Home health care business plan for starting your own agency

Home healthcare is an $84 billion industry in the US alone and it is not going to slow down anytime soon. It covers both non-medical healthcare and skilled home health care, teams. Currently, the US has over 386,000 home health care businesses and employed more than 1.7 million people approx. But this business is not for everyone. It involves high stress and peer pressure in its environment.

If you have a strong desire and passion for helping others, this industry is very rewarding and you can earn a lot with compassion. If you are eager in starting a home health care business and you are raising funds, it is highly recommended to come up with a well-detailed care agency business plan.

Executive Summary

In this section, you need to explain all the basics of your homecare business model. Explain how much amount you want to raise for the growth of your home healthcare business, while presenting the expected operations and financials over the upcoming 3 years. For Example,

Wheatland Home Healthcare Agency (Your Company Name) is a Kansas-based home healthcare agency aimed to provide home health care services to the targeted market.

The business

If you are wondering how to start a non-medical caregiver business, you first need to start with arranging for sophisticated medical equipment. Make a detailed list of all the business equipments you will have to arrange.

In addition, your company should also be licensed by your respective state and who will be your partners.

Management

When making a homecare business model, you should also include who will be the owner and main operator of the home health care business. For example, Wheatland Home Health Care Agency will be based in Wilson County (the area) and owned by its operators and investors. The office will be managed in a lavish office space in Kansas.

Customers

Your customers are basically the families and individuals looking for social services and/or home health care. If you are asking how to get clients for non-medical home care business, you can generally ask attorneys, physicians, healthcare facilities and insurance companies who can refer those patients to you.

Business Target

Consider this example when writing a home health care business plan.

“The company is expecting a business loan for five years from its investors. Later on, we will manage the cash flow to finance the growth without requiring additional debt. We are planning to have full sales on credit. Hence, we need proper cash in hand in the beginning to avoid any problems related to the cash flow.“
Home Helth Care Business Plan - 3 Years Profit Forecast

Home Health Care Business Plan 1
Strategic/Operational Business Plan
This deliverable will contain a business development road map that will help the company achieve its goals and become a market leader.

Company Summary

When setting up a care company, you need to explain how you are going to make a presence in the market. For example, “Our agency will be based on a central location of Kansas and provide different services to clients and patients coming from Wilson, Neodesha, and Labette Counties, within the radius of 90 miles of our corporate offices.”

Here, you need to define your company and goals when you start a home health agency. You may want to promote and market your business and make an online presence by starting a website.

Company Owner

As a limited liability company, Wheatland Home Healthcare Agency is going to be operated and owned by Ethan J. Peter (name of company owner).

Along with years of experience in healthcare industry, explain the specialization and qualification of the owner.

Why the home health care business is being started?

When making a non-medical home care business plan, explain what the inspiration behind starting a home health care business is. Do you have a strong desire to help people in need which drives you to make it your profession? Do you have years of experience working with a healthcare organization and want to start your own healthcare business?

How the home health care business will be started?

Since your company is being started, you will definitely need to address your funding matters and startup costs. In this sample business plan for home health care agency, we have listed the assets required for start-up, a breakdown of start-up expenses, total cash required, total funding, investment, capital, and other liabilities along with the startup cost diagram to illustrate the expected expenses, investment, assets, loans etc.

