The Comprehensive Guide to Starting a Successful Home Care Business

Heather Pollock

Written on 7 July, 2023
Start a successful home care business with our comprehensive guide. Learn the difference between home care and home health services and the legal aspects to consider.

Getting to Know Home Care Services

Starting a home care business is a big job, but it can be really rewarding. First, let's talk about home care and home health services (they are two different things!) and why they're important.

Home health or home care services help people who need care but want to stay at home. This could be someone who's getting older, someone who's sick, or someone who's just come out of the hospital. These services make sure people can get the help they need without having to stay in a hospital or nursing home.

There is a distinction to be made between home care agencies and home health agencies, even though they both provide care in a person's home. The services they provide and the qualifications of their staff differ.

There are two main home healthcare service types: medical and non-medical. They're both important, but they do different things. Let's talk about what they are and how they can help people.

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What is the Difference Between a Home Care Agency and a Home Health Agency?

People might need two main types of home care: medical home care and non-medical home care. They both help people but in different ways. Let's take a closer look at what each one does.

A home care agency typically provides non-medical assistance, which includes helping individuals with activities of daily living (ADLs), such as bathing, dressing, and meal preparation. This kind of care is great for people who have a hard time doing these tasks on their own because they're older, have disabilities, or have certain health conditions. Home care agencies can also provide companionship, light housekeeping, and transportation services. These services are essential for individuals who may have difficulties performing these tasks due to aging, disabilities, or certain health conditions.

On the other hand, a home health agency provides medical care to individuals at home. The staff at these agencies are healthcare professionals, such as registered nurses, physical therapists, and occupational therapists. These services include wound care, administering injections, monitoring vital signs, and providing physical therapy. Home health care is typically for individuals recovering from surgery or illness, those managing chronic diseases, or anyone needing skilled medical attention at home.

It's crucial to distinguish between the two when setting up a business because they require different resources, personnel, and possibly different licensing and regulatory compliance.

Understanding the Market for Home Care Services

As you get ready to launch your home care business, a key step is to get a clear understanding of the market. You need to know who's looking for private caregiver services and why they need them.

Examining the Growing Demand for Private Caregiver Services

The home care industry has seen consistent growth over the past few years, and this trend shows no signs of slowing down. According to the U.S. Bureau of Labor Statistics, employment in home healthcare services is projected to grow 34 percent from 2019 to 2029, much faster than the average for all occupations.

This surge in demand is attributed to various factors, such as the increasing aging population, the preference for aging in place, and the rise of chronic diseases.

Key Driving Factors for Home Care Demand in the US

Aging Population: The U.S. Census Bureau projects that by 2034, for the first time in U.S. history, adults aged 65 and older will outnumber children under 18. [U.S. Census Bureau. (2020). Older People Projected to Outnumber Children for First Time in U.S. History.] This demographic shift naturally leads to an increased demand for home healthcare services.

Preference for Aging in Place: A survey by AARP revealed that three out of four adults 50 years and older wish to stay in their homes and communities as they age. Home health care services make this possible by providing necessary care right at home.

Rise of Chronic Diseases: Chronic diseases such as heart disease, cancer, and diabetes are among the most prevalent health issues in the U.S. Home healthcare services can play a crucial role in managing these conditions, thereby driving up demand.

Understanding these key drivers will not only help you validate the need for your home care agency but also allow you to position your services effectively to meet the evolving needs of your potential clients.

The Global Home Health Care Industry Landscape

Home health care is a big part of health care all over the world. This is because of changes in society, better healthcare technology, and more people realizing that personalized home care can be beneficial. According to some research, the home healthcare market was worth $281.8 billion in 2019. What's more, it's expected to grow by 7.9% each year from 2020 to 20271.

The Home Care Scene in the US

The US home healthcare industry has its own special trends and growth factors. It's doing really well because of a mix of things like more older people, better medical care, and people wanting to grow old in their own homes.

Growth in the Industry: Home health care is one of the quickest growing industries in the US. In 2020, it made about $113.5 billion, and it's expected to grow by 7.9% each year through 2027.

Using Tech in Home Care: Tech has really changed home health care. Electronic health records, telemedicine, and remote systems monitoring patients have improved care and patient outcomes and made operations more efficient. Home Care agencies are now also using software to better manage their schedules, invoicing, and care documentation.

