How to Open a Nursing Home

As more and more people get older, there is increased demand for nursing home services. This is an excellent industry for someone who loves caring for people and helping families. Opening a nursing home, however, is a large and expensive task. If you'd like to get involved in this thriving industry, start by conducting careful research. Learn the regulations, competition, and costs of opening a nursing home. Then, secure funding and equipment for the business. Get the proper licenses to open your facility, and then start attracting patients. While the journey will involve a lot of work, you can succeed if you're passionate about providing excellent care.

Method 1
Method 1 of 4:

Market Research

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    Learn the nursing home regulations in your area. Any medical business involves a lot of regulations on zoning, insurance, staffing, building codes, crowding, and anything else that could impact your patients’ health. If you don’t follow all the laws then your business could be shut down. Before taking any other steps towards starting your business, know exactly what running this business entails. Check the local regulations on running a nursing home. Keep them all in mind so you are compliant with the law as you set up your facility.[1]
    • If you’re in the United States, each state has its own laws on nursing homes. Consult with your state's regulations to comply with its nursing home guidelines.
    • Since these laws may be complicated, you should consult an attorney if you’re at all unsure of the law.
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    Assess the competition in the area. Depending on where you live, there may be significant competition that you have to contend with. Do a search for local nursing homes and assisted living facilities. If there aren't many facilities in the area, then there is probably a need for your services.[2]
    • If there is a lot of competition in your area, you should consider opening your facility elsewhere. For example, opening a new nursing home in the same town as a large, well-funded and established nursing home may be a bad move. Try looking at the surrounding areas instead.
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    Develop a specialty to distinguish your facility from others. Even if there is competition in your area, you can effectively compete by providing unique or specialized care at your facility. For example, you could open a facility specifically for patients with dementia and other neurological disorders. This could distinguish your facility from one that only provides generalized care. Consider the needs in your area and come up with a specialty that is in demand.[3]
    • Another specialty could be encouraging an active social life for your residents by having regular events. This could attract patients who need some assistance in their daily activities, but still want to maintain some independence.
    • Remember that developing a specialty might involve additional expenses. You'll need specialized physicians and equipment to establish this reputation.
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Method 2
Method 2 of 4:

