Nursing homes may mean different things to different people, but they are actually a specific type of facility that falls under the wider umbrella of long-term care facilities. While many nursing homes and other facilities are run by nonprofit organizations, about 70% are run as profit-making businesses.
For anyone getting into this business, a genuine desire to help the elderly should be a primary motivator rather than money. Nursing home business profits are notoriously thin, averaging only 3% to 4% for most businesses. Those who manipulate the system and sacrifice care for money can and do make more until they are caught.
With an aging population combined with the number of seniors who move to Florida for the warm weather, you may think that Florida is a huge market for nursing homes. While there is a healthy market in the state, Florida actually has one of the lowest ratios in the United States of those who are over age 65 to those living in nursing homes, according to the Florida Health Care Association.
Long-Term Care Services and Business Models
A nursing home is just one of several different types of long-term care services a business can offer to the elderly or disabled. You may be able to offer some services from your own home, or you may offer services in patients' homes. For any of these businesses, if you plan to offer nursing care, then you will have to hire nurses or other medical professionals to provide this care.
Some business models do not require a nursing degree or medical training. However, they are all licensed and regulated by the state, specifically by the Florida Agency for Health Care Administration in most cases. You should always expect that a criminal background check will be required.
Model 1: Nursing Home
A nursing home provides 24-hour care to elderly patients in poor health who don't need to be in a hospital but have medical needs that can't be met in their homes. Nursing homes provide medical care and nursing as well as physical therapy, speech therapy and occupational therapy to patients who can benefit from these services. They also provide:
- Case management and health monitoring
- Personal care (such as bathing, dressing, eating and walking)
- Nutritional meals and special diets
- Social activities
Nursing homes are licensed and inspected by the Florida AHCA.
Model 2: Assisted-Living Facility
Assisted-living facilities provide 24-hour care to residents, including room and board and personal services. Patients in an ALF may need constant observation, but they are usually more mobile and don't need the high degree of medical care required by those in a nursing home.
Depending on the ALF, it can provide a wide range of specialized services such as nursing care or mental health services, provided it fulfills additional licensing requirements. Licensing and inspections are done by the Florida AHCA.
Model 3: ECC-Licensed Assisted-Living Facility
For many seniors, living in an ALF is a step they take before they become ill and are eventually transferred to a nursing home once their condition worsens. An extended congregate care ALF is designed to delay this transition a bit longer than a typical ALF.
In Florida, all ECC facilities are ALFs, but not all ALFs are ECCs. To become an ECC, your business needs to apply for a specialty ECC license from the Florida AHCA.
Model 4: Adult Family Care Home
This is a business you can start from your own home provided that it meets state requirements for living quarters, fire standards and safety standards. Adult family care homes are licensed and inspected by the Florida AHCA.
These homes provide 24-hour care for up to five seniors or disabled people who are not related to the owner. The owner lives with the residents and provides them with room and board and personal services as needed. You would not provide medical services to the residents.
Model 5: Adult Day Care Center
This business model offers a safe, protected environment for seniors during daytime hours. Similar to a child day care, family members are able to bring seniors to the center and pick them up at the end of the day. Overnight accommodations are not offered nor are any medical services.
An adult day care center provides meals, social activities and some respite for those who care for the seniors at home. Seniors would have minimum care requirements. Adult day care centers are licensed and inspected by the state of Florida.
Model 6: Homemaker and Companion Services
These businesses offer hands-on personal assistance to seniors in their own homes. Typical tasks include bathing, grooming, dressing, cooking and housekeeping. This type of work does not require extensive training.
Companionship is an important part of these services, and these businesses do not offer medical care. They are licensed by the state of Florida.
Model 7: Home Health Care Agency
Home health care agencies provide medical services to patients in their own homes, in ALFs or in other places of residence. Nursing care, including assistance with medication, is a big part of the work they do. However, they can also provide other medical services, such as physical therapy or other treatments requiring medical equipment.
These agencies don't prescribe medication and only provide services prescribed by a doctor. They are licensed and inspected by the Florida AHCA.
Model 8: Nurse Registry Service
Similar to home health care agencies, nurse registries act as employment agencies, providing patients with nurses and other health care workers on an as-needed basis. Because your business itself does not offer the services performed by the nurses, you wouldn't be required by law to have liability insurance.
Registries, however, are more limited in the services they do provide compared to agencies. They do not offer therapy, for example, or services requiring medical equipment. You need to be licensed by the state of Florida.
