How Do Home Care Agencies Make Money?

How Do Home Care Agencies Make Money?

March 8, 2023 By Rob Cantrell

One of the first questions you should ask before opening any business is how that business will turn a profit. If you are considering buying a home care franchise, you may be looking into how home care agencies make money. 

Proper planning is key to success in any industry. Your home care agency will only survive if you are able to generate financial benefits over and above the costs and taxes associated with running the business. 

How Home Care Businesses Earn Money

There are several unique factors that affect how home care agencies generate income, ranging from revenue sources to ongoing costs. Read on to learn how these variables should factor into your business plan and how buying a franchise from Senior Helpers can help you make the most of your home care agency’s potential profitability.

Revenue Sources for Home Care Agencies

The revenue sources for businesses in the home care sector are relatively straightforward. Home care agencies earn money by charging clients by the hour for senior care services delivered by professional caregivers who have been hired and vetted by the agency. Hourly rates may differ based on the level of support offered and the expertise of the caregiver. 

For example, seniors who need advanced dementia care or physical support through personal care will be charged more than those who need basic companion care services. Total monthly revenue for this business model can be calculated by multiplying the number of clients by the hourly rate and hours of care provided per client per month. 

The costs for care are typically paid for privately by clients and their families and are based on a plan or schedule of care agreed upon in advance. While some home care agencies earn revenue through Medicare, Medicaid, and private insurance, private revenue sources represent the bulk of the income generated. 

To ensure adequate revenue, it is important for home care agencies to be located in areas where their services will be in high demand. Market research is thus essential to finding a location with a relatively large population of seniors who have the disposable income to afford private home care. 

Ongoing Costs for Home Care Agencies

Home care agencies have the benefit of relatively low overhead and ongoing costs, allowing for enhanced profitability when compared to other business types. The main expenses of running this kind of business fall under the category of staffing. 

Agencies that focus on non-medical care will have lower staffing expenses than those that offer medical services. Non-medical care agencies can hire staff with fewer qualifications and lower demands for their hourly rates.

Other typical costs are minimal, but should not be overlooked. These include administrative expenses such as insurance and rent, as well as any funds spent on advertising and marketing.

Profitability of Home Care Businesses

The high revenue potential of home care agencies combined with their relatively low ongoing costs are what enable home care businesses to successfully establish positive cash flow and enjoy high profit margins. A 2021 Special Report by the Financial Business Review even ranked senior care franchises above other profitable franchise types, including health and personal services and real estate. 

To better understand the profitability of home care businesses, consider the self-reported data provided by Senior Helpers franchise owners: in 2021, franchises open for 5 or more years earned an average gross annual revenue of $1,229,889.

Buy a Senior Helpers Home Care Franchise

If you are interested in opening a business that not only allows you to generate significant profits but also enables you to experience the satisfaction of helping others, consider investing in a Senior Helpers home care franchise. As one of the leading franchises in the home care industry, we provide franchisees with a path to business success and the opportunity to reap the many rewards of this business model.

Here are some of the ways we help our franchisees earn a healthy profit through home care:

  • We offer some of the most affordable franchise packages in the home care sector.
  • We charge low ongoing royalty fees so that franchisees can hold onto a greater percentage of their revenue.
  • We provide local referrals for both clients and caregiving staff, enhancing the earning potential of our franchises and lowering the costs of recruitment.
  • We have franchisees participate in more than 110 hours of training, helping them avoid costly hurdles from the get-go by sharing insights from our years of experience.
  • We have a proven business model that enables franchisees to make the most of revenue sources while also making a positive difference for families in their local communities.

Learn more about buying a home care franchise through Senior Helpers! You can contact us today or schedule a call with our team to get the conversation started.