Starting a Home Care Agency
Frequently Asked Questions
Table of contents
- Why start a home care agency?
- How do I start a home care agency?
- 1. Assess your starting capital
- 2. Write your business plan
- 3. Register with the state
- 4. Join your local home care association
- 5. Create your marketing plan
- 6. Create your online image: website, Google, Facebook, LinkedIn, SEO
- 7. Decide on primary pay sources
- 8. Select your software platform
- 9. Find and Hire caregivers
- 10. Create your sales process
What is a home care agency?
“Home care” is when professional caregivers provide basic, non-medical day-to-day assistance with personal care and daily living activities. For example, homecare professionals will prepare meals, tidy up and clean the house, help to bathe, change or dress the person, and maybe drive them to and from doctor’s appointments.
These services are often essential so that elderly and dependent people can be cared for in the safety and comfort of their own homes, rather than in a residential facility.
Why start a home care agency?
Home care agencies are increasing in popularity due to the US’s aging population, and the preference of American seniors to be cared for in their own homes. Starting a home care business to meet this great demand for in-home care offers a potentially rewarding financial opportunity.
The Center for Medicare and Medicaid Services (CMS) estimates that home healthcare expenditures will more than double between 2020 and 2028, from $108.9 B to $210 B, while Medicare expenditures for home health are also expected to increase two-fold, from $43.1 B to $89.9 B.
Today, the demand for home care is greater than ever, due to the unsafe and uncertain times of the global COVID-19 pandemic.
How do I start a home care agency?
1. Assess your starting capital
How much capital do you need to start your agency? Calculate your expenses: office rental and equipment, licenses, marketing, and of course staff.
Do you have potential investors? Have you considered a small business start-up loan from the government loan program?
2. Write your business plan
This typically consists of the following sections:
- Executive summary: what is your company, its key differentiating factors, leadership, employees and location?
- Company description: what are your goals, client profile, specific strengths and advantages?
- Market analysis: examine your market and your main competitors.
- Organization and management: how the company will be structured? What procedures and policies will you have?
- Services: what services will you offer?
- Marketing and sales: how will you attract clients?
- Financial projections: forecasted income, cashflow projection, sample balance sheets, and break-even analysis (either monthly or quarterly).
You can use guide like this one to help you create this all-important document.
3. Register with the state
Your agency needs to meet state requirements by completing the relevant application for a home care agency license or permit.
You need to find the individual registry for your own state, as requirements vary.
4. Join your local home care association
Join both local and national groups and organizations, such as the National Association for Home Care & Hospice.
These credentials will inspire trust in your agency, present a professional image, and will also provide a useful source for making local contacts, and for helping you to stay up to date with the latest developments in the industry .
5. Create your marketing plan
Effective marketing strategies are crucial for obtaining clients in any industry.
Decide what your brand values are, and how you are different from other agencies in the local area. How can you build awareness of your brand?
You need to use both inbound channels like social media, but also outbound ones like email marketing and attending events.
6. Create your online image: website, Google, Facebook, LinkedIn, SEO
Today more than ever, an online presence is essential. The first and most important step, is to get a website so that you can offer an initial point of contact and visual reference. Make sure your website has effective SEO.
Register your home care agency with Google – your address, hours and phone number must be available to potential clients.
Next, set up your social channels, such as Facebook and LinkedIn, ensuring that the branding and values are consistent throughout, so that the messaging is clear and streamlined.
7. Decide on primary pay sources
Private pay is usually the preferable option, as these clients represent a stronger revenue source, with higher pricing and faster payments.
On the other hand, it is more challenging to build a profitable business around a Medicaid client base, as the system has higher complexity, taking up more administrative hours, and with lower pay rates. However, some agencies do succeed in building a low-cost business model in this area.
Note that in order to receive payment from Medicare and Medicaid for home care services provided to clients, it is essential to obtain the relevant state and local certification.
In addition, VA (veterans’ administration) is a growing market and client base, with solid reimbursement rates. Whichever client type you intend as your agency’s focus, it is advisable to use a software system like Smartcare which incorporates automated electronic billing.
This will ensure that clients are charged correctly, on time, thereby reducing payment cycle times and that your caregivers are also paid promptly. These actions will cement your reputation as a professional service and reliable employer, enhancing trust and loyalty among your staff.
8. Select your software platform
You need to ensure that your agency’s workflow is as smooth and efficient as possible right from the start.
All your staff need to be in constant contact – your caregivers need up-to-date information about each client, easily accessible on their mobile device; they can input their shift data; and this data is then shared with office staff via a secure cloud-based service.
Ideally, your software package will also assist with marketing, referrals, recruitment, payroll and billing. An efficient and streamlined one-stop-shop to address all the needs of a busy, growing agency.
You need home care software that solves the challenges in-home care: caregiver retention and engagement; workflow optimization and efficient scheduling; secure mobile connectivity using an app; customization and automation of caregiver applications; monitoring of caregiver activity; and managing client prospect.
9. Find and Hire caregivers
A home care business provides a highly personalized service to clients, encompassing a strong degree of trust and complicity.
For this reason, you need staff who accurately represent and reflect your business’ core values.
How many staff members will you need? What sort of experience, training and qualifications should they have? See our tips on recruiting homecare professionals here.
To facilitate and speed up the recruitment process, saving time and improving efficiency, you should consider a software system with incorporated automated applicant processing, like Smartcare software.
10. Create your sales process
Referral partner relationships are a crucial element in building your home care agency, as they will generate most of your new clients for your “client pipeline”. These include hospitals, nursing homes, physicians, social workers and local senior centers.
You need to track client leads and communicate with them as your sales team manages the inbound pipeline.
10.1. Engage and retain your team
Ensure that your caregivers have the best communication channels for their workflow since efficient time management is essential in the home care industry. Caregivers must know where they’re going, when and why, with no time wasted due to missed or confusing messages.
Show your appreciation and reward them for outstanding effort, making them feel valued and motivated.
Offer your home care professionals staff training and defined career tracks, ensuring that they will want to stay.
10.2. Plan for growth
Set clear business goals and make a financing plan for steady growth. Use the SMART method: specific, measurable, attainable, relevant and time-bound.
This provides a structure for setting down what you want to achieve, by when, and how to do so.