Home Helth Care Business Plan - Startup Cost

Start-up Expenses
BUSINESS DEVELOPMENT $0
Attorney Fees – Setting Up Limited Liability Company $820
State of Kansas Home Health Agency License $90
Medisoft Billing Program plus Support $4 760
Professional Liability Insurance $2 800
*Assuming 25% down of $12,000.00 $0
Workman’s Comp Insurance Deposit $410
Premises and Content Insurance Deposit $210
*Assuming 25% down of $1200.00 $0
Contract Retainer with PT/OT/ST $504
Deposit plus First $400
*Assuming $200.00/Month $0
Phone Set Up (Excluding Phones) $250
Utilities Deposit $150
Post Office Box $26
Inserted Row $0
OFFICE EQUIPMENT $0
2 Computers (Fully Loaded) $3 000
4-in-1 Printer/Fax/Copier/Scanner $750
QuickBooks Pro $150
Phones $290
Pager $50
Inserted Row $0
OFFICE SUPPLIES $0
Stationary $200
Business Cards $150
Brochures $150
Other Misc. Office Supplies $450
Computer $0
NURSING SUPPLIES $1 950
TOTAL START-UP EXPENSES $17 560
Start-up Assets
Cash Required $41 900
Other Current Assets $1 900
Long-term Assets $0
TOTAL ASSETS $43 800
Total Requirements $61 360
START-UP FUNDING
Start-up Expenses to Fund $17 560
Start-up Assets to Fund $43 800
TOTAL FUNDING REQUIRED $61 360
Assets
Non-cash Assets from Start-up $2 900
Cash Requirements from Start-up $41 002
Additional Cash Raised $0
Cash Balance on Starting Date $43 902
TOTAL ASSETS $87 804
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities $43 900
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $43 900
Capital
Planned Investment
Elizabeth Patzer $20 000
Investor $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $20 000
Loss at Start-up (Start-up Expenses) ($23 904)
TOTAL CAPITAL ($43 904)
TOTAL CAPITAL AND LIABILITIES $87 804
Total Funding $70 000

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Services for Customers

The business plan for home care services should be aimed to help people with special needs as well as elderly in their daily activities and providing all the living help at the home. The company should also retain a skilled team of healthcare professionals, in case any specific treatment is required or in an emergency.

Along with at-home facilities, your company should also provide facilities to take them out if they are not able to drive their car. In this section of a home care business plan, you need to describe the services you have planned to offer.

As a home health care business, you should ensure that all your clients/patients have been treated well. The following services should be provided by specialized health care nurses, physicians, mental health counselors, physical therapists, chiropractors, rehab counselors, and other professionals who are well versed in providing valuable services. Your non-medical home care agency business plan should include the following services –

  • Nursing Aide
  • Skilled Nursing
  • Social Work
  • Personal Injury Case Management
  • Physical, Occupational, and Speech Therapy
  • Personal Assistance Services
  • Home Medication Management

Note

When creating a business plan for home health care agency, you may also want to provide resource linkage, assessment, planning, and reporting services for injury case management.

Marketing Analysis of Home Health Care Business

When raising funds, the best thing you can have is a foolproof business plan for home care agency to stand out in the competition and market your business. It goes without saying that home health care is a growing industry on both the national and international levels. If your community has become an over-saturated market with a lot of home health care services out there, you must have a lot of competition to face.

However, a strong marketing analysis on home care services business plan can save you and drive you to penetrate the market in the short term. You need to figure out the weak point of your competitors and make proper marketing strategies.

For better insight, consider the following home health care business plan example in this segment.

The Wheatland Home Health Care Agency’s customer base would generally consist of patients who are referred by health care facilities, physicians, and other professionals in the industry. Only a small percentage of patients will be covered by any private insurance company because most of them will be insured by Medicare.

For the Personal Injury Case Management part of our business plan for domiciliary care agency, the customer base generally includes the patients who have been injured in any kind of accident or in the job. These patients will usually get referred from lawyers looking for case management services for them or insurance providers seeking help to mitigate the loss of their clients and injuries.

Franchise Business Plan

Market Trends

The target customers of personal injury case management as well as home health care services usually don’t do comparison shopping directly. They usually prefer the health care providers who are referred by their physicians.

When it comes to assess competition in the field of home health care, the most vital aspect here is consulting with other professionals and asking them to refer their clients to your agency. For doing this, your agency should provide the best patient care and showcase professional business management and organization, and pertinent and current qualification. It will help you to capture most of the personal injury case management and home healthcare market in your respective area.

Marketing Segmentation

The target market for home health care business should be an aging population who prefer to stay in their homes most of the time and go out mostly for seeing the doctors instead of being admitted to a nursing home. Your target market should cover especially the patients who are aging and need proper health care services from a well-trained nursing team. They may also call for other home care services like social work, to gather important resources from the community.

Home Helth Care Business Plan - Market Analysis

Market Analysis              
Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
HHC – Medicare Patients 10% 100 110 121 133 146 9,92%
HHC – Medicaid and Private Insurance Patients 10% 25 28 31 34 37 10,30%
PICM Patients 30% 12 16 21 27 35 30,68%
Total 12,31% 137 154 173 194 218 12,31%

Next up, you may want to target the people who need personal injury case management solutions. You can help them in dealing with financial, medical, and work-related issues.