Focus on Value-Based Care: Home health care is moving towards a model that emphasizes the quality of care instead of the quantity. This is making providers focus on being proactive, preventing health issues, and giving holistic care to improve patient outcomes and reduce hospital readmissions.

COVID-19's Impact: The COVID-19 pandemic showed how important home healthcare services are. It created new opportunities and challenges for providers, including more demand for services, the need to use telehealth, and the need to implement tough infection control measures.

If you're thinking of getting into this industry, understanding these things can help you shape your business strategy and prepare to adapt to industry changes.

If you are considering starting a home care business, read the following articles:

What to Think About and Challenges When Starting a Home Care Business

Starting a home care business can be great but comes with some special challenges. Knowing what these challenges are and thinking about ways to tackle them can help you set up a business that does well.

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Managing Travel to Home Care Clients

Traveling from one place to another is a big part of home health care. Sometimes, caregivers have to drive long distances, especially if their clients live far apart or in areas far from the city. This can affect their schedules and also cost your home care agency money.

It's important to make smart plans for traveling. Try to make the routes and schedules as simple as possible. This way, caregivers won't have to travel more than needed. Also, think about how travel time affects the caregivers' schedules and pay. If they feel like their travel time is valued, they're more likely to be happy and do their best work.

Look into home care agency scheduling software that uses GPS systems to help plan travel routes and verify visit logs. Another idea is to look into telehealth, which lets caregivers provide care over the Internet. This can be a great way to cut down on travel for cases where it's appropriate.

Using Tech to Improve Patient Outcomes

In the world of home health care, technology can make a big difference. It can help us do our jobs better and lead to better outcomes for our patients.

One key technology piece is electronic health records (EHRs). These are like digital files of a patient's health information. Caregivers can quickly get to this information when they need it. This helps them make better choices for a patient's care.

At ShiftCare, we provide a feature called Client Records Management that helps keep track of all these details in one place and instantly keep all caregivers in the loop with client updates, all securely stored on our cloud-based software. Your team can use the caregiver mobile app with the voice-to-text feature to record caregiver notes on the go. The mobile app for caregivers also makes it easy for them to log and track their time and expenses. Making their life easier and your admin work faster!

Another communication technology to explore is Telehealth services, where patients can talk to doctors through video calls. This is especially good for patients who live far away or can't travel easily.

Building the Basics of Your Home Care Agency

When starting a home care business, there are some important things you need to do first. These are the building blocks, or foundations, of your business.

This article is intended to provide general information and insights about starting a home care business. However, it is not legal advice and should not be treated as such. It's important to consult with a legal professional or advisor before making any decisions related to your business. Laws and regulations can vary by location and may change over time, so professional advice is crucial to ensure that your business is compliant and successful.

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Setting Up Your Business and Getting an EIN

The first step in starting your own home care business is officially setting up your business. This is called forming a business entity. It's like telling the government, "Hey, I'm starting a new business!"

There are a few types of business entities you could choose, like a sole proprietorship, partnership, or corporation. It's a good idea to talk to a business advisor or lawyer to decide which one is right for you.

Once you've set up your business entity, the next step is to get an Employer Identification Number or EIN. This is a special number from the government that identifies your business. It's kind of like a Social Security number but for businesses.

Registering in Your State and Learning About Licenses

The next step is to register your business in your state. This lets your state know that your business exists and is ready to start working.

You'll also need to learn about any licenses you need to run a home care business in your state. Licenses are like official permissions from the government to do certain things. For example, you might need a special license to provide medical care in someone's home.

Choosing the Right License: Home Care vs Home Health Care

You can choose between two kinds of licenses. One is for a home care agency, which provides non-medical help like housekeeping and companionship. The other is for a home health care agency, which provides non-medical help and medical care like skilled nursing services. The right choice depends on the kind of services you want to offer.

For more information on choosing the right home care or home health care agency license, you can visit the official U.S. government's website for the Centers for Medicare & Medicaid Services (CMS). The CMS regulates these types of services and provides valuable resources on licensure and the differences between home care and home health care services.

Another valuable resource for state-specific information would be your state's Department of Health or equivalent agency. They often have detailed information about licensing and operational requirements for both types of agencies.

Certificate of Need (CON) for Home Health Care Facilities

In 14 states, you must file a Certificate of Need (CON) before you can start your agency. This is a way for the state to control how many healthcare services are available. They'll look at how much need there is in your area before letting you open your agency. For a comprehensive understanding of CON programs, refer to the National Conference of State Legislatures (NCSL) website.

