Business opportunities: no place like home care

Black Enterprise, August, 1998 by Ann Brown

As life expectancy increases, opportunities open up for home healthcare providers

People living to the age of 100 represent one of the fastest growing segments of the American population. The fact that fewer of these golden agers are opting for nursing home care has cast a golden aura on the home healthcare business. According to Eugene Giunta, co-owner of Health Care Horizons, a home healthcare consulting and management firm based in St. Louis, there are about 10,000 in-home healthcare agencies in the U.S., with revenues expected to reach $63 billion by 1999. This segment of the healthcare industry has attracted a growing number of black entrepreneurs, among them Gwendolyn and Eric Johnson, a mother and son who operate a home healthcare business in downtown Cleveland.

After not being able to find adequate care for his 87-year-old grandmother, Eric launched Geric Home Health Care in 1992, with $2,000 in personal funds and credit cards. During the licensing process, his mother, Gwendolyn, a newly retired educator, joined the business. Eric, who formerly owned a construction business, set up two offices--one in his basement, the other in his mother's basement. Starting with private accounts, his first step was to approach the state for client referrals. When the state balked at using a new, unproven company, he challenged them to give Geric their most difficult clients, a challenge he knew he could handle. "Most were African Americans in high-crime areas in the inner city," says Eric. But his agency was well-equipped to deal with a market other agencies refused to service. "Besides hiring people with home healthcare aide certification, we also looked for caring people with a spiritual base," he says. "We became known as the inner-city specialists."

Geric's services include physical and speech therapy, bathing and house keeping. Eighty percent of the staff are certified nurse assistants; the other 20% are licensed practical nurses, registered nurses and in-office help. To offset the problem of shortages in trained staff, Geric started a training school run by a registered nurse certified to teach home healthcare. In 1995, Geric received $1.4 million in funding from two venture capital firms and expanded to other locations, including Detroit; Gary, Indiana; and Cleveland, Akron and Lorain, Ohio. Geric now has 600 employees and revenues of $12 million.

LAYING THE GROUNDWORK

For obvious reasons, it's best to start your agency in an area with a growing population of elderly people. Typically, start-up costs are about $150,000, although this may differ from region to region. Rosalie Crowe borrowed $12,000 from the Small Business Administration to start Southern Hospitality, a home nurse's aide service in Fayetteville, North Carolina, in 1994. Her first client was her mother. Now providing in-home nursing services to more than 60 clients ranging in age from 24 to 93, Crowe keeps her expenses down by employing part-time temporary staff, Revenues last year topped $500,000.

While many agencies are started by medical professionals like Crowe, a registered nurse with a B.S. degree, no special training Is required to own a home healthcare business. However, the agency must be licensed by the state, and employees must have nurse's aide certification.

You can accept private medical insurance if you meet the insurer's criteria, which vary from company to company. Additional licensing and certification are required to work with Medicare and Medicaid recipients. For example, to accept Medicare clients, you must apply through the state Medicare agency, plus obtain a surety bond of $50,000 from an approved surety company. A state representative inspects your agency to make sure it meets health and safety standards and visits your active patients (you must have at least seven) to review patient care and clinical records. Also, you must have at least three months' worth of operating funds on hand, plus a steady revenue. Starting later this year, background checks on criminal records are expected to be required for all home health aides. The state will then make a recommendation to the U.S. Department of Health and Human Services to approve or deny the application.

For more information, check out Health Care Horizons' Web site, at www.hchinc.com, or call your regional office of health care financing administration.