How to Start a Home Health Agency: A Complete Guide

Is home health care a good business to start?

‍

Home health care is rendered to patients who don’t need hospital or facility care, but rather benefit from daily in-home patient visits by a healthcare professional or licensed caregiver to help them live comfortably and safely.

‍

The support and medical treatment they may be given can include assistance with daily activities like eating, bathing, dressing and companionship.

‍

There are several pieces of evidence that prove the need for home health care agencies is rising:

1. The demand for private caregiver services is rising, as aging baby boomers account for around 25% of the U.S. population. By the year 2030, this demographic group will be 65 or older.
2. In today’s society, aging seniors prefer to stay in their own homes as they age - 90% of them, to be exact.
3. With the help of modern medicine, life expectancies have increased. Patients with chronic illnesses will require longer care than previously needed. And, with chronic illnesses becoming more prevalent, the need for health care agents has increased.

‍

These statistics prove that a home health care agency is indeed a good business to start, as the industry is expected to experience growth over the next 5-10 years. 

How much does it cost to run a home health care business?

‍

Before digging deeper into starting a home health agency, you must get one crucial thing sorted: the finances. The cost structure consists of the necessary up-front investment, start-up expenses, and project costs in the business’s first three years.

‍

The costs of starting a homecare business can differ depending on the state you’ll operate in and the type of home care agency you want to launch. Generally speaking, the non-medical home care agency will cost you the least, while the Medicare/Medicaid Home Health and Hospice start-ups are the most expensive.

‍

Starting a home healthcare business can range anywhere from $40,000 to $350,000, depending on the type of service and the state where it will be provided.  

‍

Take a look at the estimated costs of different types of start-ups:

‍

• Private Pay Home Care agency: $40,000 - $80,000
• Licensed Home Health non-MediCare agency: $60,000 - $100,000
• Medicare Certified Agency: $100,000 - $350,000

‍

PRO TIP: Developing working capital for the first year should be your priority. Not having a working budget for the start-up costs is one of the main reasons new home care businesses fail. 

What licenses do I need to start a home health care business?

‍

In the United States, to legally operate a home health care business, you must acquire Medicaid certifications, a home care license, and a general business license on behalf of the entity.

‍

A Medicaid certification is needed if your business plans to receive payment to Medicaid (a joint federal and state program that covers low-income individuals) beneficiaries. 

‍

Most states require businesses providing home care services to attain a home health care license. State officials may conduct yearly inspections to verify businesses are adhering to healthcare standards. Currently, only Iowa, Massachusetts, and Michigan do not require owners to acquire a home health care license before starting a home health care agency.

‍

It is important that you take the time to understand any pertinent license and certification criteria before you open your home health care business. Adhering to these guidelines will keep your company in compliance with policies and guidelines established by federal and state regulatory organizations.

Checklist for starting a home health agency

‍

‍

‍

DOWNLOAD YOUR COPY OF HOW TO START A HOME HEALTH AGENCY CHECKLIST

‍

1. Conduct market research and develop a business plan

‍

Investors are drawn to work with companies that have a well thought out business plan. Your business plan should reflect the type of care and services your home health care business will provide. 

‍

Every home health care agency business owner should include the following points in their business plan:

• Executive summary 
• Company overview 
• Services portfolio 
• Target audience
• Leadership structure

2.Draft  a budget and secure funding

‍

To set yourself and your new enterprise up for success, develop a budget plan for your personal and business needs. Make sure you open a business checking account and purchase accounting software to efficiently manage your budget.

‍

The expenses associated with overhead costs, hiring and training staff, and purchasing business equipment tend to add up quickly. 

3. Create a business entity

‍

The term entity refers to different types of business structures. For example, one can establish a corporation, partnership, sole proprietorship, or Limited Liability Company (LLC).

‍

The entity type that you choose plays a part in your personal obligations as a business owner, the amount of taxes you’ll be required to pay, and the organizational structure of your enterprise. 

‍

Make sure you do your research, and decide which of the available business entities ticks the most boxes for you.

4. Get your EIN

‍

The Internal Revenue Service (IRS) issues a unique 9-digit number to every business entity operating within the borders of the U.S. This number is your company’s Employer Identification Number (EIN) or Federal Employer Identification Number (FEIN).

‍

Applying for an EIN is a free service. You can apply via multiple channels: online, USPS mail, fax, or  telephone (for international applicants).

5. Register with the Secretary of State

‍

This step may sound intimidating, but it’s not! 

‍

In most cases, all that is required is for you to file your business name with state and local governments.

‍

But, before you file your business name, make sure to check whether the name you’ve chosen for your business is available. Also, don’t forget to browse the web and check the availability of the domain name for your website, too!

6. Obtain proper insurance

‍

We can’t stress enough how important it is to obtain the right insurance before you open the doors of your business. The healthcare industry is risky, especially since you will be working with vulnerable individuals. Accidents and unpredictable events can happen no matter how careful you are, so make sure to get this step right to protect your business and assets. 

‍

You’ll need the following insurance policies:

‍

• Professional liability insurance (also known as “errors and omissions” insurance) - This policy will cover you if malpractice, negligence, or incompetence claims arise. 

