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Considering Starting A Home Care Business

Are you considering opening your own home care business or home health agency but still have questions that you can’t find the answer to? This is your lucky day! The next ten minutes you spend reading this article may save you thousands of dollars and a lot of time. There are many things to understand that lurk under the surface that can sink your new home health agency or private duty home care agency. Some of this information is hard to find because it seems that many articles on the internet about the home care / home health business are pushing an agenda or trying to sell you something. I am an agency owner with nothing to sell. I am here to help. In this article, I will go over several very important things to consider before deciding to get into the home care business. No agenda’s here, just the facts as I have experienced them. We currently have about 50 full-time employees and are out of the woods for the most part, BUT we did not draw a paycheck for the first 3 years we were in business. I have several other businesses that do well, which sustained us while our agency grew. It has been ‘all hands on deck’ for five years now.

 

First, this is a brutal, cut-throat business. You MUST have a calling to help others because patients and their families can be extremely brutal, taxing emotionally, and unforgiving. Having a business background is not enough. Private pay clients are shelling out hundreds, if not thousands of dollars for care each week and most have no idea how much effort goes into staffing and facilitating care for them or their loved ones, nor do they care. Surprisingly, many well-heeled families (which are the backbone of your business) have never had any employees of their own and do not understand the importance of treating their caregivers with respect. Many expect TOTAL kindness from their caregivers but they treat everyone (including company owners) like crap. Very ironic. This means the patients you need to grow are going to be the LEAST cost effective/most work to try and keep happy. In their defense, many families are stressed out and their loved ones may not be in their right minds. Some clients are very graceful while others use you up and spit you out without giving a second thought to how much work you and your staff have put into their care. It can be very taxing because most of us really do care and are trying our very best. Stay away from Hospice. These families often wait until they are in crisis mode and are stressed to the max. They almost NEVER give you the opportunity to achieve success because they need lots of care for a short amount of time, which is hard to facilitate and hard on your staff. Once their loved one passes, they move on while you are left trying to recover the trauma you and your staff just endured on their account. Oh, and you made on money on the case.

 

Secondly, understand your market. If you live in a market with an MSA/population under 250,000 and the two or three hospitals that serve your community own their own home health agencies, growth/sustenance is going to be a serious battle. Although it is illegal, most hospitals that have their own HHA or a loosely tied affiliate type relationship with one, you will NEVER get enough referrals to sustain your business. Our company has had full-time professional sales reps earning $80k a year, professional coaching for our reps, etc. and NOTHING works with these people. The hospital caseworkers are extremely busy AND loyal to their employer. In other words, they don’t care. They have 10 different ways to sneakily refer patients to their in-house HHA without getting caught and/or they don’t care enough to refer to ANYONE. The best part is that no one regulating the hospitals even care about these shady practices. Hospital-affiliated HHA’s leave private, non-affiliated home care agencies ALL fighting for the same scraps from the same, ever-shrinking group of referral sources. They give the rest of us a bad name because they have a solid stream of cases coming in from the hospital every day, therefore, they have very little incentive to do a good job. The clients just keep coming for them! Hospital owned HHA’s probably absorb 80-90% of the home care cases in our community and drastically reduce consumer choice and quality of care…but that is another article for another day.

 

Thirdly, understand your market. Competition is fierce. There are probably 10-20 nationwide home care franchises selling franchises to anyone with a pulse. We have seen 3-4 franchises come and then go in our market, in just the last 2-3 years. Why, because the people who bought them thought they could throw up a website and the Franchisor would just take care of the rest. Maybe this is the case in very large metropolitan areas or areas with no hospital owned HHA’s, but if you are in a small to medium-sized market, forget it.

