How to Start a Home Care Agency - 10 Step Guide

So you're thinking about starting a home care agency and probably not sure where to start. Fortunately, I own three home care and staffing agencies that have generated over $50 million in sales in the past five years. And I'm here to share my story and offer a 10 step by step guide on how to start a home care agency. For some reason, this is the sort of stuff that most owners don't like to share, but I take a different approach. I share what I wish I knew when I got started to whoever is willing to listen. On this channel, we cover how to start, grow and sell healthcare companies. Welcome to Passive Workforce. We're going to cover a lot of information in this video. And if you have any questions, please use the comment section below. At Passive Workforce, our team of consultants answer every question and are here to help you whenever you need it. You're interested in home care and rightfully so. Home healthcare makes up $150 billion in the US economy and at the same time addresses America's largest demographic which is aging. The current trend is to provide more community-based care and improved managed care services. I say that to say this, the time is right to get started in the home care industry. I got into the home healthcare business because of my mom. She's a nurse and prior to home health, we exclusively ran a nursing agency. Fortunately for me, my mom got into healthcare entrepreneurship early in my life. It was 1996, I was 14 years old and she decided to start a nursing agency. It started with her, a group of her friends, a few family members, all picking up shifts at facilities that she contracted with. Now we're still in this business but decided to expand into home healthcare and got licensed for home healthcare in 2001. From there, we expanded our nursing agency into home healthcare and I actually continued that expansion opening up an additional agency in New York and one in Florida. So over the past 26 years, I've accumulated quite a bit of knowledge and information within this space whether it's healthcare staffing in a nursing agency or home health, both non-skilled and skilled. Now that you know my story and my experience, let's talk through the step-by-step of starting a home care agency. Step one is to determine the type of agency you will open. There are three types of agencies that come to mind when you're dealing with home healthcare. Your first and most basic form of agency is gonna be considered your companion care agency. There's actually no healthcare administration on this side and in most states, there isn't even a license as required. With companion care, what you're actually doing is kind of almost providing sort of babysitting services if you wanna look at it in that sort of way. You're providing an adult companion to spend time with someone who needs maybe some supervision, some assistance with running errands, maybe medication reminders and transportation from time to time. The scope of the practice is going to be dependent on the state that you're in as far as what's allowed and not allowed. But in most states, companion care doesn't require a license and is the most basic form of agency that you can start where you're providing services. More often than not, companion care agencies are private pay only. So there's gonna be no Medicare billing, no Medicaid and most likely no private insurance involved because again, there's no license, no state regulations and there isn't really healthcare being administered in that particular setting. The step up from companion care is actually home care. I know it sounds a little bit confusing but I'm here to explain. Home care is going to involve personal care services and home health aid services. These are trained professionals that have more skills than a companion and are able to actually come in contact with the patient. This is turning them, range of motion exercises, medication reminders, basic skills that are gonna be needed to fit within an overall care plan that is signed off by a physician. Again, this is the step up from companion care and in most states, it's regulated. Why? Because there's gonna be direct patient contact and whenever there's direct patient contact, there's of course risk to the patient and that's why it needs to be regulated. Here, you're gonna be able to most likely get licensed and bill private insurance. In some states, home care agencies can provide both non-skilled services like home health aids and personal care aids and even in some states, under that same license, be able to provide skilled services which leads me to talk about home health care. Sounds the same, I know, it's ridiculous but home health care really kind of narrows down the slice of services that are focused on skilled services. This is gonna be your skilled nursing services like IV injections, infusion, dressing changes, certain therapies at home like physical therapy, speech, occupational therapy for those who have just experienced potentially a stroke. It's advanced services that are taking place in the home and it's more or less supposed to function as a step down from an acute situation. So for patients who are coming out of the hospital and need to continue services now that they're stable, home health care takes the lead in that area and because of this, the payer for home health care is typically private insurance and Medicare. As you start to research, you're gonna start to see them refer to agencies as Medicaid agencies. Those tend to be home care agencies and Medicare agencies which tend to be skilled home health care agencies. So it's important for you to get familiar with this sort of language within the industry so that you know exactly what sort of agency you feel you wanna start. Remember, the threshold for entry is gonna be in that order. Companion care, typically not licensed, no patient contact, home care which is going to include home health aides and more or less mid-range services which can then be licensed services and sometimes billing insurance to the highest level of services which is skilled home health care. So just get familiar with the language so you know which agency type you wanna choose. Step two is to contact your local department of health or whatever it's named in your state to determine whether or not your agency type requires a license and where to obtain that application. Step three is to pick the name of your company, create the company and open up a bank