Select Page

The long term care industry is a highly rewarding field that ensures elderly adults receive proper care in their senior years. Due to the United States’ rising elderly population, there is an increasing need for more long term care assistance for the elderly. This has naturally led to investors researching how to start a nursing home. 

So how does one know that they are ready to learn how to start a nursing home? There are telling some signs that one can look for within themselves to know if they need to take the leap:

  • You care about the long term care industry: One of the most important things is to be passionate about the work that you will be doing. Remember, long term care is not just about the profits. Rather, it should be focused on the level of quality care and quality of life you provide to your residents as they reach the end of their lives. This dedication is something that families look for most when assessing long term care residences, meaning a lack of sincerity will have an impact on the bottom line. Additionally, families will also be looking for compliance with the CMS nursing home requirements. Therefore, it is imperative to understand the industry and market before starting a nursing home. Past experience with the long term care industry is a huge plus, but it is not a must. A passion for long term care and its residents is what is at the core of this industry, and if you are ready to start a nursing home, then you will not be able to wait to get started.
  • You have done your research: An investor must be knowledgeable about the long term care industry and what goes into running a successful nursing home. There are many resources available online and through professional organizations such as the American Health Care Association (AHCA), National Center for Assisted Living (NCAL), the CMS, and the HHS. Also, it is worth noting that, as part of your research, you should consider what type of long term care EHR you would like to have implemented in your facility.
  • You have a business plan: According to the CDC, as of 2016, 69.3% of all American nursing homes were for-profit organizations. If you are headed in this direction, then you will need to know the value of a clear business plan, which should summarize the business goals, strategies, and tactics for a start-up business. This document is important as it will be used to generate interest and investment in your nursing home venture.   

At this point, if a person is clear on their goal of going into long term care, they will need to consider one of three options: starting a nursing home from scratch, buying an alternative senior care franchise, or opening an alternative senior care franchise.

Option #1: Starting a Nursing Home From Scratch

Assuming that one decides to start a nursing home from scratch, there are 15 steps they can take on their journey to opening a nursing home:

An investor considering how to start a nursing home
If a person is clear on their goal of going into long term care, they will need to consider one of three options: starting a nursing home from scratch, buying an alternative senior care franchise, or opening an alternative senior care franchise.
  • Study the long term industry to understand all the rules and regulations
  • Do the market research from a business perspective to determine the viability of opening a nursing home at a particular location
  • Learn who your competitors are
  • Decide whether you want to buy an existing facility or build a facility on an empty plot of land
  • Create a legal entity for your nursing home
  • Analyze all the insurance options you may need
  • Get the state and federal certifications needed for your facility
  • Obtain other legal documentation, such as a business license and a federal tax ID number needed for operations
  • Create a detailed business plan
  • Raise the needed capital from potential investors with the help of your business plan
  • Decide on a final location for your facility
  • Start hiring staff
  • Figure out the pricing structure for the services provided at your facility
  • Create a marketing plan and implement it
  • Contact a nursing home software vendor to get yourself an effective nursing home EHR

Unfortunately, some nursing homes have encountered issues in implementing EHRs, which may discourage others from pursuing this technology despite the numerous benefits EHRs offer facilities. Hence, before settling on an EHR, one should always ensure they demo the EHR to ensure it will be easy to implement and meet their facility’s needs.

Option #2: Buying an Alternative Senior Care Franchise

The alternative option for those interested in how to start a nursing home is to buy a senior care franchise or an already established business model with a brand name, support system, and infrastructure in place. When you buy a franchise, you are essentially investing in a turnkey operation that has proven successful. The main benefit of buying a franchise is that it takes a lot of the risk and guesswork out of starting a business.

Another key advantage of buying a franchise is that you will have access to the franchisor’s proven business model, including its brand name and marketing materials. You will also benefit from the franchisor’s relationships with suppliers, which can help you obtain better deals on the products and services you need for your business.

Most franchisors offer ongoing support to their franchisees, so you will have someone to turn to if you have questions or need help with anything. If one is considering buying a senior care franchise, there are a few things they should know:

Happy seniors receiving care after an individual researched how to start a residential care home
Most franchisors offer ongoing support to their franchisees, so you will have someone to turn to if you have questions or need help.
  • Owning a senior care franchise is different from working in it: This means that a person does not need to be an RN, LPN, or have past medical experience. If a person wants to own and run a facility, they will instead need a nursing home administrator’s license, which, of course, varies according to the state. Therefore, it is important to research what licenses to obtain before opening a nursing home. 
  • The upfront fees for senior care franchises can vary drastically: These fees can range from a few thousand dollars to a few hundred thousand dollars, so it’s important to do your research and find a franchise that fits your budget.
  • Each senior care franchise has its own goal: It’s important for a person looking into how to start a nursing home to choose a franchise that aligns with their goals and interests. For example, some franchises offer continuous ongoing training for nursing home staff on topics like management, leadership, and PDPM reimbursements. Others offer marketing and 24/7 customer support for facilities.