Business Setup

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    Form a business entity. A nursing home must be a legally-licensed business, so form an entity to get that started. Different entities have different advantages. A limited liability company (LLC) is a simple entity to form among a few partners. A corporation is more complicated, but useful if you have several partners and investors. Weigh the benefits of each entity to determine which is best for your business.[4]
    • Forming an entity is usually just a matter of filling out the necessary paperwork and filing it with your state.
    • If you’re at all confused about the process of forming an entity, consult a business attorney for legal advice.
    • Another advantage of forming an entity is that your personal assets are protected if your business fails or you face a lawsuit.
    • Also open a separate bank account for your business. This keeps your personal and business assets separate. Speak with a representative at any bank to open a business account.
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    Contact medical suppliers for quotes on equipment. Nursing homes require equipment similar to a hospital, so line up your suppliers early on. There may be several suppliers to choose from, so contact all of them for quotes on the equipment you need. Once you find a supplier, order what you need to get the facility ready to open.[5]
    • Buying in bulk is almost always cheaper per unit than buying smaller amounts. If you know you’ll need a lot of rubber gloves, for example, order 10,000 instead of 100. You know you’ll use them every day, so it’s a worthwhile expense.
    • Remember to not only go for cheaper prices when considering suppliers. One company may be the cheapest in the area but have a reputation for bad service. Take the whole package into account.
    • You may also be able to contact the manufacturers directly for equipment. This may be cheaper than working with supply companies.
    • Remember that all of this equipment is expensive. Have a steady stream of funding secured before buying it.
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    Find a location that can fit enough patients to make a profit. The size of your facility is a balancing act. More patients lead to more expenses, but you need a minimum number of patients to bring in enough money to operate. After adding up your operating costs, consider what you need to bring in every month to keep the nursing home open. Then find a location that can fit the required number of patients to meet that need.[6]
    • Remember that there are regulations on how many beds can be in each room and how much space each patient should have. Check with the laws in your area to make sure you don’t overcrowd your facility.
    • Average nursing homes have at least 50 beds, and some have over 200. These are very large operations that require a lot of funding.[7]
    • Remember that your facility will probably not be full for the first several months of your operation. Have funding available to cover your expenses before patients start coming in.
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    Add up your total operating costs for running this business. There are huge operating costs for medical facilities because of the amount of necessary equipment, personnel, and insurance required. Depending on the size of the facility, the annual costs could be several million dollars. First, consider the price of rent in the building you want to use. Then, factor in the cost of the equipment and staff you’ll need to run the facility. Add any permits, fees, insurance, and construction costs to get a rough estimate of your operating costs.[8]
    • Remember to include the salaries for all your staff. Entry-level nurses, for example, usually expect a salary of at least $55,000-60,000, and more if they have several years of experience.
    • Remember that there will be more startup expenses besides the normal operating costs. Permits, insurance, and construction all add fees to the budget.
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    Secure funding for the business. Since starting a nursing home is a large expense, you’ll probably need outside funding to get started. The 2 most common sources of business funding are bank loans and private investors. A bank will lend you the money and you’ll pay it back over time with interest. A private investor may provide more funding, but investors usually want to own a percentage of the business as payment. Consider which method meets your needs the best.
    • For a bank loan, shop around for banks that offer good interest rates on business loans. Speak to a representative and present your business plan to apply for bank funding.
    • Finding private investors is usually a less formal process. Speak with other business owners to find potential investors. They'll want to see your business plan and projected profit before investing with you.
    • You can also use a mixture of bank and private funding. A bank loan could provide the startup costs while an investor could cover operating expenses later on.
    • You may also qualify for government funding. Check with your state or local government for grants or loans that might be available.
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    Set up your facility so it complies with all local safety regulations. Nursing homes must have certain safety and medical equipment. They also must be equipped with handrails, ramps, enough beds, and bathrooms for all the residents. A facility that doesn’t meet these standards won’t get approval to operate, so be sure your nursing home is set up according to local regulations.[9]
    • There are limits to the number of patients you can place into one room. You also must have enough bathrooms for all the patients. Make sure you follow these regulations so your facility isn’t overcrowded.
    • There may be a business that provides professional consultants on setting up a nursing home so it meets regulations. See if a business near you provides this service. It will be an additional expense, but it may be worth it to make sure your business is up to industry standards.
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Method 3
Method 3 of 4:

Licenses and Employees

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    Obtain all the required licenses to run the facility. All health and medical facilities require many licenses and certifications. The specific ones you’ll need depends on the area you’re operating in. Check your local regulations to determine which licenses you need to operate. Apply and meet all the required compliance regulations to receive your license.[10]
    • In the US, nursing homes usually need licenses for each of the services they offer. For example, long-term care, intermediate care, and skilled nursing facility are all separate licenses that one nursing home may need.
    • The licensing board will probably visit your facility and check it for compliance. Set up your facility with this in mind.
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    Apply for insurance certification to accept patient insurance. Since you’ll be working with older patients, most will probably carry Medicare or Medicaid insurance. Approval requires compliance with state and federal regulations. Contact the Centers for Medicare and Medicaid Services (CMS) in your state to begin the approval process. Do not start operating your business until you're approved to accept patient insurance.[11]
    • The approval process usually requires an inspection of your facility and business plan. Be ready to provide any paperwork that the CMS requests.
    • Other insurance companies may have their own approval processes. Contact the major insurance providers to find out their approval process.
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    Buy insurance for your business. Just liek all other businesses, a nursing home needs insurance to protect you from accidents and liability. Medical facilities need additional coverage for malpractice and any harm a patient might experience. Before opening, be sure to find a good insurance provider and buy comprehensive insurance for the nursing home.[12]
    • Search online for insurance providers that work with doctors and medical facilities. These businesses should have the right package for your nursing home.
    • Shop around for the best insurance quote. Remember that the cheapest plan is not necessarily the best. Trying to save money on a less comprehensive plan could leave you with high bills later on if you have to cover an accident out of pocket.
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    Hire staff to carry out the day to day tasks of running the nursing home. You can't run a nursing home by yourself. Besides caring for the patients, there are numerous tasks that go into running a facility, like cleaning, accounting, managing food, and fixing computers. Hire all of the medical and administrative staff you need to run the facility smoothly. Place job ads on websites like Indeed to get the highest number of applicants.
    • Nursing homes require at least 1 physician and pharmacist on staff, plus a number of nurses to help the patients with their daily tasks.
    • Currently, the US government only requires that 1 full-time nurse be on staff at all times, but some states have passed laws dictating a minimum nurse to patient ratio. Check your local regulations to comply with the law.[13]
    • Remember that you can outsource certain jobs instead of hiring full-time workers. Instead of hiring your own accountant or cleaners, you can work with an accounting firm and cleaning business. This may be more affordable.
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    Confirm that all of your employees are licensed and qualified. All of your nursing staff, technicians, receptionists, and other employees should have the proper qualifications and licenses to work in a nursing home. Residents’ families will want the best possible care for their loved ones, and having anyone unqualified on staff could hurt your reputation. Furthermore, hiring unlicensed workers could hurt your chances of getting approval to open your facility. Check all your applicants’ qualifications before hiring them.[14]
    • Perform background checks on all your potential employees and contact past employers to confirm their qualifications.
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Method 4
Method 4 of 4:

Patient Care

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    Attract patients to your nursing home by advertising your services. With all the setup work done, now get to work finding residents. There are many ways to do this. For a smaller facility like yours, work to become part of your local community and spread the word. People will feel more comfortable sending their loved ones to your facility if you’re someone they know and trust. Also form relationships with local doctors to get referrals to your facility.[15]
    • Also advertising, both in print and on the internet, brings more attention to your business.
    • Be accessible. Answer the phones and your emails. People won’t want to send their loved ones to a place where they can’t speak to someone in charge and find out about the facility.
    • Since you’re just starting this business, one of your selling points could be that since you’re a smaller nursing home, you can provide more personalized care for your patients. This could attract some early residents.
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    Develop a care plan for each resident when they begin their stay. Nursing home care is not a one-size-fits-all approach. Each of your patients requires individualized care based on their needs. Whenever you admit a new resident, meet with them and their family and present your care plan for that patient. This is a written guide on how you will care for that patient and meet their needs. Work with your attending physician and nurses to develop the best plan for each patient.[16]
    • Initially, this can be a baseline care plan based on the patient's broad medical history. Once the patient is a resident, carry out assessments and observations to develop a more comprehensive plan. Keep the patient's family informed on all your plans.
    • Don't just draw up a care plan and then ignore it. Put it into practice so your patient receives the best possible care.
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    Stock enough food to serve each patient 3 nutritious meals every day. Each one of your residents needs 3 meals per day, so food is one of the largest expenses that nursing homes have. Make sure that each patient receives meals that are nutritious, provide all the necessary vitamins, and prepared in a sanitary manner. Serve meals at regular times so the residents stay on a predictable schedule.[17]
    • For increased convenience, consider allowing residents to eat in their rooms if they prefer that.
    • Remember to pay close attention to every patient's dietary restrictions. Many will have doctor-directed diets, so be sure to stay within those constraints.
    • Work with suppliers to get regular food deliveries so the food is fresh. Stock up on non-perishable items in the event of a delay in deliveries or power failure.
    • Remember to review the Medicare regulations for food safety and compliance. These change periodically, so stay up-to-date and meet all the regulations for nutrition.
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    Make sure your staff helps every patient with their normal tasks. Most nursing home standards dictate that each patient's daily routine should go on as normal, unless some tasks are not medically possible. This means that each patient should bathe, use the bathroom, get dressed, eat, socialize, and exercise as they normally do. Nurses and other staff are there to help assist them whenever necessary. Make sure that all your workers know these procedures and carry them out.[18]
    • Make sure each resident has access to a signaling device that calls staff to them if they need help. If a resident rings the device, make sure your staff responds immediately.
    • If any staff member is not caring for the patients properly or is abusive in any way, don't hesitate to fire them. Your patients deserve the highest level of care possible.
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    Keep careful records of each patient's drug needs to avoid mistakes. Nursing homes are responsible for administering prescribed medications for all their patients. Whenever a patient comes in, review their medical charts and take note of all their prescriptions, allergies, and medication schedule. Administer every patient's drugs exactly as the doctor has ordered.[19]
    • In some areas, all nursing homes must keep a full-time pharmacist on staff to administer drugs. Review the local regulations to see if you have to hire one or more pharmacist.[20]
    • In addition to everyone's prescriptions, also stock normal medications like pain relievers, cold and flu medicine, and antihistamines. Always review a patient's medical chart before giving them any medications to avoid allergies or interactions.
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    Clean the facility on a regular basis to protect the patients' health. Nursing home residents often have compromised immune systems, so the facility must be clean at all times to prevent infection. Conduct a thorough clean of the entire facility, including bathrooms, kitchen, and living areas, at least once per week. Disinfect high-traffic areas and touch points like door knobs every day. Also be sure to clean any messes and spills right away.[21]
    • Never skimp on hygiene in your facility. A dirty facility could lead to disease outbreaks. If you get a reputation for running a dirty facility, your business will probably fail or be shut down.
    • If your own staff can't handle this job, hire a professional cleaning service. Make sure any company you work with have experience and credentials working in hospitals or nursing home facilities.
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Expert Q&A

