. SEO largely involves ensuring:
- Your website is easily crawled and indexed by Google
- Your copy includes frequently-used home care keywords, making the pages relevant to the searches your potential customers perform
- Your website is trusted by Google; this is accomplished by acquiring links from other websites, ensuring the content on your website drives engagement from your visitors, and that it is medically accurate.
Traditional marketing is marketing that isn’t done online. It includes print ads, billboards, and phone calls. This marketing strategy is not direct response advertising which means it will take longer, sometimes years, to see results. However, this type of marketing can make a company synonymous with a service over time.
Often, a home care business will flourish or die depending on how effectively it handles its marketing. For some startup home care businesses, it may make sense to hire a professional SEO or even a fractional CMO, but it largely depends on resources available to the company.
Why Does a Home Health Care Agency Need Insurance?
While having insurance isn’t a necessity to starting your caregiver business, it is vastly important if you want to protect it. Insurance will prevent your agency from closing due to claims brought on by an accident or error on the part of your business. There are two main types of insurance a home health care agency should consider.
Types of Insurance for a Caregiver Business
The first is Professional Liability Insurance. This insurance is meant for situations where your agency may be getting sued due to claims of negligence, misrepresentation or inaccurate advice. Even if your agency did nothing wrong, a client can still sue if they believe you made a mistake. Professional Liability Insurance would help pay for these legal costs brought on by the claims.
Some situations this insurance will not cover include bodily injury or property damage, work-related injuries or illnesses and a data breach.
The second main type of insurance a home health care business should consider is General Liability Insurance. This will protect your agency from claims of bodily injury or property damage, the specific situations not covered by Professional Liability Insurance. These claims will be unrelated to your professional operations such as accidentally damaging something in a clients home when you visit. General Liability Insurance will help cover you for costs brought on as a result of bodily injury or property damage.
6. Finding Caregivers For Your Agency
Once your home health care business has a licence, insurance and a marketing strategy the next step is to find caregivers for your agency. There are many different ways to find staff members who match the direction and character of your agency. Below are the top four sources to start your search.
One of the most common ways to find employees for your caregiver business is job boards. This is a great way to reach people actively looking for a job while also providing you an easy way to screen them. Read their resumes and cover letters to get a better sense of who they are and if they would fit well in your agency. The most popular job boards include Indeed, Glassdoor, and Monster.
Social Media is a great way to reach a large audience. It’s best to note that different social media platforms have different demographics. Depending on the age of your desired clients, some platforms may be better than others. In order to get your job posting in front of the right people, be sure to use hashtags and be present on pages frequented by your ideal employees. The most popular social media platforms to promote open positions are Instagram, Facebook, LinkedIn and Twitter.
If you are looking for recent graduates or interns for your new home health care agency, try promoting your business at university job fairs. These events allow for in person conversations which can help you meet and screen potential caregivers on the spot. Job fairs are perfect for finding eager caregivers who are ready to put their college learning to work.
Another way to find caregivers for your agency is by helping them come to you. This can be done through the creation of a career page on your website. When optimized for SEO, this page can bring targeted traffic for caregivers in search of a new position.
7. Financial Investment
One of the most integral steps to starting your home care agency is understanding the costs. Creating a budget and franchise model will help to prepare you for the expected and unexpected costs of running your business. Below are the major areas where costs will start to build.
Licensing and Insurance Costs
The costs of licensing and insurance may not be the first thing you think of when considering costs, but these fees add up. Licesnising applications for a home health care agency is typically around $500 with some states having slightly higher or lower costs. Some states like Alabama will also require you to pay for criminal background checks which are around $70 while other states require a license fee of $200-300 with some ranging to $500. Some states require this license fee to be paid annually.
The two major insurance types for home care businesses, Professional Liability and General Liability, also come with their costs. Professional Liability Insurance is around $59 a month which comes out to $713 a year. General Liability Insurance is around $30 a month which comes out to $360 a year.
With both licensing and insurance costs, your agency is looking at well over $1,000 of initial fees to cover. Be sure to work these costs into your financial plan.
As a home care business your equipment can range from medical devices to computers. These costs, depending on the specific medical equipment you need, will be quite high. Compared to the other areas, equipment will be the biggest factor to invest and plan for.
Operational costs include the smaller tools and resources your home health care agency will need on a daily basis. These include software subscriptions, masks, gloves, rent and employee paychecks. While these costs are significantly smaller than equipment or licensing fees, they will add up over time and should not be overlooked.