Making a Solid Plan for Your Business

After setting up your business, the next big step is making a business plan. A business plan is like a roadmap for your business. It helps you figure out where you're going and how you'll get there. It also helps other people, like investors or banks, understand your business better.

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Thinking About Equipment and Start-Up Costs

The first thing to think about in your business plan is what equipment you'll need and how much it will cost to start your business. This includes things like medical supplies for your care team, an app for caregivers, and software to keep track of appointments.

To figure this out, make a list of everything you'll need and research how much it costs. Don't forget to include any costs for getting licenses or insurance.

Researching Your Market and Competition

The last part of your business plan is doing some market research. You'll want to learn about the people who might use your home care services, which is your market. Find out what they need and how you can help them.

You should also look at other businesses that offer home care in your area, which are your competitors. Find out what they do well and where they could improve. This can help you figure out how to make your business stand out.

Setting Up Your Home Care Business

Embarking on your journey to establish a home care business is exciting. This involves several critical steps, but we'll simplify the process by breaking it down into manageable parts. Let's delve into how your business operations will take shape.

Getting Your Business Systems in Place

The first step in setting up a successful home care business is to adopt specialized tools to manage crucial aspects of your operations, like scheduling, invoicing, and tracking work hours. These tools often come as software solutions that you can use on different devices, including computers and smartphones. Using this kind of software can streamline operations, ensure you adhere to compliance standards, and make your everyday tasks go more smoothly. In our tech-driven world, the right software can make your home care agency's operations seamless.

Creating Clear Policies and Procedures

Next up, creating clear-cut policies and procedures for your business is important. Policies serve as a roadmap for how to react in different situations, while procedures provide a step-by-step guide on carrying out these policies. You might need a policy on what to do when a patient gets sick or a procedure explaining how to collect payments. Keeping your policies and procedures clear and well-documented is crucial for maintaining steady operations and following the rules in the home healthcare industry.

Finding the Right Caregivers and Team

Lastly, thinking carefully about the people who will make up your team is crucial. Primarily, your team should include skilled caregivers who will be responsible for delivering home health care services. However, you'll also require staff to handle administrative tasks such as scheduling, billing, and general team management to run your business effectively. Creating a balanced team with diverse skill sets is vital for the successful operation of your home healthcare business.

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Understanding the Rules: State and Medicare/Medicaid Requirements

Running a home care business means you'll need to follow certain rules set by your state and get certifications, especially if you're planning to accept Medicare or Medicaid. While these rules can change from place to place, they usually need you to show that you can give top-notch care, have skilled staff, and follow health and safety rules. The process might seem tricky, but there's a handy guide from the Centers for Medicare & Medicaid Services on how to get certified.

Keep Up With Training for Caregivers 

Just getting up to standards isn't enough. You have to keep up with them too! One big part of this is making sure your caregivers keep learning. This helps you stay in line with all the rules and ensure your team gives the best care possible. There are lots of online places to find caregiver training courses, like CareAcademy. You can use these along with the training programs you do in-house. 

Take a look at the Institute for Professional Care Education for a big selection of training resources for home care providers.

Spreading the Word About Your Home Care Business

Once you've set up your home care agency, the next step is to let people know about it. This is where marketing comes in.

Creating Your Marketing Plan

Your marketing plan is like a roadmap. It guides you in telling people about your services in a way that makes them want to use them. You might use things like brochures, a website, or social media to get the word out. The goal is to reach as many potential clients as you can and let them know how your services can help them.

Making a marketing plan might sound hard, but don't worry. You don't have to figure it all out on your own. We've put together a guide that walks you through the steps. It's called The Ultimate Guide to Marketing Your Home Care Agency and a great place to start.

Remember, the key to growing your home care business is to connect with the people who need your services. Your marketing plan can help you do just that. It's all about getting the word out, showing people how you can help, and building relationships with your community. So go ahead, start planning, and watch your business grow!

Navigating Legal Aspects in Home Care

Understand HIPAA and Privacy Rights

When running a home care business, respecting your patients' privacy rights is a must. In the United States, the Health Insurance Portability and Accountability Act (HIPAA) is a key law that protects patient health information. Understanding and complying with HIPAA will ensure you respect your client's privacy and avoid legal issues. For more on HIPAA and its application in healthcare, refer to the U.S. Department of Health & Human Services' guide.