  • Question
    What is the difference between non-medical and medical supportive care?
    Justin Barnes
    Justin Barnes
    Senior Home Care Specialist
    Justin Barnes is a Senior Home Care Specialist and the Co-Owner of Presidio Home Care, a family-owned and operated Home Care Organization based in the Los Angeles, California metro area. Presidio Home Care, which provides non-medical supportive services, was the first agency in the state of California to become a licensed Home Care Organization. Justin has over 10 years of experience in the Home Care field. He has a BS in Technology and Operations Management from the California State Polytechnic University - Pomona.
    Justin Barnes
    Justin Barnes
    Senior Home Care Specialist
    Expert Answer
    It is what it sounds like. Medical supportive care often includes things like physical therapy, checkups, and medication management. Non-medical supportive care is when you have someone helping folks manage daily tasks, and providing companionship.
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References

  1. ↑ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/GuidanceforLawsAndRegulations/Nursing-Homes
  2. ↑ https://bizfluent.com/how-2104527-start-nursing-home.html
  3. ↑ https://www.profitableventure.com/starting-a-nursing-home-business/
  4. ↑ https://bizfluent.com/how-2104527-start-nursing-home.html
  5. ↑ https://bizfluent.com/how-2104527-start-nursing-home.html
  6. ↑ https://bizfluent.com/how-2104527-start-nursing-home.html
  7. ↑ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/Downloads/nursinghomedatacompendium_508-2015.pdf
  8. ↑ https://www.forbes.com/2007/02/28/merrill-lynch-assisted-living-ent-manage-cx_mf_0228assistcosts.html#70c4c14660c3
  9. ↑ http://www.canhr.org/factsheets/nh_fs/html/fs_CareStandards.html
  1. ↑ https://www.health.state.mn.us/facilities/regulation/nursinghomes/licnh.html
  2. ↑ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/CertificationandComplianc/NHs
  3. ↑ http://www.canhr.org/factsheets/nh_fs/html/fs_CareStandards.html
  4. ↑ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4833431/
  5. ↑ https://scdhec.gov/sites/default/files/Library/Regulations/R.61-17.pdf
  6. ↑ https://fitsmallbusiness.com/nursing-home-marketing-ideas/
  7. ↑ http://www.canhr.org/factsheets/nh_fs/html/fs_careplan.htm
  8. ↑ https://www.nia.nih.gov/health/residential-facilities-assisted-living-and-nursing-homes
  9. ↑ http://www.canhr.org/factsheets/nh_fs/html/fs_CareStandards.html
  10. ↑ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/downloads/LewinGroup.pdf
  11. ↑ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5132416/
  12. ↑ https://ehs.ncpublichealth.com/docs/rules/294306-2-1300.pdf

About This Article

Justin Barnes
Co-authored by:
Justin Barnes
Senior Home Care Specialist
This article was co-authored by Justin Barnes. Justin Barnes is a Senior Home Care Specialist and the Co-Owner of Presidio Home Care, a family-owned and operated Home Care Organization based in the Los Angeles, California metro area. Presidio Home Care, which provides non-medical supportive services, was the first agency in the state of California to become a licensed Home Care Organization. Justin has over 10 years of experience in the Home Care field. He has a BS in Technology and Operations Management from the California State Polytechnic University - Pomona. This article has been viewed 31,557 times.
15 votes - 100%
Co-authors: 4
Updated: July 28, 2022
Views: 31,557
Categories: Aged Care Facilities

Medical Disclaimer

The content of this article is not intended to be a substitute for professional medical advice, examination, diagnosis, or treatment. You should always contact your doctor or other qualified healthcare professional before starting, changing, or stopping any kind of health treatment.

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