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Business Target

Since you are specialized in community-oriented services and home health care services, your target should be the segments where your services are needed the most. By working for those market segments, which need home care services only, you can save overhead expenses significantly, as you will not have to set up another office space.

Product Pricing

When acquiring home health care services, trust is the major aspect for both referring professionals and customers. They should have faith in your home care service for reliability, professionalism, and quality.

The customer’s choices do not get affected with the pricing of your services. A lot of those services are covered under Medicaid, Medicare, and private insurance providers and the rates are set by them.

Pricing is a very determining factor for personal injury case management. It varies from case to case and is paid on an hourly basis, which is subject to negotiation. When it comes to providing personal injury case management, the pricing would be estimated on the total time required for the client.

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Home Health Care Marketing Strategy

So you have developed a full-fledged domiciliary care agency business plan and go through all the complex processes of Medicare and state certificate. You have also recruited experienced professionals.

The next thing to consider in a free business plan for home health care agency is the way to attract clients. This is where you need proper marketing strategies to ensure success.

Competitive Analysis

In this free business plan for home health care agency, we will start with your competitive edge. If you have learned a lot of daily administrative duties and have experience in home health care business, you can make it successful. Your reputation can help you build a solid client base even before starting your business.

Sales Strategy

Here, you need to provide the best patient service and ensure complete satisfaction from referring to healthcare facilities and physicians.

Sales Monthly

This part should contain your projected monthly sales in business.

Home Helth Care Business Plan - Sales Monthly

Sales Yearly

Define annual projected sales from your business for three years in this section.

Home Helth Care Business Plan - Sales Yearly

Sales Forecast

It reflects the conservative average of your patients during the first year along with modest year-by-year rise. It should be based on the total patients you are seeing currently in your home health care business.

Home Helth Care Business Plan - Unit Sales

Sales Forecast      
Sales Year 1 Year 2 Year 3
Home Health Care Sales $424 000 $466 400 $513 040
Personal Injury Case Management Sales $18 900 $19 656 $20 442
TOTAL SALES $442 900 $486 056 $533 482
Direct Cost of Sales Year 1 Year 2 Year 3
Home Health Care Sales $21 721 $21 000 $22 000
Personal Injury Case Management Sales $2 410 $2 500 $2 600
Subtotal Direct Cost of Sales $24 131 $23 500 $24 600

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Personnel plan

In this sample business plan for home care agency, the following points should explain your staff requirements, benefits, and costs needed to hire them. You should also consider the cost of living of employees without affecting your administration. Project the growth of the client base without any impact on payroll because of increased working hours.

Company Staff

In this part of home care business plan free, explain the number of employees as well as who will be hired for what services and for how many hours.

Average Salary of Employees

This part should contain the breakdown of an average salary of each employee in your organization for the next three years.

 Personnel Plan      
  Year 1 Year 2 Year 3
Administrative Director – MSW/MPA $0 $0 $0
Clinical Director – Kellene Walker, RN $51 000 $53 550 $56 228
Administrative Assistant $17 600 $18 480 $19 404
Skilled Nurse $19 400 $20 370 $21 389
Nurses Aide $9 900 $10 395 $10 915
Social Worker $7 450 $7 823 $8 214
Total Salaries $105 350 $110 618 $116 148

Financial Plan

As discussed, you may want to use your cash flow to finance your growth. It will ensure slow but steady growth. The collection of dues plays a very vital role in non-medical home care business profits. The services will be mainly reimbursed by insurance providers.

Important Assumptions

The assumptions table showcases major annual assumptions based on tax rates, interest rates as well as staff requirements. For example, we assume no major recession and strong economy, as well as no major and unexpected change in federal policy.

General Assumptions      
  Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 9,00% 9,00% 9,00%
Long-term Interest Rate 7,00% 7,00% 7,00%
Tax Rate 29,00% 29,00% 29,00%
Other 0 0 0

Brake-even Analysis

In a home health business plan, the brake-even analysis is based on Average Variable cost (per unit) and fixed monthly costs.

