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How to build revenue with homecare services

December 12, 2011
by Rick Morey
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A few years ago, many assisted living facility (ALF) owners had the idea that with the looming baby boomer retirement wave about to hit “if you build it, they will come.” Facilities cropped up quickly but with an economic slowdown many are now looking for ways to stand out, build new revenue streams and increase occupancy. Enter private-duty services. In-home nonmedical care, known as homecare or private-duty care, offers services such as companionship, housekeeping, personal grooming and medication reminders.

THE PRIVATE-DUTY ADVANTAGE

An ALF offering private-duty services is a newer concept in the industry. Previously, the take for many was that the two were at odds with each other, but not so. Offering private-duty services opens an entirely new revenue opportunity in several ways. First, as many ALF marketing professionals will attest, the sales cycle for bringing in a new resident can be very long. Many times this is because the senior, and/or their family, isn't quite ready to commit to such a big life move. If an ALF can offer to provide some in-home care services to the family at their current residence, when the time comes to make a move into an ALF, who do you think they will approach? Naturally, the ALF they already have a relationship with. Offering private-duty in-home services before the senior moves allows the ALF to generate revenue and build brand affinity.

Another issue within the assisted living industry is the use of private caregivers hired by families to work at the facility. Usually states require that residents be allowed to choose their own homecare provider. In many instances the selected private caregivers create a number of problems for the facility. A solution to this problem is to require private caregivers working in the facility to carry Workers' Compensation insurance and at the same time provide an in-house private-aide option as a viable alternative.

As a former owner of a private-duty agency and an ALF, I speak with hundreds of homecare entrepreneurs and ALFs. What I hear repeatedly is that the realities of private-duty services are very different from initial expectations.

DUE DILIGENCE

Before taking the plunge into private-duty care service, consider the following tips.

Seek expertise. Just because you operate or own a successful ALF, don't assume you understand the nuances of private-aide or companionship services. Consider speaking with other ALFs that offer these services and, if possible, even some homecare agencies in your area, to understand the business model and what it entails. They will educate you and guide you when making this important decision.

Ask hard questions. Many homecare businesses fail and it is important to understand why. Determine if this is a commitment your facility is willing to make, and if it is a fit within your own culture and business model. Buy-in from your marketing team is key. Normally you will use the same marketing person for both operations, so it's important to develop a compensation system that rewards this person adequately. If you don't, you will run into resistance.

Identify skill sets. Private-duty services require specific skill sets in an operator and in its caregivers. Identifying roles within your existing organization and pinpointing appropriate staff members' skill sets is crucial. Do they match up? Or do you need to consider expanding staff?

Homecare = entrepreneurial. The most attractive aspects of offering private-aide services is additional revenue and quality control over your own staff. A big misstep is the “build it and they will come” mentality. The mind-set of the facility marketing person has to be that of an entrepreneur.

It is up to your team to sell these services, seek out new audiences and referral sources, measure marketing methods' effectiveness, etc. You will have competition and you will need to learn to practice a sound marketing strategy and differentiate. If you don't see yourself or your team as entrepreneurial, then this probably isn't the service line for you.

Creative sales approach. Private-aide services differ from selling widgets in one fundamental way: People never think of it until they need it, making “pre-selling” a very difficult task. In the industry, we like to call this an at-need service. This makes referral marketing extremely important. In fact, ALFs typically only secure about 4 percent of income-eligible seniors to move into their facility. As mentioned earlier, taking the long-tail approach to building potential customer relationships via homecare services is a great tactic. When the senior has challenges or staying at home becomes cost prohibitive, your ALF will be the logical next choice.

Attracting and retaining employees. The most important staff initially will be your sales and marketing staff. If you don't have acceptance of selling private-aide services from this group, then offering these services will fail. Incentivizing aides through their compensation structure should be shifted accordingly with this new service line. Training is another important component in assembling and retaining the right team. You are offering a set of services that are nonskilled for the most part, provided by many who might have a lower level of education and more economic hardships than the group with which you are used to dealing. Recruitment and retention is of particular importance.

Technology systems are key. Scheduling and management of staff and client cases are very challenging in the business of homecare. With private-aide services it is imperative that you implement a scheduling, billing and management program. There are many software platforms already created specifically for private-duty services available that will help you build and grow this services line.

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