Funding to Start Home Health Care Agencies

"I want to help people. I want to start a home health business, but I don't have the money." For business savvy people and health professionals who have uttered these words, owning a home health business can be a reality. With an understanding of the rules governing home care pay model and research into local business opportunities, entrepreneurs can find dollars to start and run a home health agency.

Identification

• Funding from home health agencies happen in a variety of ways. Startup cash from personal savings is always an option. Other options include small business grants. Grants of this nature aren't everywhere, but the best place to look are state and local government entities designed to encourage the creation of a small business. These agencies vary from state to state, but they are usually housed in the state's revenue department. Grants as a non-profit entity are more likely. Hundreds of corporate and government grants are available for non-profit agencies that want to serve the community. Owners should find a seasoned grant writer and give detailed information on exactly how the home health agency will operate. The Department of Labor is reviewing grant request to serve low income seniors. A pool of dollars totaling 342 million is available for businesses who submit appropriate grants.

Considerations

• Before seeking any kind of funds, entrepreneurs should develop a budget. The budget should include the salaries for a director of nurses and an administrator. A nurse with sufficient management experience can serve both roles initially. Allowances should be made for home health aides and therapists in a contractual or employee arrangement. Many agencies are run as home based businesses. Building costs should be incorporated into the budget as well. The budget should allow for at least six months with no revenue.

Warning

• Home health agencies can't bill for services until a surveyor goes on an actual visit to an existing patient. In the interim, the agency must operate using its own funds. The time that each state takes before approving an agency to bill varies from state to state. Owners must have an alternative plan for surveys that don't happen according to schedule. An agency may have an initial census of ten patients, people who need various combinations of nursing, therapy and home health care. The agency must serve those patients without submitting claims until a representative from the state comes in and approves the agency's practices as in line with state rules.

Potential

• The Balanced Budget Act of 1997 changed the model for payment for all Medicare home health agencies. The new model allowed for efficient agencies to make a significant profit. As a result, agencies can achieve double-digit profit margins even in a slumping economy. Home health agencies moved to a prospective pay system. Managers who understand the prospective pay system will make more money.

Theories/Speculation

• Several events will lead to continued success for home care agencies. As baby boomers retire, many will want to remain in their homes and lead independent lives even after serious medical procedures. Adult children will form living arrangements with the parents and seek home health agencies as support systems. Hip replacements are common procedures as people get older. In the past, patients would heal from hip replacement in a nursing home and possibly never return to home life. Seniors now expect a full recovery from hip replacement surgery. They expect to complete recuperation in their own homes and return to their normal lives.