Weeding Through The Cost Of A Homecare/ Home Health Start-Up.
Kenyon HomeCare Consulting • February 28, 2021
Kenyon Home Care Consulting
Kenyon Home Care Consulting has assisted with a number of start-up home health agencies across the country over the years. There are many questions that are asked, but we have noticed that only about 10% or less of those individuals calling have projected out the assumed cost of starting up or ask if the assumption is correct. The remaining individuals or about 90% have no idea what the cost of starting up a Home Health agency are and if they have thought about it, tend to grossly underestimate what it will take in the first year of operations. Costs of a start up home care agency vary by state as well as by the type of Home Care agency that an individual may wish to start. The least expensive is the non-skilled Home Care agency followed by the licensed skilled home care non-Medicare and finally the most expensive Medicare/Medicaid Home Health and Hospice.
We understand that one of the major reasons new businesses fail is because of lack of working capital for the start up phase of the business. The estimated cost to start up a non-skilled Private Pay Home Care agency runs about $40,000 to $80,000, Licensed Home Health non-Medicare $60,000 to $100,000 and Medicare Certified agencies $150,000 to $350,000, all depending on the state the home health agency start up is in. Much of the cost is incurred around licensing issues and regulations requiring licensed personnel, computer software and hardware, patient care non-recoverable costs paid out of the owners pocket, commercial office space. and length of time the state is out until initial review or survey. Additionally many states now require that all Medicare start up agencies go through an Accreditation organization which also adds cost and time to the start up phase.
It is recommended that anyone thinking about starting up a home care/health agency first develop a working budget for the first year. There are some basic costs that all home care start-ups share; name and logo development, policy and procedure development if in a licensed state or going for Medicare, computer software and hardware, marketing and sales, recruitment and retention, office furniture and equipment, in some states office space rental, plus telephones, office supplies and personnel costs depending on the type of agency and the state and federal rules. For the Medicare agency, the requirement of paid clinical staff to care for a minimum of ten patients has to be added in the budget as start up cost. Those monies are not recoverable from Medicare and are considered part of the startup costs. Additionally Medicare and the states will require a specified amount of money be in a bank account to prove the financial viability of the new organization. All of these elements must be in the startup budget.
There is one last budget element that must be added. The most common missed budget line is payment to the new owner. The time and energy put into starting up an agency is considerable and requires a line item for reimbursement. Starting a business is a full time job! Some of the estimated start-up costs stated above is the reimbursement that the owner will need to survive financially while the agency is getting started. Failure to include this expenditure leads many aspiring home care agency owners to work outside the start-up to generate income while they simultaneously try to start the business. This is a sure recipe for failure.
If you are considering starting up a home care/health agency and need some assistance in developing the budget, contact Kenyon Home Care Consulting for a sample budget. Or call 206-721-5091 for consulting assistance.
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Today, this article will look at little different than out typical articles. We all know the costs of losing employees and trying to hire and train new ones. It is exhausting and expensive. So, we think about our wages and benefit packages all the time. What can we do differently that makes people stay? We can’t change the job and we don’t want to keep people that don’t like the work itself. So, how do we acknowledge employees in a way that is valuable to them and that our businesses can afford to do? 5 Things To Consider About Employee Recognition At Your Christmas Party: 1. Years of Service: These can be based on milestone work anniversaries (5, 10, 15 yrs, etc.). If a person has been at your agency 11 years, you pull them up and acknowledge them in the group of employees who have been there at least 10 years up until the time they hit the 15 years landmark. This way longevity is recognized yearly. 2. Special Employee awards: Now, this may be difficult if your staff is very small, but acknowledge the employee who has gone the extra mile in the job they do. Tell the story. The employee needs to know when the employer is proud of the work that has been done. Consider a plaque or certificate. Don’t minimize the value of the employee having them to display. 3. Acknowledge all employees in the mix: Because we are a clinical industry, the administrative staff is often overlooked on day-to-day operations. Ultimately, don’t miss the chance to acknowledge the employee who was able to catch billing errors or collect on a large account. Staff doesn’t like to hear about money, but those types of collections keep Christmas bonuses in place! So, make sure the other staff knows the accomplishments of the finance department or the office manager that every caller loves to speak to. Don't ever forget the IT staff that is on call more than any clinical person in your agency! 4. Letters from the administration: Add a personal note to your staff either collectively or individually depending on the size of your agency. If you are larger, there are employees you don’t often see or get to talk to on a regular basis, so take the time so send a note with that Christmas bonus. 5. Consider the Christmas bonus: Listen, some of you can afford to do substantial monetary bonuses and that is fantastic. However, if you are not in that position, consider something in its place. Maybe small gas cards go with the letter from administration. With the cost of groceries, consider something that helps with the costs of daily living for employees. Big box gift cards in your area will always be used. You may do a lot of these things on a yearly basis to employees. All this being said, it doesn’t mean there aren’t reasons for acknowledgement throughout the year. However, your annual Christmas party is a good way to do it collectively. Between your annual party, write the individual cards to employees when you hear a patient interaction worthy of praise. Or, maybe you buy a gas card for the employee who has picked up extra shifts and always shows up on time. Ultimately, employees will feel valued. You will not regret the time, effort, and energy put into these efforts. Merry Christmas! If you want help with recruitment and retention strategies for your agency, please call Kenyon Homecare Consulting at 206-721-5091 or contact us online today.