account. In naming your agency, you're gonna wanna use the type of agency in your company's name. This is a general tip that I give everybody. Don't use a name that doesn't include the type of service because when it comes to search engine optimization and people discovering who you are, you don't wanna have some obscure name that doesn't include home health care. One of my companies we did that with, it just didn't make sense to name it Aidbook for example. Just as an example. Aidbook is the name of one of my home care agencies and it's not named Aidbook Home Health Care, it's just Aidbook Inc. And because of that, I knew that I needed to add more information on our website around the sort of services that we provide so that when people are searching for home health care in Broward County, they're able to see our company come up because our website is optimized for that. So in picking your name, be smart to include home health care services, scaled home health care, personal care services, something on those lines using the terminology that people will search for so it's clear what kind of company you're in. You're also gonna wanna choose what sort of entity type you want to have. So your main options are gonna be corporation and LLC. I'm not gonna do a deep dive in this particular video covering what's the difference between the two but you can speak with your accountant and attorneys to kind of sort through what sort of company you wanna be and how you're gonna be taxed. But you're gonna have to pick some sort of company type so that you're able to build your agency around on this company itself. And eventually, you're gonna get your tax ID number which is gonna give you everything that you need to set up your bank account. Step four is to apply for licensing. Each state will be different and the license application will tell you exactly what you need to have in order for that application to be approved. When applying for licensure, you typically need your entity already created, a bank account to reference. You're going to also need insurance which is gonna be general liability insurance, sometimes malpractice insurance and most of the time, workers' compensation insurance. They're also gonna give you a list of mandatories that you need to satisfy such as policy and procedures, whether you need an office space in an office environment or you could run the agency from your home. All these things are gonna be specified on your application and it really varies significantly from state to state. If you're finding this information really helpful, do me a favor and subscribe to the channel. You should also share this video with your prospective business partners so you're all on the same page. Step five is to draft policy and procedures. Here's where it gets tricky. Policy and procedures are a beast. When we started our agency, we actually created this Frankenstein policy and procedures that we borrowed from a bunch of different institutions whether it was nursing homes and other home care agencies, whatever documents we were able to get our hands on, we built this policy and procedure manual that was about this thick, close to 1,000 pages. Nowadays, there's agencies that provide policy and procedures. I work with a few different consultants who do exactly that. So whenever we need to help one of our clients with policy and procedures, we don't necessarily draft all of them ourselves. We work with agencies that exclusively do that because again, they're a bear. The policy and procedures have to mirror the state's regulations. And since we don't work with starting agencies in every state, we don't have every state's policy and procedures. So I think it's best to work with consultants in this area because it can be a nightmare to draft 1,000 pages of policies on your own, especially if you've never been in the business. Step six, build your team. At minimum, you're gonna need a registered nurse and an administrator on your team. If you aren't already a nurse yourself, it's probably wise to go out there and recruit a nurse as a partner, and that will help keep your startup cost on the lower side. After you get your approval to start your operation, you're going to need some operational tools. Step seven is to get software to run your business. I personally developed a software by the name of OnTimeITS. It's a platform designed to help you manage your agency. Our software allows you to onboard your employees, input your patient information, do your medical billing, manage your schedules, and so much more. Compared to other software that's out there that I've worked with, I really prefer our software and recommend anybody that we work with to use our software because it's designed from the perspective of an operator, not just some software company that really didn't think and develop their system around the worker and around the operator. If you want more information on our software, you could go to ontimeits.com, request a demo, and you could see exactly how our system is organized and how it will help you run your business. Step eight, choose a payroll provider. You'll have a lot of employees and a lot of payroll to process, and that's going to be crucial. I work with a few payroll companies, and I'll be glad to make some introductions when the time comes. Step nine is to start to market and promote your services to find workers, patients, and payers in your community. For number 10 and the last and final step, admit your first patient. Your agency isn't real until you have your first admission. All the previous steps are in preparation of this big day. You'll never forget seeing all the hard work pay off. One more thing that I'd like to mention is that depending on the license type and your state regulations, you may have to get accredited by an accreditation body. This will be a necessary step in your licensing process, and I'll actually do another video on the whole accreditation process and how it all works. I started this channel to work with entrepreneurs in the healthcare space, giving them the advice I wish that I had. If you want to work with me and my team to get your business started, growing, or even sold, visit PassiveWorkforce.com and book an appointment with me or somebody on my team. We currently set up nursing agencies, companion care agencies, and recently started setting up home care agencies in New York now that the licensing unit has reopened. Until we chat again, take care, and good luck on starting your agency.