Hospice service businesses offer clients a safe and caring environment as they edge closer to passing on. They ensure terminal patients are comfortable, feel loved, and get round-the-clock medical attention. Family members also get support and education as they prepare for the passing of a loved one. Note that the hospice business is perfectly ideal for people who are passionate about helping others.
To start and run a hospice business, you need to be ready to face all the hurdles that come with running a multi-faceted facility. According to reports, the demand for hospice care is increasing, and hospice providers in a highly competitive marketplace will have to keep striving to bring a larger share of those patients under their wings.
Steps on How to Start a Hospice Business
Table of Content
Conduct Market Research
You have to understand that carrying out thorough market research is imperative when starting a hospice business. Consult doctors, healthcare professionals, and carefully analyze the demand for hospice services in your area. If already there are hospice agencies in the same area, you should also find out as much as you can about them, and gather information regarding the opportunities and threats in operating the business.
a. Target Audience
The services offered by a hospice business are mostly reserved for terminally ill patients with a life expectancy of 6 months or less. If an individual lives beyond that time frame, the concerned doctor will have to recertify that the disease borne by the patient is incurable.
In this line of business, families looking to extend palliative care to their members are the main target audience, but you have to establish a well-fitted center and employ a compassionate nursing staff to attain success in this business.
b. Is Hospice Business a Profitable Business?
Yes, it is a very profitable business. According to reports, hospice care is now the most profitable type of health care service that Medicare pays for; especially since 7 in 10 Americans say they would prefer to die at home. And that’s the direction the health care system is moving, as part of efforts to limit unnecessary and expensive treatment at the end of life.
c. Are There Existing Niches in the Industry?
- Offering routine home care
- Offering continuous home care
- Offering general inpatient care
- Offering inpatient respite care
- Offering hospice and palliative care
d. Who are the Major Competitors?
- AseraCare Hospice
- Chapters Health System
- Chemed Corp.
- Compassionate Care Hospice
- Curo Health Services
- Empath Health
- HCR Manorcare
- Hospice of the Valley
- Kindred Healthcare
- LifePath Hospice
- Seasons Hospice & Palliative Care
- Stratum Health
- VITAS Healthcare
e. Are There County or State Regulations or Zoning Laws for Hospice Business?
Yes, the regulations, requirements, and zoning laws for starting a hospice business will vary from one municipality to another. Therefore, you should talk to the appropriate healthcare authority of the state to know the licenses necessary to operate a hospice service agency in your locality.
These regulations will surely vary from state to state. For instance, aside from needing an NPI (National Provider Identification) number with Medicare/ Medicaid, your state or county may need you to obtain additional licenses and permits to set up your hospice business.
f. Franchises for Hospice Business?
- A Better Solution in Home Care: $75,000 – $1,000,000
- Interim HealthCare®: $125,500 – $198,500
- ClearPath Hospice: $122,500 – $156,500
- Libertana Home Health & Hospice: $98,000 – $140,000
- Talem Home Care family: $77,200 – $143,400
- Griswold Home Care: $107,350 to $135,500.
- FirstLight Home Care: $99,681 to $152,926
g. What Do You Need to Start a Hospice Business?
- Vision and Business Plan
- Medicare Accreditation
- Adequate Funding
- EMR Software
Memorable Hospice Business Names
- Peaceful Transition
- Care and Love
- Perfect Oasis.
- Comfort Sanctuary.
- Prime Companion
- Neighborhood Hospice
- Mount of Zion
- Valid Retreat.
- Journey Haven.
- Prime Care
- Eternal Care
- Passionate Hearts Hospice
- Venus Hospice Care
- Pure heart Senior Care
- Rising Sun Care
- Next Door Help
- Blessed Care
- Friendly Services
- Trilogy Hospice
- Vital Companions
Register your Business
a. What Type of Business Structure is Best for Hospice Business?
When looking to start a hospice business, you must contact the appropriate local business registering authority and decide upon the best business structure for you. In the United States, you can choose the LLC since it provides certain extra benefits to business owners. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings, and other managerial formalities.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Select a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
c. What Type of License is Needed to Open a Hospice Business?
Licensing requirements for Hospice businesses vary from state to state. However, the vast majority require businesses to pay for a license. Licenses you need to consider include;
- General Business License
- Health and Safety Permits
- Professional License
- Sign Permit
d. What Type of Certification is Needed to Open a Hospice Business?
- Advanced Certified Hospice and Palliative Social Worker (ACHP-SW)
- Registered nurse and Licensed practical nurse Certificate
- The Hospice and Palliative Nurses Association (HPNA) Certification
- Caregiver Certification
- Membership – American Academy of Hospice and Palliative Medicine (AAHPM)
- Membership – American Board of Hospice and Palliative Medicine (ABHPM)
- QAPI Certified Professional (QCP)
e. What Documents are Needed to Open a Hospice Business
- Insurance Policy
- Federal Tax Payer’s Id
- State Permit
- Employment Agreement (Offer Letters)
- Administrative Policy And Procedure Manuals
- Employee Handbooks
- Forms Manuals
f. Do You Need a Trademark, Copyright, or Patent?