 

Fourthly, understand your marketING. Competition is fierce. There are a hundred different businesses trying to sell you marketing solutions at all times. From TV ads to radio spots, mailers, geo-fencing, on and on. None of it works. Why, you ask? The average person MAYBE needs home care once in their life, if that. Do you think that one of your advertising spots is going to be playing at the exact moment they need care? Highly unlikely. They will have forgotten all about you when they need care 10 years down the road. Even then, very few people can actually afford private duty home care. You have to find people who need home care, are willing to pay for it, and most importantly, have the means to pay for it. Three VERY tall orders given you probably don’t have access to large numbers of hospital patients.

 

Fifthly, understand your clients. The entire idea of starting low hourly billing clients in the hopes of them someday increasing their weekly billing is a complete waste of time and does not work. You need the sickest of the sick. People that need lots of care. Where are they? At the hospitals! See above. Two hour cleaning shifts once or twice a week will sink you faster than anything. Have minimums for service. We have four hour minimums at our agency. If someone doesn’t NEED at LEAST 15-20 hours of home care each week, THEY DON’T NEED HOME CARE.

 

Sixthly, understand who is paying the bill. Elderly patients paying for their own care almost NEVER work out. They get fatigued writing the check for services every week and suspend services after a week or two. Your ideal client is a woman in her 50-60’s who is writing the check for her parents care, OUT OF HER PARENTS checking account. She knows they need the care and is not concerned so much about the bill. Although it is her inheritance she is spending, she didn’t work 50 years earning it, so it doesn’t grind her gears to write the check. Plus, she likely needs the help and it is saving her own sanity.

 

Seventhly, the Alzheimer’s Association does NOT care about your business or helping families with Alzheimer’s. They only care about getting donations for the association. We have spent thousands of dollars working with our local chapter. Fundraising, sitting on their boards, getting petitions signed on their behalf, working at events, etc. In five years, they have not referred ONE person to us. They say, “we give everyone who asks a list and you are already on the list”. Can you guess who is at the top of the list? You guessed it! A national franchise who donates a lot of money to them. You cannot compete, so don’t even bother. A list! That is the best they can do to help families struggling with loved ones that have Alzheimer’s? We have severed our relationship with the Alzheimer’s Association. It was a complete waste of our energy. All they care about is smiling and taking people’s money.

 

Eighthly, the new frontier. There are SO many people who are hiring caregivers from Care.com or some other online caregiver portal. It usually blows up in their face because the average person THINKS they are qualified to hire an employee but they have no idea what they are getting into. You cannot compete with these type of portals but you are forced to. The people using them are only concerned with price and do not care to circumvent the law in order to find the CHEAPEST solution to their problems. Most do not withhold taxes, pay required workers compensation, overtime, etc. All of which are required by law in most states. In our market, we are seeing these little ‘mom and pop’ home care shops with no office, that are paying their employees 1099’s, which is HUGELY illegal. They all get caught eventually, but they are stealing your clients and giving our industry a bad name in the meantime. One of the largest, privately owned home care agencies in the nation has just transitioned to this 1099 model. They too will get shut down. The US Department of Labor Final Rule SPECIFICALLY states that the Companionship Services Exemption can ONLY be used if the worker is SOLEY employed by the consumer. The IRS also has publications on this same topic, at length. Misclassification of an employee is tax evasion.

 

There you go. It is not all peaches and cream. There is a lot of work and liability that comes with owning a home care agency, but it is also very rewarding if you can figure out how to access the clients needed to keep your doors open. We keep seeing franchises come and go in our small community and I feel that franchisors are preying on unwitting people who have NO idea how complex the market forces can be. Before you open an agency or buy a franchise, please do your research and understand your specific market. I wrote this article to help those considering opening a home care agency or those who may be struggling. This is an amazing industry with lots of opportunity but there are many greedy people in it that are more concerned with the money than the care, and they give us a bad name. It might be a rocky ride for 3-4 years BUT, if you have the time and wherewithal AND put patient care FIRST, everything else will likely fall into place for you. Best of luck to everyone.

 

Sincerely

Sean Sutton