Home Helth Care Business Plan - Break-even Analysis

 Brake-Even Analysis  
Monthly Units Break-even Assumptions $ 17 500
Average Percent Variable Cost 7%
Estimated Monthly Fixed Cost   $17 100

Projected Profit and Loss

You need to project the overall profit and loss, with sales, rise over the next three years and profits should be notable in the beginning. Also, project your expenses and primary costs in providing services on a monthly and annual basis.

 Pro Forma Profit And Loss      
  Year 1 Year 2 Year 3
Sales $442 900 $486 056 $533 482
Direct Cost of Sales $24 131 $23 500 $24 600
Other Costs of Sales $0 $0 $0
TOTAL COST OF SALES $24 131 $23 500 $24 600
Gross Profit $418 769 $462 556 $508 882
Gross Margin % 94,55% 95,17% 95,39%
Expenses      
Payroll $105 350 $110 618 $116 148
Payroll Taxes $ 26 928 $ 27 381 $ 27 860
Depreciation $ 0 $ 0 $ 0
Rent $ 2 160 $ 3 240 $ 3 240
Heat and Lights $ 1 620 $ 1 620 $ 1 620
Phone $ 2 700 $ 2 700 $ 2 700
Cell Phones $ 1 620 $ 1 620 $ 1 620
Water and Garbage $ 540 $ 540 $ 540
Internet Access $ 270 $ 270 $ 270
Professional Liability Insurance $ 8 100 $ 10 800 $ 10 800
Workman's Comp Insurance $ 540 $ 540 $ 540
Premises and Content Insurance $ 540 $ 540 $ 540
Advertising and Marketing $ 1 080 $ 1 080 $ 1 080
Meals and Entertainment $ 540 $ 540 $ 540
Professional Development $ 1 080 $ 1 080 $ 1 080
Office Equipment and Supplies $ 4 320 $ 4 320 $ 4 320
Contracted Therapists: OT/PT/ST $ 17 550 $ 17 550 $ 17 550
Nursing Supplies $ 10 800 $ 10 800 $ 10 800
Total Operating Expenses $ 185 738 $ 195 238 $ 201 249
Profit Before Interest and Taxes $ 233 031 $ 267 318 $ 307 633
EBITDA $ 233 031 $ 267 318 $ 307 633
Interest Expense $ 3 900 $ 3 900 $ 3 900
Taxes Incurred $ 45 826 $ 52 684 $ 60 747
Net Profit $ 183 305 $ 210 734 $ 242 987
Net Profit/Sales 41,39% 43,36% 45,55%

Profit Monthly

In this section, you need to show the detailed overview of your monthly profits for the 12 months in the next 3 years.

Home Helth Care Business Plan - Profit Monthly

Profit Yearly

Your investors may also want to know the annual profits your business can make. It will also help you determine the estimate annual profits for the next 3 years

Home Helth Care Business Plan - Profit Yearly

Gross Margin Monthly

You need to show up your gross margin on monthly basis in your business plan.
Home Helth Care Business Plan - Gross Margin Monthly

Gross Margin Yearly

For this section, you can mentkon the annual gross margin you are expecting for the next 3 years.
Home Helth Care Business Plan - Gross Margin Yearly

Projected Cash Flow

It should show annual amounts, which are important to your business success. The following table represents cash flow on monthly basis.
Home Helth Care Business Plan - Project Cash Flow

 Pro Forma Cash Flow      
  YEAR 1 YEAR 2 YEAR 3
Cash Received      
Cash from Operations      
Cash Sales $0 $0 $0
Cash from Receivables $341 293 $470 096 $521 854
SUBTOTAL CASH FROM OPERATIONS $ 341 293 $ 470 096 $ 521 854
Additional Cash Received      
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $ 341 293 $ 470 096 $ 521 854
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations      
Cash Spending $109 343 $118 322 $121 870
Bill Payments $161 040 $196 683 $208 739
SUBTOTAL SPENT ON OPERATIONS $ 270 383 $ 315 006 $ 330 608
Additional Cash Spent      
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $270 383 $315 006 $330 608
Net Cash Flow $70 910 $155 091 $191 246
Cash Balance $ 115 509 $ 270 600 $ 461 846

Projected Balance Sheet

The projected balance sheet of your home care business should show sufficient net worth growth and healthy financial state.

