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Most senior citizens are likely to need long term care services at some point, and as the number of older adults in the US increases, more nursing homes will be needed to improve the quality of life for elderly residents. Thus, investors and those interested in the long term care industry may be interested in learning how to open a nursing home. Here you will find that process summarized in fifteen simple steps. 

15 Easy Steps To Opening a Nursing Home

Opening a nursing home can be challenging in part because of the number of administrative tasks to perform. First and foremost, you need to make sure that you apply and obtain all of the necessary licensing and zoning requirements. This can be difficult because of the varying regulations depending on the state and meeting the state nurse-to-patient ratios. However, if you follow these steps on how to open a nursing home, the process will be considerably less daunting.

1. Study the long term care industry

Before you embark on opening a nursing home, it is important to understand the long term care industry as a whole. This means getting up to speed on the latest industry technologies like long term care EHR, which is now a necessity, as it significantly improves workflow processes and efficiency and helps facilities stay in compliance with federal regulations.

One should ensure that they understand the role of the CMS, Medicare, the nursing home compare website and PDPM reimbursements, and how they impact facilities. And knowing the challenges facing the long term care industry is a must, as these will become your problems as well. These challenges include: the nursing home staffing crisis, understanding SNF consolidated billing, infection prevention and control for SARS-CoV-2, etc.

2. Conduct in-depth market research

Research material for how to open a nursing home
Know who your main competitors are so that you can best position your nursing home in the long term care market.

Next, you need to conduct market research to determine if there are any competitors in the local area to determine whether it is viable to open a nursing home in your chosen area. This will allow you to assess the market size and the number of potential residents, thus confirming whether there is enough demand for a nursing home in your area. Resources like the American Health Care Association can help you find nursing homes in your state and city. 

You should always seek to know who your main competitors are so that you can best position your nursing home in the long term care market. For example, if your local area is already saturated with nursing homes, it is wise to consider alternative niche markets like caring for veterans.

3. Learn about your competitors

It is also important to understand what your competitors’ strengths and weaknesses are, as this information can give you a competitive advantage for your own nursing home. Some ways to gather information about your competitors include:

  • Asking other long term care professionals in your network about their experiences with the competing nursing homes
  • Searching online for reviews of the competing nursing homes
  • Visiting the competing nursing homes in person

4. Decide whether to buy an existing nursing home or start from scratch

When considering how to open a nursing home, you will have the option of buying an existing nursing home or nursing home franchise or starting from scratch. There are pros and cons to both options. 

One advantage of buying an existing nursing home is that you already have an established customer base and staff who are familiar with the facility. However, you also take on the possible brand problems, such as past F-tags, which impact the facility’s reputation. 

Starting from scratch, meanwhile, gives you complete control over how the facility is run and who to hire. However, it is considerably more time-consuming and it may take longer to gain residents because of the unestablished reputation. Therefore, you must be patient while waiting to make a profit.

Alternatively, a nursing home franchise can be a good idea if you are looking for brand recognition and also want to get started quickly. Just be sure to have a lawyer review your contract with the franchise, so you understand the terms and conditions.

Ultimately, there is no right or wrong answer. What’s more important is to weigh up your options before making a decision, and deciding on the best course of action for your specific situation and what you are looking for in a nursing home.

5. Create a legal entity

Lawyer with legal documents to help with opening a nursing home
Usually, an LLC is the best legal entity if you are thinking about how to open a nursing home.

Personal protection from liability is something that you should never overlook when opening a nursing home. Personal liability protection may be obtained through business entities like corporations, limited liability companies (LLCs), and limited liability partnerships (LLP), which are created and maintained by your state’s secretary of state office. It is always advisable to speak with an attorney or accountant to discuss the best option for your nursing home. 

Usually, an LLC is the best legal entity if you are thinking about how to open a nursing home. This is because an LLC protects you from personal liability if, for example, a resident slips and falls in a hallway. With an LLC, only the amount of money you put into it is at risk if the family files a lawsuit and not your personal finances.

6. Discuss insurance

In line with having a legal entity to protect yourself, you should also have adequate insurance in place when opening and running a nursing home for several reasons. Firstly, if you are sued, your insurance policy can cover some of the legal fees and any damages that you are ordered to pay. Secondly, if one of your employees causes an accident, your insurance can help cover the cost of any resulting medical bills or property damage. Finally, if your nursing home is damaged by a fire or a natural disaster, your insurance policy will likely include cover for repairs and damages.

In terms of insurance, you will need a general liability insurance policy, which will protect you from most lawsuits against your facility from family members of residents. You will also need property insurance, which will cover the cost of repairs and damage to your nursing home as a result of a fire or another disaster. Finally, you may also want to consider workers’ compensation insurance, which will cover the medical bills and loss of wage for employees who are injured on the job.

It is always best to talk to an insurance agent to discuss your specific insurance needs.

7. Get the needed certifications

If you want to open a nursing home, you need to research and plan ahead. Firstly, you will need to become a certified nursing home administrator by taking a state-approved training course and passing a written exam. The process of becoming certified can take several months, so it is important to plan ahead.

In addition to being certified, you will also need to have a license from your state to operate a nursing home. Each state has its own licensing requirements, so check with your state’s licensing board to see what is required.

Once you have your certification and license, you will be ready to open your nursing home. 

