Senior home healthcare: An opportunity for franchise investors
Wednesday, January 03, 2018
According to the U.S. Census Administration on Aging, 1 in 5 Americans will be over age 65 by 2030. And the overwhelming majority of seniors — 88 percent, according to research by AARP — have stated they prefer to remain in their homes for any necessary long-term healthcare services.
That preference has created a $70 billion segment within the senior healthcare service industry — a figure bound to grow substantially as it tracks with America's rapidly growing population of seniors.
The long-term home care services that seniors purchase vary greatly and often change rapidly. Many seek help with daily living activities, personal care and assistance getting to medical appointments. These kinds of simple-to-manage but highly valued home services can grow more demanding and serious in relatively short order, from home care to assisted living and, finally, hospice.
The ability of seniors to remain in their homes rather than seeking institutional care can only continue to expand as advancements in medical technology, remote monitoring and next generation emergency response systems become widely available. It's definitely a great time to be exploring franchises in the senior and home healthcare services category.
Finding the right one for you
Industry growth has created an increasing number of choices for investors in search of a senior or home care franchise opportunities. Of the currently recognized models, each offers a different cost of entry, different licensing requirements, various overhead structures and more.
Here's a snapshot of the most popular options:
Home care: Normally, this is a service that provides help with nonmedical daily activities such as bathing, dressing, hygiene, meal preparation and light housework. The provider may care for the customer in her private home or at an assisted living facility.
Payment typically comes in the form of long-term care insurance, worker's compensation, Veterans Aid benefits and/or private funds.
Home care is an attractive franchise option for many because it offers a lower cost of entry. The services offered require no office, so overhead can remain low. However, licensing requirements vary from state to state and will require extra research depending on the state you plan to operate.
Home healthcare: This is skilled care rendered by people trained in physical therapy, occupational therapy and nursing who perform their specialties in the customers' homes or, again, at an assisted living location. Some models blend this service with home care.
Home healthcare does differ from home care in that the source of payment is usually Medicare or Medicaid, requiring an ability to understand and maneuver through government funding. Startup costs are understandably higher than home care franchises, as there is a reliance on higher labor costs as well as liability insurance.
Assisted living placement: With a low cost of entry, this service essentially helps people navigate the confusing maze of senior living options and find the right one for the senior who can no longer live alone. At present, there are no licensing requirements for this model, but that can change.
Maintaining the right staff is basically the only overhead. Payment is a one-time commission from the facility where the senior is placed. For this model, that means the franchisee must maintain a steady flow of customers in search of facilities in order to sustain cash flow.
Making the smart investment
As with any franchise opportunity, it's important to not let emotions sweep you into an investment that isn't a good fit for you. As a potential investor considering a home healthcare franchise, you will see there are many advantages but as attractive as home healthcare is on many levels, there are also disadvantages.
Here are a few of each for you to consider:
Low cost of entry: It can cost, at minimum, a half-million dollars to open a fast food franchise, and that number easily climbs into seven figures for one of the household names. Compare that to most home healthcare franchises that start out for as little as $65,000.
High revenue potential: First, you won't be servicing a high startup cost. Additionally after making connections with key referrers, such as social workers and elder law practices, you can drive a lot of volume as territories can often be quite large.
Growing demand: As already explained, the market is big and growing quickly, a trend that will continue for decades.
Regulation knowledge: Regulations, licensing and certifications vary greatly from state to state and regularly change on the national level. For the independent, it's a huge struggle to keep up. On the other hand, franchise owners are known to insurers, navigate policy and often are right in the lobbying mix to fight for favorable legislation for their franchisees.
Staff hiring and retention: This is a high-touch business model, and your staff will be interacting with seniors who are not in the prime of life and who may have some physical and/or mental limitations. It takes a special kind of person to bring a great attitude into that work environment every day.
Unfortunately, estimates indicate demand will exceed the supply of such workers for several more years. The good news is an estimated 1.3 million home health aides are in the process of entering the job market. However, this influx will be concentrated on the East and West Coasts, so you should assess your market carefully for its ability to supply good workers.
Regulatory landscape: Certifications, continuing education, compensation (minimum wage, overtime, benefits, etc.) and regulations can vary from state to state. When selecting a franchise, your research should focus on those that have the proven background and experience with the laws and legislation in the state(s) where you plan to operate.
Adhering to regulations is especially critical in the home healthcare realm where some of the services offered require a certified healthcare professional.
There are home care agencies out there deceptively marketing themselves with the image of providing trained medical professionals to the customer's home, when in fact they staff with regular people who have merely been through an internal training program. This sort of practice has government agencies and private organizations in many states asking for standardization in the regulation process.
Be aware, the landscape is ever-shifting.
Technological revolution: From home health monitoring systems that connect to hospital networks to mobile pharmaceutical administration units, outdated systems have been replaced with powerful, highly technical equipment. Fluency with these technologies is essential, and those home healthcare agencies that lag with adopting technology will get left behind.
Question any prospective franchisor thoroughly about their approach to technology, training and their plans for staying at the cutting edge.
For those with entrepreneurial drive or a passion for helping others, owning your own senior home care franchise represents the opportunity to control your own destiny while serving the greater good. With America's rapidly aging population, few business opportunities offer as much upside potential as investing in a senior home care franchise business.
It's just a matter of finding the right opportunity for you.
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