Model 9: CCRC
Continuing care retirement communities offer different levels of care according to the residents' needs, moving them through increasingly advanced facilities as they age. Residents are guaranteed residence and services for life and are often covered through a private insurance program.
At one end, the CCRC would resemble a retirement home where residents have minimal medical needs, but as they age and their health deteriorates, their medical requirements increase. Florida AHCA licenses and inspects CCRCs. Their contracts are regulated by the Florida Department of Insurance.
Model 10: Hospice
Hospice providers offer care to terminally ill patients when the patient has about six months to live or less. They can also provide grief counseling and related services.
You can provide hospice services in the patients' home or in a hospice facility or residential unit. Hospice service providers and their facilities are licensed and inspected by the Florida AHCA.
Nursing Homes vs. ALFs
According to the Florida Health Care Association, there are 691 nursing homes licensed in Florida with an occupancy rate of about 85%. There are about 71,000 residents in nursing homes at any time, which means the average nursing home has about 100 patients. The average cost for a private room is $100,375 annually, while the cost of a semiprivate room is $89,297, bringing the average revenue to anywhere between $89 million and $100 million each year.
ALFs, on the other hand, tend to be much smaller. There are 3,080 ALFs licensed in Florida with approximately 106,103 beds, which means the average ALF accommodates about 34 residents. The average cost for a private room is $48,000, so the average ALF brings in $1.6 million. Of course, some ALFs are quite small with as few as three or four residents, while others are larger.
Starting a Nursing Home in Florida
Nursing homes are regulated by both the state and federal governments. For the federal government, this is under the jurisdiction of the Department of Health and Human Services, which is also the administrator of the Medicaid and Medicare programs.
The Florida AHCA has a comprehensive series of documents that you will need to read before you begin planning a nursing home. For example, you will be required to retain a physician licensed to serve as your medical director if your facility has more than 60 beds. For a nursing home with 60 beds or less, you're allowed to sign on a physician as a medical consultant instead. Each resident must see a physician at least once every 30 days.
Every aspect of a nursing home is regulated by law, and you will need to have policies and procedures in place for just about every occurrence, from meals and activities to dental services, disaster preparation, infection control and housekeeping services.
Starting an ALF in Florida
Unlike nursing homes, ALFs are regulated only by the state government. Although the list of requirements isn't quite as long as that of nursing homes, it is still comprehensive.
One of the forms you will need to fill out involves proof of financial ability to operate. The requirements are different for an ALF with 16 beds or less compared to an ALF with 17 or more beds. This document is essentially a two-year budget comparing your startup costs and operating costs with your projected revenue, which needs to be detailed for each source of funding.
If you want to provide limited nursing services or mental health services to residents or offer extended congregate care, you will have to apply for these specialty licenses in addition to the standard ALF license.
Writing Your Business Plan
A carefully researched business plan will be vital for your long-term care business. Funding will be of particular importance for a nursing home or any other facility that will become the home of your residents. At minimum, you will need to include a budget for the first two years of operation.
If you're planning to use your own home or if you already have a building suitable to use as a residence for an ALF or nursing home, you will still likely need to do some renovations not only to meet building and safety requirements but to make your residence attractive to people in an increasingly competitive market. Depending on your location, there may be grants to open an assisted-living facility available from the local government.
Research your location carefully, not only for existing residences that will be your competition but for projects that are currently being planned and may open at about the same time as yours. Your business plan will also need a strategy for marketing and closing deals with applicants. Agreeing to a long-term health residence facility is a major life decision requiring persistence on your part. If you're not skilled in getting people to sign on the dotted line, you should consider hiring someone to help with your sales.
- William A. Johnson, Attorney at Law: The Florida Long Term Care & Nursing Home Answer Book
- Florida Agency for Health Care Administration: Frequently Asked Questions Regarding Hospice Licensure
- Bplans: Address These 3 Critical Risks Before You Start an Assisted Living Home
- Florida Health Care Association: Facts About Long Term Care In Florida
- Nursing Home Law Center: Who Regulates Nursing Homes?
- Florida Agency for Health Care Administration: Health Quality Assurance Licensure Forms
- Life Matters Media: The Disparity Between Cash And Care In The For-Profit Nursing Home Industry
A published author, David Weedmark has advised businesses on technology, media and marketing for more than 20 years and used to teach computer science at Algonquin College. He is currently the owner of Mad Hat Labs, a web design and media consultancy business. David has written hundreds of articles for newspapers, magazines and websites including American Express, Samsung, Re/Max and the New York Times' About.com.