No, you might not encounter any reason to file for intellectual property protection/trademark in this line of business. However, you can also choose to protect your company’s logo and other documents or software that are unique to you, or even jingles and media production concepts.
Do your Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Hospice Business?
Have it in mind that the cost of starting a hospice business in the United States will vary depending on numerous factors. However, if you intend to start a licensed home health non-Medicare facility, expect to invest around $60,000 to $100,000, while Medicare-certified hospice agencies would cost around $150,000 to $350,000.
b. What are the Costs Involved?
- Business registration and necessary permits: $4,600
- Licensing for faculty and staff: $12,360
- Computer hardware and software: $6,000
- Commercial space for office and/or medical facility: $85,230
- Accreditation: $2,500
- Website, logo, business cards and other printable material: $2,700
- Marketing strategy and materials: $10,240
- Insurance: $24,560
- Inventory: $72,000
- Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Hospice Business?
- Business license and accreditation
- Business structure and registration
- Rent, renovation, and furnishing of your workspace
- Choice of software
- Number of employees
- Advertising and marketing plan
d. Do You Need to Build a Facility?
This will depend on your business goals and the services you intend to offer. Note that hospice businesses most often provide services in the patient’s home. However, hospice care can also be provided by free-standing or independent facilities designed to offer hospice care, or through programs based in hospitals, nursing homes, assisted living centers, or other health care systems.
Nevertheless, if you choose to construct a facility, without referencing the cost of medical equipment, expect to spend about $400 to $700 per square foot.
e. What are the Ongoing Expenses for Running a Hospice Business?
- Lease or rent
- Supplies and inventory
- Fees and licenses coming in second.
- Travel budget and continuing education
f. What is the Average Salary of your Staff?
- Chief Executive Officer: $108,083/Year
- Facility Administrator: $93,861/Year
- Nurses/Caregivers: $81,165/Year
- Sales and Marketing Executive: $52,340/Year
- Accounting Officer: $54,650/Year
- Security Officer: $39,859/Year
- Cleaners: $32,490/Year
g. How Do You Get Funding to Start a Hospice Business?
- Personal funds
- Business loan
- Government grants
- Venture capital
Write a Business Plan
a. Executive Summary
Our primary objective at Prime Companions is to provide best practices, research, support, and training in the area of hospice palliative care. We intend to provide sufficient and easily accessible care to meet the hospice palliative care needs in Russian Hill, San Francisco.
Prime Companions will fill a significant gap in the current end-of-life care continuum in Russian Hill which does not currently have a residential hospice business. We will also employ competent, caring, and well-trained individuals who are responsive to the needs of our patients, their families, and the communities we serve.
b. Products and Service
- Residential hospice
- Primary care
- Home care
- Acute care
- Long-term care
c. Mission Statement
Our mission at Prime Companions is to establish a trusted Residential Hospice that will provide the people of Russian Hill with compassionate, meaningful end-of-life care. Note that to do this, we will employ a skilled, interdisciplinary hospice palliative care team to help ease emotional, physical, social, and spiritual pain.
In partnership with other agencies, our vision at Prime Companions is to become the place where adults with progressive life-limiting illnesses can access team-based, holistic and timely hospice palliative care. We will aim to help individuals live as they choose and optimize their quality of life.
d. Goals and Objectives
- Improving the Transitions of Care
- Directing more resources to Front-Line Care
- Supporting individuals at home, or if they need/desire to be in our facility
- Reducing the need for Hospital Acute and Complex Continuing Care Services
e. Organizational Structure
- Chief Executive Officer
- Facility Administrator
- Nurse’s Aides and Caregivers
- Sales and Marketing Executive
- Accounting Officer
- Security Officer
a. SWOT Analysis
- A profitable industry with positive cash flow
- Extremely high barrier to entry
- Gross margins that typically range anywhere from 90% to 95% on all services rendered
- High operating costs
- Need for highly trained workers
- New facility
- A growing industry
- Ability to expand by offering additional services
- Precise target audience
- Potential change to the reimbursement rates
- Identical business in our business area
b. How Do Hospice Businesses Make Money?
Businesses in this industry tend to make money from a wide range of sources, however, charitable donations and grants form a good percentage of their revenue. In addition, these businesses get reimbursed by private insurance, Medicare, and Medicaid for each terminally ill patient they care for.
A good number of them are reimbursed on a per diem basis, earning a specific amount for each day the patient is enrolled in the program, irrespective of the services required. For patients who need round-the-clock home nursing care, hospice is reimbursed on an hourly basis.
c. Payment Options
- Payment via bank transfer
- Payment with cash
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Use data distributions to identify growth
- Use signs on your vehicles
- Send a letter introducing your services to social workers, counselors, clergy, and therapists who may be willing to give referrals
- Hire a hospice marketing agency
- Share content across social media platforms
- Continuous content generation
- Create & update your GMB (Google my business) account
a. How Much Should You Charge for your Service?
