Senior Care Industry Profile
Senior care is one of the fastest growing segments in the franchise industry. Franchises in this category benefit from a growing client base and changing societal views that result in increased demand for the types of services these firms provide. Since most senior care franchises can be started with relatively low set-up costs, the industry is one of the most accessible for first-time franchisees.
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In the United States, the population of older adults is expected to dramatically increase as baby boomers age and people live longer. Senior citizens have become the fastest growing segment of the population. Evidence of this growing senior care industry market includes the following data from a 2015 report on aging by the U.S. Department of Health and Human Services:
- The population of people age 65 and over increased by 28 percent in just 10 years. This group grew from 36.2 million in 2004 to 46.2 million in 2014.
- People who reached age 65 in 2014 had a life expectancy of 19.5 additional years.
- The number of Americans over age 65 is projected to more than double to 98 million in 2060. In the years between, the population is expected to reach 82.3 million in 2040.
- Older Americans will represent a larger portion of society in the future. In 2040, 21.7 percent of the population will be over age 65, up from 14.5 percent in 2014.
- The number of oldest Americans, and those more likely to need the most care also is set to increase. The population of adults over age 85 is expected to triple from 6.2 million men and women in 2014 to 14.6 million in 2040.
In 2015, about 29 percent of all non-institutionalized older Americans lived alone, representing a population of 13.3 million, according the U.S. Census Bureau. As baby boomers age, they want to remain independent longer, even as they face physical and mental decline, rather than move to more traditional settings such as nursing homes. A 2014 survey by the American Association of Retired Persons (AARP) reported that 87 percent of adults over age 65 want to stay in their current home and community as they age. In addition, 71 percent of people age 50 to 64 said they planned to age in place.
The senior care franchise industry has grown in response to increasing demands. Between 2010 and 2015, the in home senior care franchise industry grew at an annual rate of 12.6 percent, according to an April 2015 report by IBISWorld, a market research firm. The report counted 6,004 firms in this segment, with annual industry revenue of $13 billion. These numbers showed that the industry had made significant gains in just three years. In 2012, IBISWorld had reported industry revenue of $6 billion shared by 4,009 establishments. In the five years leading to 2012, annual revenue growth had averaged just 3.5 percent.
Some of the most lucrative opportunities for senior care franchises may be in underserved geographic areas. In a 2015 study of the availability of hospital services for older adults, researchers at Johns Hopkins University found that in-patient and post-acute services for senior adults were concentrated in the northern part of the United States. These areas were primarily in the northwestern, north central and northeastern regions. The areas with the lowest concentration of services for senior adults were in the southwestern, south central and southeastern United States, even though these areas are home to large numbers of senior adults. Senior care franchises may have more growth potential in these underserved geographic areas since they can offer needed services that are in short supply.
According to a 2015 report by the U.S. Administration on Aging, almost 63 percent of adults age 65 and over lived in just 14 states in 2014. The populations of older adults in these states included:
- California (5 million)
- Florida (3.8 million)
- Texas (3.1 million)
- New York (2.9 million)
- Pennsylvania (2.1 million)
- Ohio, Illinois, Michigan, North Carolina, New Jersey, Georgia, Virginia, Arizona and Massachusetts (over 1 million each)
The senior care industry includes those businesses that provide a wide range of onsite services, from non-medical household help to specialized nursing care. Franchises in this segment specialize in the types of care and assistance specific to the needs of older adults. Some franchises in this segment operate in the broader home care services industry, which provides care for a wider range of age groups and types of needs.
In categorizing this industry, many resources use terminology including "senior care," "elder services," "home care" and "home healthcare" interchangeably. In practice, all senior care franchises do not provide the same types of services. An understanding of the differentiation between these segments is important if you're considering a franchise in this industry.
You can find a senior care franchise that may work for you by searching Franchise Opportunities' Senior Care Franchises category.
The majority of senior care franchises provide in home senior care. These types of franchises assist people in carrying out activities of daily living (ADLs), which include bathing, eating, dressing and administering medications. They also assist in instrumental activities of daily living (IADLs), such as cleaning, cooking and household chores. The purpose of these types of services is to enable older adults to stay in their own homes longer as they age.
The workforce may include home health aides, certified nursing aides or companion caregivers. Caregivers can include students, homemakers and active senior retirees. Typically, individuals working as caregivers do not require certification or formal training. However, requirements such as training and background checks vary by state and by franchise. In addition, as a franchisee in this segment, you will be subject to the licensing requirements of the state in which you conduct your business.
Payment for in home senior care services can come from a variety of sources. Depending on an individual patient's insurance policy and conditions, home care services may be covered by long-term care insurance, worker's compensation or veteran's benefits. However, in many cases, patients or families pay for home care out of pocket since these services may not be considered medically necessary.
Senior care franchises in this category typically provide skilled nursing services to their patients. These may be for needs resulting from a chronic illness such as diabetes. Patients also may require services for recuperation from short-term issues, such as surgery or an injury. Some franchises offer both home care and home healthcare services, however, many firms do not. For patients who have both medical and nonmedical needs, it may be appropriate to use both a home care franchise and a home healthcare franchise in tandem.
