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Report Confirms Strength of Home Care Franchising

I just completed a report entitled “Home Care Franchises: Opportunities and Challenges.” It presents a detailed look into the role of franchising in the home care industry.The 22 page report includes interviews with several home care franchisors and home care industry experts.

Home care franchises have had dynamic growth in the past several years and this report explains in detail why this franchise sector should continue to have strong growth well into the future. The complete report is available at no cost to subscribers of the FranchiseKnowHow newsletter. For more information visit the FranchiseKnowHow website.

The following is excerpted from Home Care Franchises: Opportunities and Challenges by Ed Teixeira.

Overview

Home care services were provided to individuals over one hundred years ago. The Visiting Nurse Service of New York reports providing home care to patients in 1910 from locations throughout New York City. In 1965, Medicare and Medicaid were signed into law, making the federal government responsible for financing health care for the elderly and for low-income people in need of medical care. As a result, home care services (HC) expanded dramatically, according to the National Center for Health Statistics, CDC.

  • Today, approximately 12 million individuals currently receive care from more than 33,000 HC providers [1]
  • Personal and HC aides provide an estimated 70 to 80 percent of the paid hands-on long-term care and personal assistance to Americans who are elderly living with disabilities or other chronic conditions.[2]
  • Recently, the United States Department of Health and Human Services announced $4.2 million in grants to six states to train over 5,100 Personal and HC aides by 2013.
  • In an effort to control readmissions, a new Medicare regulation will go into effect October 1, 2012, that will penalize hospitals with (avoidable) readmissions higher than the national average. The HC industry is expected to play a significant role in reducing hospital readmissions.[3]

The Franchise Segment

There is another side to the HC industry and that is the senior care or non-medical market.

There are over 4,500 franchised home care (“HC”) locations in the United States[4]and this sector has been one of the fastest growing in the franchise industry. Moreover, this growth shows no sign of abating. This paper will seek to answer several questions regarding the franchised HC industry: How does the franchise sector fit into the overall category of home care services? What are the dynamics that will continue to fuel the growth of HC in the United States?  Can franchising continue to take advantage of the growing HC market? Will some franchise companies move towards providing more HC services to clients? Finally, what does the future hold for HC franchising?

Description of the HC Industry

Magnitude of the industry

According to the Center for Medicare & Medicaid Services, annual expenditures for home health care were projected to be $72.2 billion in 2009. In 2008, the U.S. Department of Labor, Bureau of Labor Statistics counted approximately 946,930 employees in HC agencies. The acceptance of HC as an alternative to lengthy hospital stays; nursing homes and other inpatient treatments has seen a steady compounded growth rate of over 8% since 2000. The growth rate is expected to increase to 10% through 2015 as baby boomers mature and government policies drive the use of HC over higher cost inpatient care. [5]According to the U.S. Department of Health and Human Services, at least 70 percent of people older than 65 will require some long-term care services at some point in their lives. However, people of any age may need long-term care. Multiple factors increase the risk of needing long-term care, however, age is a key factor since the longer a person lives, the greater the risk.

According to the Bureau of Labor Statistics, HC services are projected to be the 4th fastest growing employers through 2018.

Some industry experts believe that reductions in reimbursement and potential staffing shortages, will lead to declining margins. However, some say the increase in those needing HC will increase revenues, although margins may be lower than today.

Licensing a Non-Skilled Private Pay Franchise is Simpler

Due to the complexity of regulations, administration and reimbursement pertaining to skilled home care services; it’s not surprising that franchisors have chosen to adhere to the non-skilled home care segment. A number of States require a simple business license in order to perform this type of home care although some States require registration with a State health care agency. For example, Florida requires Companion and Sitter Services to register with the Florida Agency for Health Care Administration. The following is a list of the States and the licensure requirements for non-medical home care. Visit the individual State website in order to obtain specific details.


[1]National Association of Homecare 2010

[2]US Dept of HHS

[3]US Dept of HHS

[4]From FKH review of Franchise websites

[5]US Bureau of Labor Statistics 2010

 About the Author: Ed Teixeira has over 35 years of franchise industry experience as a franchise executive and franchisee. He has served as a franchise executive in the c-store, manufacturing and home healthcare industries and has licensed franchises in Asia, Europe and South America. Ed operates FranchiseKnowHow which provides information and advice to prospective and existing franchisees and franchisors. He publishes newsletters for the franchise community.

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About Ed Teixeira

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Public Profile

Ed Teixeira is the founder and owner of FranchiseKnowHow, which publishes articles and provides advice for prospective and existing franchisees and franchisors. He is also COO of  FranchiseGrade.com. Ed's most recent book is The Franchise Buyers Manual, a comprehensive guide for prospective franchisees. He has also published the Home Care Franchise Industry Update for the past 3 years. Ed has worked in the franchise industry for over thirty five years. He was a franchisee and has served as a corporate executive for firms in the retail, manufacturing, healthcare and technology industries. Over the course of his career Ed has been involved with over 1,000 franchise locations and has transacted international licensing in Europe, Asia and South America. His articles and interviews have appeared in numerous publications and media. Ed has spoken before various groups including: the International Franchise Association, the International Franchise Expo, European Healthcare Conference in Luxumbourg and the Chinese Franchise Association in Shanghai, China. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country. 

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