Just like it was noted above, hospice businesses often get reimbursed a daily rate for each patient, irrespective of the level of services offered that day. The total payment amounts tend to vary each year, but the average for routine care is around $146/day. If continuous care is vital, Medicare reimburses at an hourly rate of around $40/hour.
b. How Much Profit Do Hospice Business Owners Make a Year?
According to reports, well-to-do hospice care business owners earn around $120,000 to $175,000 profit. However, this will vary depending upon the number of patients the business caters to, the average billable hour rate for services offered, and the number of hours each patient is provided each month. This figure, minus expenses and financing costs determine the exact profit a hospice business owner can make a year.
c. What Factors Determine the Amount of Profit to Be Made?
The amount of profit a hospice business can make will vary depending on the following factors.
- The number of patients an establishment cares for in the entire financial year
- Salaries paid to the nursing staff and health aides
- The number of hours devoted to every patient each month
- Size of the business
d. What is the Profit Margin of a Hospice Business?
While this can be quite hard to stipulate, margins in hospice could well be within the 15% to 20% range.
e. What is the Sales Forecast?
- First Fiscal Year (FY1): $288,000
- Second Fiscal Year (FY2): $680,000
- Third Fiscal Year (FY3): $1,390,000
Set Up your Office
a. How Do You Choose a Perfect Location for Hospice Business?
- The demography of the area
- The demand for hospice and palliative care services
- Accessibility of the location
- The number of hospice and palliative care centers and homecare related services in the location
- The local laws and regulations in the community
b. What State and City are Best to Open a Hospice Business?
- The Villages, Florida
- Myrtle Beach, South Carolina
- Lake Havasu City, Arizona
- Punta Gorda, Florida
- Barnstable Town, Massachusetts,
- Homosassa Springs, Florida
- Prescott, Arizona
c. What Equipment is Needed to Operate?
- Bedside commodes
- Geriatric recliners (Geri chairs)
- Hospital beds
- Overbed tables
- Shower chairs
- Bandages and other wound care supplies
- Briefs, pads, and other continence care supplies
- Personal care products include soap, shampoo, body lotion, and barrier creams.
- Positioning devices including cushions and wedges
- Adult wet wipes
- Oxygen equipment (including ventilators)
- Bi-Pap and C-Pap machines (these machines help you breathe while you sleep)
- Blood pressure monitors
- Lifts (this equipment helps you move and change positions)
- Kidney machines
Truth be told, you must build an effective and committed team as it will matter a lot to the success of your hospice business. Note that you will need an administrator and a patient care director, to begin with. Nurses, volunteer coordinators, aids, bereavement coordinators, accounting professionals, etc. are also very necessary. You will also have to set up a standing order procedure for hiring new staff.
It is also necessary that you arrange proper training programs for your new staff to ensure that they adjust very well to the job profile and the needs of the job as soon as possible. Documentation tends to play a very vital role in the day-to-day operations of this business, therefore ensure you train them adequately in maintaining records.
Launch the Business Proper
After you must have gotten accredited and everything else is in place, you must consider opening your business to let people know of the services you offer. Note that you have to prepare for the launch by reviewing and improving some key elements of your business. You need to have;
- A properly fitted facility
- Well trained staff
- A good and reliable website
a. What Makes a Hospice Business Successful?
Note that some of the most successful hospice businesses in the United States are brilliant networkers who invest a lot to sustain existing relationships they have within the medical and religious communities. While your network will surely grow and expand as your hospice business grows, it’s important to be familiar with the key players in your community before you start your business. Here are a few things that ensure that a hospice business remains successful;
- Quality Management
- Innovative Projects
- Excellent Delivery of Hospice Palliative Care
b. What Happens During a Typical Day at a Hospice Business?
In this line of business, your day-to-day activities will differ extensively, depending on how large a role you wish to take within the business. First and foremost, note that a good number of palliative care facility owners serve as the hospice administrator, and this will require that you function in different capacities. Your daily duties as the owner of a hospice business will include;
- Replying to emails and picking up phone calls from prospective clients/patients
- Meeting with prospective clients/patients to identify their needs
- Staying up to date with local, state, regional, and national regulations to ensure the facility is in compliance
- Identifying organizational policies that require updating and implementing changes
- Budget management
- Sustaining relationships with vendors, medical professionals, and support staff
- Overseeing the recruitment, hiring, training, and supervision of the workforce
c. What Skills and Experience Do You Need to Build a Hospice Business?
Although not mandatory, experience in the healthcare industry is indeed an advantage when starting a hospice business. If you’re lacking this experience, then you should consider hiring an administrator that can provide their expertise. Owing to the delicate nature of the business, you must possess strong interpersonal skills.
Note that aside from patients and family members, you should be able to effectively communicate with staff, pharmacists, healthcare professionals, religious clergy, and funeral directors. Other skills you need to run a successful hospice business include;
- Critical thinking
- Problem-solving and decision-making
- Time management
- Compassion and empathy