With all these in mind, we can now move on to the different types of senior care franchises to consider when considering starting a nursing home.

How To Start a Residential Care Home

For those new to long term care, the above-mentioned 15 tips on how to start a residential care home can prove to be invaluable. However, if one has considered how to start a nursing home and cannot front the high initial investment, there are 13 alternative home health senior care franchises to consider. Here we will highlight the five best organizations.

Option #3: Opening an Alternative Senior Care Franchise

Visiting Angels

This is a national senior care franchise that offers non-medical in-home care services to seniors across America. Services include companionship, light housekeeping, meal preparation, errand services, and personal care. One of the key features of this franchise is that it has a very low initial investment compared to other franchises in the industry. In addition, veterans get 10% off the franchise fee. Other financial details include:

  • One of the lowest royalty fees in the industry at only 3.5%
  • A required $59,950 as the franchise fee
  • 2.5% co-op ad fee

Assisting Hands

This is another top senior care franchise that provides non-medical in-home care services to seniors as well as a 10% veteran’s discount. Assisting Hands prides itself on:

  • An expanded business model that includes medical equipment, skilled nursing, and temporary staffing.
  • Its reach, as it has over 170 franchises sold across the country
  • Provision of training and tools to help franchise owners be successful

To get started with this franchise, one will need approximately $100,000.

Senior Care Authority

Unlike the other two, this senior care franchise business is not about in-home care but instead focuses on senior placement and elder care consulting. For those who have looked at how to start a nursing home and feel they are not yet ready but still want to work with seniors, this senior care franchise may prove to be the ideal pick for them. The ideal person who would select this senior care franchise is someone who has:

  • Sales experience
  • Networking and communication skills
  • A strong desire for work-life balance

The cost of investment for this franchise is between $50,000-$150,000.

Caring Senior Service

Caring Senior Service has been around since 1991 and has over 100 franchises across the United States providing in-home care services, respite care, and 24/7 live-in homecare. One of the outstanding features of this franchise is that they offer a protected territory to their franchisees, preventing individuals from the same franchise from competing with each other. This franchise requires an initial investment of $150,000.

Care Patrol

Care Patrol is one of the largest and most respected senior care franchise companies in North America with over 100 locations. Similar to Senior Care Authority, Care Patrol focuses on senior placement. The Care Patrol model is simple: “We are the advocates for families seeking quality senior care. We meet with the family, assess their needs, and then match them with a pre-screened, qualified provider in their area.” An initial investment of $50,000 is required to get started with this senior care franchise

Contact us here if you would like to test drive our long term care software if you are considering how to start a nursing home.

How Much Does It Cost To Start a Nursing Home?

Previously, we listed some alternatives that one might consider if one cannot afford the initial cost of a nursing home. For those who can, though, they will, at some point, ask how much does it cost to start a nursing home? This is fundamental knowledge when exploring how to start a nursing home. 

According to SharpSheets, nursing home startup costs can range from $675,000 – $3,600,000 for those looking to open a 40-unit nursing home, plus $278,000 – $293,000 in operating costs per month to run the business. If one has looked into how to start a residential care home and advises that those who cannot afford the high costs consider buying a senior care franchise instead. Alternatively, one can look for care homes for sale to help reduce the initial investment costs, but that comes with its own legal challenges as well.

How To Start A Nursing Home: Overcoming the Challenges

The nursing home industry is plagued with various issues, which can make it a risky investment for those who are not familiar with the long-term care landscape but still researching how to start a nursing home. In this section, we will outline some of the challenges those considering how to start a nursing home should be aware of:

A team of long term care investors asking 'how much does it cost to start a nursing home?'.
The nursing home industry is plagued with various issues, which can make it a risky investment for those who are not familiar with the long term care landscape.
  • The nursing home staffing crisis: A study conducted by the AHCA/NCAL revealed that 87% of nursing homes are short-staffed, which can lead to various problems, such as higher rates of hospitalization and poorer quality of care for residents
  • Home healthcare growth: According to a report by AARP, as many as 77% of older adults would prefer to remain in their homes as they age. This preference for aging in place (at home) is likely due to the rise of home healthcare options, which can provide seniors with the care they need without having to leave their homes.
  • Financial pressures: Unfortunately, reimbursement rates from Medicare and Medicaid continue to lag behind the actual cost of providing care, making it difficult for operations to remain open in some cases. 

Clearly, there are various risks and challenges involved in the long-term care industry that one should take into account before making any decisions. However, when done right, starting a nursing home can be a rewarding experience.

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

Elijah Oling Wanga
Latest posts by Elijah Oling Wanga (see all)