Start a Home Health Care Business: Licensing Guide

In order to start a home health care business, there are many regulations that need to be followed in order to stay compliant and legally protected on both the state and federal levels. The home health care industry is growing at a rapid pace as a result of the growth of the baby boomer generation moving towards personalized care for themselves and their families. Per the U.S. Census Bureau, by 2030, every baby boomer will be 65 years old or older.

This changing demographic of baby boomers is one of the main reasons that entrepreneurs are looking to enter this type of business now. One of the first steps to take to start a home health care business is to understand that getting licensed is more than a formality. It is an extensive examination of how the provider's level of care matches regulatory standards.

The Rising Demand for Home-Based Care

The home health care sector is expanding quickly and will reach approximately $473.76 billion by 2030, largely due to demographic trends and consumer demand for home care rather than institutional care. Because of this potential growth, a large number of entrepreneurs are inquiring about how do you start a home health care business.

This discussion should begin by examining the legal differences between medical and non-medical services and how they will affect the required licensing for each type of service. Once you make the decision to start a home health care business, you enter into a very competitive market, as patient safety is the primary concern for all levels of government.

Key Licensing and Compliance Requirements

Prior to being operational, please be aware that there are a number of different layers of bureaucratic and operational requirements to fulfil before opening your agency. Each of these layers may differ based on the location.

1. Agency Licensing at the State Level

All except these four states (Iowa, Massachusetts, Michigan, and Ohio) in the United States require an official agency license before an agency can begin operating. If you want to start a home health care business that is located in a state that has regulating authorities, you are required to submit a completed application, pay applicable licensing fees, and submit disclosures for both the Administrator and Clinical Director. Many applications also require you to provide evidence of having a fixed physical office location and a "Certificate of Completion" from state-mandated orientation classes.

2. Medicare & Medicaid Certification

If you're wondering how do you start a home healthcare agency that accepts government insurance, then your next step is getting your agency certified federally after completing the licensing process on the state level. You have to look through the federal regulations, like 42 CFR 484, about becoming certified by submitting the form 855A, and also have your application processed through a CMS-approved fiscal intermediary (FI). The FI will schedule an on-site survey once the application for certification has been approved.

3. Caregiver Credentials & Background Checks

In order to properly start a home health care business, you must ensure that your employees meet certain professional requirements mandating that each employee have the appropriate licenses as required by the state, i.e., RNs, LPNs, or Certified Nursing Assistants (CNAs). Every employee must complete a criminal history background check, which may involve fingerprinting through the state patrol division. You will also need to maintain a full-time equivalent worksheet, which identifies the number of staff members who meet the qualifications required in order to provide quality patient care.

4. Professional and General Liability Insurance

One of the most fundamental parts to start a home health care business is the need to ensure your business is protected against lawsuits. You will generally be required to have current commercial general liability insurance, as well as professional malpractice coverage, as outlined in state codes like WAC 246-335-320. Additionally, you will also typically be required to carry Workers' Compensation Insurance to protect your employees who are working in potentially hazardous home environments.

5. Business Permits and Certificate of Need

Depending on where you live, you may need to obtain a Certificate of Need (CON) to start a home health care business. It is documentation that shows there is a need for additional health care services in your targeted geographic area. If your application does not include a CON, the state may deny your application for the purpose of avoiding excess health care agencies that dilute the quality of care. You will also need to obtain all necessary general business permits from the city or county where each office location is located.

Final Thoughts

The home healthcare industry offers many benefits, including addressing an important social need. However, there are many details to consider in order to start a home health care business. The first challenge will be navigating the regulatory environment, which includes obtaining state and national licenses, obtaining a Medicare certification or a certification from another payer source, and securing proper liability and malpractice insurance. By following the steps outlined above, from applying for your Certificate of Need to hiring a qualified staff of caregivers, you will develop an organization that will be both successful in business operations and will also ensure patient safety. Additionally, as the elderly population is rapidly increasing, licensed home healthcare agencies are well-positioned for continued growth in their industry.