Understand Employment Laws

You'll also need to know about other rules related to work besides HIPAA. This could be laws about fair pay, extra hours, not discriminating, and more. Getting to know these laws will help you take care of your worker's rights and keep you out of legal trouble. You might find looking at the U.S. Department of Labor's guide helpful. Don't forget, and it's a good idea to talk to a lawyer to make sure you're following all the rules and laws you need to.

The Role of Home Care Software

As you get your home care business up and running, you'll quickly realize how important it is to have good software to help you out. Think of it as your digital assistant: it can help with scheduling, keep track of patients' details, help with billing, and much more. Having the right home care software can save you time, reduce errors, and make sure your patients get the best care possible. Want an easy-to-use solution? Look at ShiftCare's home care software, designed to streamline operations and improve patient care.

The Plus Side of Electronic Health Records (EHR)

Electronic Health Records (EHRs) are another tech tool you should consider. An EHR is a digital version of a patient's paper chart. It keeps track of their medical history, diagnoses, medications, and more. But it does much more than just replace paper records. With EHRs, you can easily share information with other healthcare providers, which means better-coordinated care for your patients. Also, EHRs can help prevent mistakes like medication errors, making care safer. Plus, they can save you a lot of storage space – no more filing cabinets stuffed with paper charts! So, it's worth considering an EHR system as part of your home care business technology toolbox.

Building Relationships with the Healthcare Community

Networking with Hospitals, Clinics, and Other Health Care Providers

Your home care business doesn't exist in a vacuum. It's part of a much bigger healthcare world, including hospitals, clinics, and other providers. Building good relationships with these folks can really help your business. Why? Because they can refer patients to you. Plus, when you work together, it's easier to coordinate care and make sure patients get what they need. So, take the time to network with these healthcare providers. Attend industry events, schedule meet-and-greets, and consider joining professional associations. 

For more tips on networking in healthcare, check out this helpful guide from ShiftCare (section #7).

Working Together with Health Insurance Companies

Health insurance companies are another important part of the healthcare world. They can help patients afford your services, which is a win-win for everyone. But to make this work, you'll need to build good relationships with these companies. That means understanding their requirements and making sure you can meet them. It might involve filling out some paperwork and jumping through some hoops, but the benefits can be worth it. By working together, you can help more patients get the care they need. 

Remember, collaboration is key to a successful home care business!

Keeping Track of Your Home Care Business Success 

It's important to know if your home care business is succeeding. To do this, you should keep an eye on some special numbers or "Key Performance Indicators" (KPIs). Here are some KPIs that can help you understand how well your business is doing:

Client/Patient Satisfaction: This tells you if your clients are happy with the care they're receiving. You can measure this by asking them directly or by using satisfaction surveys. Make sure your surveys ask about different parts of your service - like the quality of care, punctuality of caregivers, and ease of communication.

Employee Satisfaction: This shows how much your caregivers enjoy their work. Happy employees often provide better care and are more likely to stay with your company for a longer time. You can check this by talking to your caregivers regularly and by using surveys or questionnaires.

Referral Rates: This is about how often other healthcare providers recommend your services to their patients. If you're getting a lot of referrals, that's a great sign! You can track this by asking new clients how they heard about your service and keeping a record of the answers.

Financial Health: This shows if you're making enough money to cover all your costs and still have some left over. You can check this by regularly reviewing your business income and expenses. It's also important to check how quickly you're being paid after providing services and how much money you owe or are owed.

Client Retention Rate: This tells you how many of your clients continue to use your service over time. If any of your clients stay with your service for a long time, it's a good indication that they're happy with the care they're receiving.

Caregiver Turnover Rate: This shows how often your caregivers leave your service. If your turnover rate is high, it could be a sign that your employees aren't happy or that there are problems with your working conditions.

Regularly checking these KPIs can help you understand what's working well and what might need to be improved in your business. This will let you fix any problems before they get bigger and can help you make your home care business even more successful.

Next Steps

Ready to jump-start your home care business with smart technology? Using a software solution from day, one can be a game-changer.

ShiftCare home care software is designed specifically to meet your home care agency's needs. Its scheduling, invoicing, compliance, and patient management features will help you reduce how long you spend on admin work. So you can spend more time on what really matters, building and growing your home care business.

Experience the ease and efficiency of managing a home care business with ShiftCare. 

Try ShiftCare free and make your first step in the home care industry a confident one!

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