‍

Depending on the services your agency will provide, you may also need:

‍

• General liability insurance - This insurance protects your business from claims that it caused bodily injuries and property damage.
• Cybersecurity insurance - In today’s tech world, this type of insurance has become indispensable. If your business happens to be under a malicious online attack and you experience a breach or a hack, this insurance will protect you against HIPAA penalties related to exposing Personal Identifiable Information (PII).

‍

In addition, unemployment insurance, workers’ compensation, and disability insurance are usually required by law (though this varies from state to state).

7. Hire the right people and develop a plan to retain them

‍

Now that you’ve tackled the paperwork, met legal requirements, claimed your business name, and your entity is approved, it’s time to focus on hiring qualified caregivers and staff for your business. 

‍

Your employees are the face of your business, so hire those who reflect your company’s values, who can also provide the best care possible to your patients.

‍

To help you hire competent professionals who interact well with patients, you’ll want to develop a caregiver recruitment plan. As you begin to invest in your caregivers, you will want to retain your top talent. You can employ various tactics to reduce nurse turnover rates, but for the most part, providing ongoing training and recognizing staff for their hard work will be enough to keep your caregivers on board.

‍

8. Get the clients: Have a sales and marketing plan in place

‍

This may be the most challenging step in starting a home health agency. Until you build a trusted brand, you’ll need to adopt effective marketing strategies to attain clients.

‍

 Here are some of the best ways to attract clients to your home care business:

‍

• Connect with reputable referral sources in your community: Partner with hospitals, rehab centers, and community organizations in your area. These partnerships can help you expand your reach, gain referrals, and increase your client base.

‍

• Build an online presence: Growing your business without a website is impossible in today’s business world. 

‍

To get more exposure, you’ll need a professional-looking site with content that targets the following audience:

• older adults and seniors
• adult children of seniors 
• relatives of older citizens and individuals with disabilities

‍

• ‍ Set up a Google Business Profile (formerly known as “Google My Business”): This is a really important step in boosting your online visibility and acquiring clients. Once you get listed in Google Business, your business address, hours, phone number, and ratings will be available for potential clients and anyone searching for a home health agency within local searches.

‍

• Take advantage of established elder care websites: Post your agency listing on prominent elder care websites to get more online visibility at the right place.

‍

• Run Google Ads and engage in social media: Using Google ads is a great way to get noticed quickly, especially when you’re still establishing your brand. Your Google ads will have immediate exposure when clients make relevant searches. For instance, you’ll want your website to show at the top of Google when someone types in search terms like, “[your location] home health agencies.” 

9. Define formal policies and procedures

‍

Your business will need to have formal policies and procedures in place to address the essential parts of your business operations. You can either write your company policies yourself (make sure to consult a legal advisor) or purchase them. 

‍

Some of the topics that should be included in your business policy are:

‍

• New client admissions
• Care plans
• Scheduling
• Hiring process
• Employee and payroll records
• Training
• Client billing
• Client rights and responsibilities

‍

10. Prepare for operations: Scheduling, accounting, time, and mileage tracking

‍

To keep your daily operations running smoothly, use a home health care workforce management software system built for scheduling, time and mileage tracking, and accounting processes.

‍

Some of the apps on the market provide multiple business solutions and third-party integrations. For example, Timeero seamlessly integrates with QuickBooks to export timesheets and mileage records. 

‍

Grants to start a home health care business

‍

Several grants are available for entrepreneurs looking to start home healthcare businesses. Below are a few of the grants you can apply for as you start preparing to launch your business.

‍

• Rural Health Network Development Planning Program: Ideal for agencies that don’t operate in larger cities or urban markets. You must provide a detailed description of the business’s experience and ability to assist rural people to qualify.
• Small Business Innovation Program: Ideal for small or midsize businesses. This grant supports the launch of innovative businesses, including healthcare startups.
• Office of Small and Disadvantaged Business Utilization: This grant focuses on small businesses pursuing health and human services-related contracts.
• Dementia Care and Caregiver Support Intervention Research: Ideal for agencies that provide the care needed to promote the health, functions, and well-being of people with Alzheimer's.

‍

When looking for a grant, assess your business needs and make note of how much funding you will need. Search for grants that will help meet your financial expenses. You can search various sources such as grants.gov and hhs.gov to find out what grants you qualify for. 

‍

Starting a home health agency: ‍Choose Timeero as your trusted partner 

‍

‍

The effort that you put into preparing to launch your business often determines the success and trajectory of your company. 

‍

Timeero is a reliable software solution for home health care agencies looking to optimize scheduling, time tracking, mileage reimbursement, and payroll processes.

‍

Partnering with Timeero will give your businesses the following advantages:

‍

• Real-time GPS time tracking: Track your caregivers’ hours, breaks, and attendance through Timeero’s mobile app. Timeero’s “Who’s Working” dashboard provides the real-time locations of caregivers that are on the clock.

• Accurate mileage tracking: Timeero automatically tracks caregivers’ mileage as they drive from one in-home visit to another.

• Easily comply with HIPAA and EVV requirements: Timeero’s tracking technology meets the standards set forth by HIPAA for protecting sensitive patient data and records the necessary details of patient visits to meet Electronic Visit Verification (EVV) requirements.

• Convenient scheduling and PTO tracking: Easily create and assign patient visits to caregivers. Timeero also centralizes how your employees submit PTO requests and simplifies the approval process.

• Optimize payroll with software integrations: Timeero can easily share recorded data by integrating with popular payroll software, such as QuickBooks, ADP, and Viventium.

‍