 Pro Forma Balance Sheet      
  Year 1 Year 2 Year 3
Assets      
Current Assets      
Cash $115 509 $270 600 $461 846
Accounts Receivable $91 647 $101 624 $112 843
Other Current Assets $3 500 $3 500 $3 500
TOTAL CURRENT ASSETS $210 656 $375 724 $578 189
Long-term Assets      
Long-term Assets $0 $0 $0
Accumulated Depreciation $0 $0 $0
TOTAL LONG-TERM ASSETS $0 $0 $0
TOTAL ASSETS $210 656 $375 724 $578 189
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities      
Accounts Payable $18 248 $15 979 $17 262
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $18 248 $15 979 $17 262
Long-term Liabilities $50 000 $50 000 $50 000
TOTAL LIABILITIES $68 248 $65 979 $67 262
Paid-in Capital $20 000 $20 000 $20 000
Retained Earnings ($21 901) $122 408 $289 745
Earnings $144 309 $167 337 $201 182
TOTAL CAPITAL $142 408 $309 745 $510 927
TOTAL LIABILITIES AND CAPITAL $210 656 $375 724 $578 189
Net Worth $142 408 $309 745 $510 927

Business Ratios

The projected business ratios should be based in comparison with home health care standards. Expect to have healthy ratios for risk, profitability, and returns.

 Ratio Analysis        
  Year 1 Year 2 Year 3 INDUSTRY
 PROFILE
Sales Growth 0,00% 10,89% 11,04% 3,71%
Percent of Total Assets        
Accounts Receivable 43,51% 27,05% 19,52% 21,90%
Other Current Assets 1,66% 0,93% 0,61% 45,48%
Total Current Assets 100,00% 100,00% 100,00% 69,58%
Long-term Assets 0,00% 0,00% 0,00% 30,42%
TOTAL ASSETS 100,00% 100,00% 100,00% 100,00%
Current Liabilities 8,66% 4,25% 2,99% 35,62%
Long-term Liabilities 23,74% 13,31% 8,65% 21,27%
Total Liabilities 32,40% 17,56% 11,63% 56,89%
NET WORTH 67,60% 82,44% 88,37% 43,11%
Percent of Sales        
Sales 100,00% 100,00% 100,00% 100,00%
Gross Margin 94,43% 94,86% 95,26% 100,00%
Selling, General & Administrative Expenses 63,87% 67,34% 66,75% 85,34%
Advertising Expenses 0,00% 0,00% 0,00% 0,70%
Profit Before Interest and Taxes 48,54% 50,63% 54,66% 0,35%
Main Ratios        
Current 11,54 23,51 33,49 1,52
Quick 11,54 23,51 33,49 1,2
Total Debt to Total Assets 32,40% 17,56% 11,63% 62,84%
Pre-tax Return on Net Worth 144,76% 77,18% 56,25% 1,09%
Pre-tax Return on Assets 97,86% 63,62% 49,71% 2,93%
Additional Ratios Year 1 Year 2 Year 3  
Net Profit Margin 33,33% 34,86% 37,74% NA
Return on Equity 101,33% 54,02% 39,38% NA
Activity Ratios        
Accounts Receivable Turnover 4,72 4,72 4,72 NA
Collection Days 57 73 73 NA
Accounts Payable Turnover 9,83 12,17 12,17 NA
Payment Days 27 32 29 NA
Total Asset Turnover 2,06 1,28 0,92 NA
Debt Ratios        
Debt to Net Worth 0,48 0,21 0,13 NA
Current Liab. to Liab. 0,27 0,24 0,26 NA
Liquidity Ratios        
Net Working Capital $ 192 408 $ 359 745 $ 560 927 NA
Interest Coverage 52,54 60,76 72,85 NA
Additional Ratios        
Assets to Sales 0,49 0,78 1,08 NA
Current Debt/Total Assets 9% 4% 3% NA
Acid Test 6,52 17,15 26,96 NA
Sales/Net Worth 304% 155% 104% NA
Dividend Payout 0 0 0 NA

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