Since many home healthcare services are covered by private patient insurance, or Medicare or Medicaid, patients are not as limited by financial resources as they might be in paying for home care. Physicians also have more input in determining patient needs and eligibility. However, this industry segment is affected by more state and federal regulations than home care. This can result in more complex billing procedures.
Licensing or certification is required for home health aides, certified nursing assistants, nurses, physical or occupational therapists, and any other professionals who provide medical care. Since employees are better trained and educated than general caregivers, they will require higher wages. Costs for liability insurance also are higher because of the type of care being administered.
Some senior care franchises offer specific services in narrow segments. Senior care non-emergency transportation provides a safe and reliable option to public transportation. They help seniors who want to maintain the freedom to leave their homes for errands, medical appointments and social occasions. Senior home modification franchises recommend and implement structural changes that can make a home safer and more accessible for older adults. Services are personalized to each person's physical needs and can include the installation of improvements such as grab bars, stair lifts or wheelchair ramps.
Senior placement and senior relocation are two relatively new entries in the senior care industry. Senior placement franchises help patients and caregivers navigate the choices available for long-term senior care and housing. They typically receive reimbursement from the selected facility after a patient is placed. Senior relocation franchises assist older adults and their families in moving or downsizing. These firms also can be helpful in facilitating real estate transfers and estate sales. Overhead for both senior placement and senior relocation franchises can be low since they often can be managed and run by the franchisee alone, without employees.
While the majority of senior care franchises are associated with in home services, some franchises in this industry provide residential care. Franchises that offer round-the-clock treatment include facilities such as multi-patient assisted living communities. Some may offer specialized services in the growing field of dementia care. Given that these types of franchises typically require that franchisees purchase land, build a facility and maintain specially trained employees, initial investments are much higher than franchises that offer in home services.
According to a 2014 report in Forbes magazine, most home health care agencies require $150,000 or less to start up. While every franchise is different, most senior care firms typically can be run from a home office, reducing the cost of overhead. Depending on the franchise, a franchisee in the senior care industry can expect the highest expenses for marketing, recruiting and hiring staff, and purchasing insurance for workers' activities while in patients' homes. Additional employees may be needed to manage billing, insurance and licensing paperwork. Specific computer software may be required to facilitate insurance billing and approvals.
With its ties to the healthcare industry, any type of senior care can be affected by changes in national and state insurance laws. Senior care franchises have benefitted from changes in the healthcare system that shortened hospital stays across the industry. This segment also has been helped by the Affordable Care Act, which made health care coverage and medically necessary in home services more accessible to a larger population. However, senior care franchises that employ unlicensed caregivers may suffer if they become subject to higher minimum wage laws that are gaining popularity in some states.
With the promise of a growing customer base and increasing demand, a franchise in the senior care industry can be an attractive business enterprise. While the complexities of insurance billing and healthcare regulations may seem daunting, senior care franchisees don't have to tackle those challenges alone. Franchisees can tap into the experience of their franchise, which can share proven methods for handling insurance and government issues. Since many franchises in this segment can be managed from a home office by the franchisee alone, they also offer flexibility for those who may not be able to commit to being in an office full-time.
Perhaps one of the most significant benefits of franchises in this sector is that they have a positive impact on customers' lives by helping them remain in their homes longer. Many senior care franchises began with founders who were frustrated by their own experiences and wanted to assist others. The care you facilitate through your employees can be life-changing and, in many cases, life-saving for the people your franchise serves.
According to Home Care Pulse, a market research firm, "75 percent of consumers report choosing their home care provider based on what others thought of the agency." As a senior care franchisee, you'll benefit from the reputation of your franchise name. However, a large portion of your success will depend on the connections you can make with referrers in your area. Professionals such as physicians, attorneys and social workers play a major role in helping patients and their families decide on home care resources. Establishing a good rapport and positive relationships with these groups can make them feel confident in recommending you.
You also should consider that you will need to provide round-the clock coverage for your business, including evenings, weekends and holidays. People get discharged from hospitals at all times. Social workers and caregivers will need to align home services and care as soon as possible upon discharge. Since your employees are likely working around the clock, urgent issues that need your input can happen at any time.
Characteristics for Success: Who Should Consider a Franchise in the Senior Care Industry?
No matter what kind of senior care franchise you pursue, you don't need a background in healthcare to succeed. However, there are some strengths and skills that can help you enjoy what you do and grow a profitable business.
You should consider a senior care franchise if:
- You truly enjoy working with people. The fact that you should, "enjoy working with people" is more than a cliché. You'll likely need to successfully interact with many types of people, including physicians, patients, families, employees and insurers on a daily basis.
- You can empathize with your patients and their families. While dealing with frazzled families or vulnerable patients, you may need to tailor your solutions with consideration of the life problems they may be facing.
- You can remain an objective business owner when problems arise. The emotional toll of dealing with physically and intellectually frail customers can be overwhelming. You will owe it to your business, your franchisor and your employees to keep an eye on the bottom line.
- You enjoy managing people to get the best from them. Your business will succeed based on the dependability of your employees and your ability to retain those who shine.
- You have the confidence or skills to tackle marketing and sales to keep referrals growing. Depending on the competition, you'll need to be outgoing and assertive with regard to networking.
Industry Snapshot*:Minimum Cash Required: $ 30,000
Average Cash Required: $ 60,412
*Based on currently active listings at FranchiseOpportunities.com