Assisted Living Facilities vs Home Care

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Assisted Living Facilities vs Home Care

Home care businesses cater to people of all ages who need living assistance such as the sick, disabled, and the elderly. In 2018, it's a $103 billion industry in the United States which was expected to double in the next 15 years. Home care businesses need to be state-licensed and the license fees can be a flat rate or based on the number of employees. When starting an independent home care agency, the recommended minimum available liquid capital needed is $35,000.

Overview of a Home Care Business

  • A home care business, basically, aims to help people who are in need of living assistance such as those who are sick, disabled, and the elderly. The services that home care provides are necessary for keeping clients in their homes.
  • Home care businesses cater to people of all ages but most of their clients are seniors. The home care industry is expected to grow significantly as the baby boomer generation continues to grow older. The prediction of the Bureau of Labor Statistics is that there will be a job growth of 17% for nursing assistants and 38% for home health aides through 2024. Both of these job growth rates are higher than the average job growth.
  • The services that home healthcare agencies provide often include physical therapy, nursing services, medical social work, and home health aides that are all inside the patient’s home.
  • In 2018, the home health care business industry was valued at $103 billion in the United States and it was expected to double in the next 15 years. This is according to the analysis that was released from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary.
  • According to the CMS researchers, "the aging of the U.S. population and other demographic and economic fundamentals will be the main drivers of health care spending over the next eight years, despite ongoing uncertainty over federal health care policy."
  • The Home Care Association of America notes that 33% of those older than 65 (or a third of more than 50 million seniors) live alone. Other statistics show that 9 out of 10 Americans who are 65 and older desire to stay in their homes for as long as possible.

Medical vs Non-medical Home Care

  • There are several advantages to non-medical home care. According to, these are the advantages: the clients get personalized care, the clients also get a companion or someone who can help them with their medication and dietary needs, they get help with their personal hygiene and their day to day chores, they also get to stay at a familiar environment which is their home, they get to have their independence, and they are cared for by qualified professionals such as a licensed nurse.

Licensing and License Fees

Running Costs

  • The recommended minimum available liquid capital needed to start an independent home care agency is $35,000. This cost will go to setting up the company, getting a license, setting up the entity (S-corp, LLC, Partnership, etc.), paying for the office location, office setup, and insurance, as well as staffing ramp up, and marketing.
  • Here's a sample breakdown of some running costs for a home care business on its first year of operation: $2,400 for rent, $1,800 for heat and lights, $9,000 for professional liability insurance, $1,200 for advertising and marketing, $1,200 for professional development, $4,800 for office equipment and supplies, $19,500 for contracted therapists (OT/PT/ST), $12,000 for nursing supplies. The total operating expenses for the first year would amount to about $198,000.
  • If the home care agency is a franchise, the cost would be different. The liquid capital amount needed for a home care franchisee application ranges from $25,000 to $150,000. A major consideration of ongoing costs in starting a franchised home care business is the ongoing royalties which range from 3% to 7%. The average royalty is 5.5%, which is calculated from the gross revenues of the agency.


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