8. Get the legal documents you need to operate

There is a lot of red tape when opening a nursing home. Some basic legal documents and information that you must have include:

  • Federal tax ID number
  • Business license
  • Employment agreements
  • Federal license
  • State license
  • Professional license
  • Proof of Insurance

9. Create a business plan

A person creating a business plan on how to open a nursing home
A business plan consists of: an executive summary, company desctription, business goals, market research, etc.

To create a business plan, simply grab a piece of paper and a pen and do the following:

  • Write an executive summary (your elevator pitch)
  • Describe your company
  • State your business goals
  • Describe your products and services
  • Do your market research
  • Outline your marketing and sales plan
  • Perform a business financial analysis
  • Make financial projections

Having noted down your findings of all the above, the document you now have is your business plan.

10. Raise the capital you need

Having completed all the above steps, you now need to start thinking about how to raise the capital to open your nursing home. One option is to take out a loan from a bank or other financial institution. If this is your chosen route, the business plan you previously created will prove to be invaluable.

Another option is to look for investors who are willing to provide the capital in exchange for a percentage of ownership in your business. You may also want to consider seeking grant money from the government or private foundations. This can be a great option if you are planning to open a nursing home that will serve a low-income population or provide other social services. 

Once you have raised the capital you need, you are ready for the next step.

11. Choose a location

One of the most important decisions you will make when opening a nursing home is choosing the right location. The location you choose should be easily accessible to your target market, have enough space to accommodate your needs, and be in a safe and secure area.

When considering potential locations, it is also important to think about the type of building you will need. If you plan to purchase an existing nursing home, you will need to make sure that the building meets all local zoning and safety requirements.

If you are planning to build a new facility, you will need to find a suitable piece of land and then have the necessary permits and approvals in place before construction can begin.

12. Begin hiring

As you get closer to opening your nursing home, you will need to start hiring staff. The first step is to develop job descriptions for the positions you need to fill. Once you have a good understanding of the skills and experience required for each position, you can begin advertising the open positions.

You can use online job boards, newspapers, or even word-of-mouth to find potential employees. Once you have a pool of candidates, you will need to screen them carefully to find the best fit for your nursing home. You should also consider conducting background checks on all prospective employees. This is especially important in long term care, where you will be working with the elderly.

As for medical equipment, you will need to consult with your state’s licensing board to see what is required.

13. Work out your pricing

Ultimately, long term care is a business, and one of the most important aspects of opening a nursing home is determining how much to charge for your services. You will need to take into account the cost of labor, supplies, and overhead when setting your prices. You should also research the rates charged by other nursing homes in your area.

It is important to remember that you are not just competing on price, but also on the quality of care you provide. Be sure to set your prices in a way that allows you to offer the best possible care to your patients.

14. Come up with a marketing plan

A nursing home is a business, and like any business, it needs to have a marketing plan. You will need to identify your target market and figure out the best way to reach them. You should also consider developing a brand for your nursing home. This can include things like creating a logo, choosing a color scheme, and having a mission statement.

Your marketing plan should also include a budget for your marketing and advertising costs. Furthermore, don’t forget to measure the success of your marketing campaigns by defining goals and targets.

15. Get a long term care EHR

Nurse using a tablet in a nursing home
Long term care software like EHRs, e-MAR and point of care software are all essential to the long term care industry of today.

Finally, do not forget to get effective nursing home software for your facility. The age of paper records is over. Long term care software like EHRs, e-MAR and point of care software are all essential to the long term care industry of today.

EHRs in particular are important, as they provide a complete view of each patient’s medical history. This is crucial in long term care, where patients often have complex medical needs. EHRs also help to improve communication between staff members and make it easier to track the progress of each patient. Just be sure you provide EHR training for all your staff.

There are multiple long term care vendors in the market, so ensure you do your research and choose a care plan software that is right for your nursing home.

Contact us here if you would like to test drive our user-friendly long term care software.

Nursing Home Marketing Ideas

Nursing home marketing will be a big part of your plan as you decide how to open a nursing home and create a  nursing home business plan. Here are some marketing ideas to consider:

  • Revamping your website to make it responsive and mobile-friendly
  • Providing formal training to the nursing home sales team
  • Tracking phone calls from the marketing source to sale
  • Adding the nursing home business to Google’s local search results
  • Competitor analysis to borrow what works from them
  • Utilizing PPC (pay per click) ads
  • Utilizing Facebook ads
  • Website Search Engine Optimization (SEO)

If you are interested in how to open a nursing home, one question you may ask yourself is, are nursing homes profitable? The short answer is, yes, if it is done right. However, long term care is not just about profits, but it is also about providing quality of care and quality of life to your residents. Your residents and their needs should always come first. If you do this, you will develop a reputation in the industry, earning you more residents, and resulting in more profits.  

How To Open a Nursing Home

Above, we have mentioned 15 steps one can take if one wants to open a nursing home. These include things like studying the long term care industry as a whole, researching your competitors, deciding whether to buy an existing nursing home (franchise) or starting from scratch and creating a legal entity for your nursing home.

Now that you know how to open a nursing home, it’s time to get started. Use the steps and tips we’ve provided to create your business plan. Remember to always put your residents first and choose a quality long term care software solution to help run your facility.

For more on recent trends in long term care, read our blog and subscribe to the LTC Heroes podcast.

Elijah Oling Wanga
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