Harbor Light Home Health

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Executive Summary

Harbor Light Home Health is a home health agency in Texas. We send registered nurses, therapists and trained caregivers to the homes of older adults and people recovering from a hospital stay, an injury or a serious illness, so they can heal and stay independent where they are most comfortable. We start with private-pay personal care, Medicaid attendant care and licensed skilled nursing visits, and we plan to become a Medicare-certified agency, which opens the largest source of payment for home health care.

Most people want to recover at home, and most hospitals and doctors want to send patients home with good care. The gap is a reliable local agency that answers the phone, starts care within a day or two, sends the same caregivers each time and keeps the doctor and the family informed. Families often leave the hospital with a list of agencies and no way to tell them apart, and some agencies are slow to start, short of staff or hard to reach. We will be a small agency with a nurse in charge, a short start-of-care time and a real person to call.

Here is what our numbers show. In Year 1 we expect about 10,000 hours of private-pay care, 7,000 hours of Medicaid attendant care and 300 skilled visits, which brings in sales of $510,500, growing to $3,839,200 by Year 5 as Medicare patients become our largest line. We expect a loss of about $217,600 in Year 1 and a loss of about $102,400 in Year 2, because a home health agency has to pay for a license, a nurse manager, software and insurance before it has many patients, and because Medicare billing starts only after certification. We expect a profit from Year 3 ($63,800), growing to about $324,100 by Year 5. Home health is a regulated business with thin early margins, so we plan carefully for staffing, payment delays and compliance.

We need $600,000 in total. Of that, $79,000 is startup costs (the office, equipment, licensing, legal and compliance help, and training), and the rest is cash to pay caregivers and bills while we build our patient base and wait for payers to pay. I am putting in $200,000 of my own and family money, and I am asking for a $400,000 SBA loan.

I am Denise Alvarado, a registered nurse with 14 years of hospital and home health experience, and the owner. These numbers are estimates based on the assumptions listed at the end of this plan, not promises.

Company Description

Harbor Light Home Health is a small, independently owned home health agency in Texas, planned as a limited liability company (LLC). We will serve older adults and adults with disabilities in the cities and suburbs of our service area, and we will apply for a Texas license as a home and community support services agency, which is the state license for agencies that provide home health and personal care.

Our mission. To help people recover and live safely at home, with care that is skilled, kind and on time.

What we believe. Good home care starts with a clear plan, caregivers who know the client and a nurse who is easy to reach. We hire carefully, pay fairly, train well and tell families the truth, including when a client needs a higher level of care than we can give.

What we offer:
- Personal and companion care. Help with bathing, dressing, meals, medication reminders, mobility, light housekeeping and company. Families pay privately, or through long-term care insurance or a veterans' benefit when it applies.
- Medicaid attendant care. Personal care paid through Medicaid managed care plans and state programs for people who qualify. We will credential with the plans that serve our area and follow the program rules, including electronic visit verification.
- Skilled nursing and therapy visits. Visits from registered nurses, and later therapists, to manage wounds, medications, new diagnoses and recovery after surgery, paid by private pay, long-term care insurance and commercial insurance.
- Medicare home health. After state licensing, accreditation and Medicare certification, care for Medicare patients who are homebound and need skilled care, under a plan of care signed by their doctor.
- Care coordination. A nurse makes the plan of care, supervises the caregivers, and keeps the doctor, the family and the patient's other providers informed.

What we do not do. We do not provide emergency care or transportation, and we do not give legal or financial advice. We do not take a patient whose needs we cannot safely meet, and we help the family find the right place. We do not promise a result. We do not pay for referrals, which federal law forbids for Medicare and Medicaid patients.

How we are run. I am the owner and administrator and a registered nurse. A part-time registered nurse is our clinical manager in Year 1, and a full-time director of nursing joins in Year 2. A healthcare attorney and an accountant advise us, and a small advisory group of a physician, a hospital discharge planner and a family caregiver tells us what is working.

Where things stand today. We have a draft policy manual, an office lease option and introductions to three hospital discharge planners, two skilled nursing facilities and four primary care offices. We have no clients and no license yet. Before we begin, our attorney will review our patient agreements, HIPAA documents and any referral or staffing contracts, and our compliance consultant will confirm what Texas requires at each step.

Problem & Opportunity

When a person leaves the hospital, the hardest part of recovery often starts at home. A new walker, a wound dressing, ten new medications and a family that has never done any of this can be overwhelming. Patients who do not get good follow-up care at home are more likely to be sent back to the hospital, which is hard on them and costly for everyone. Hospitals and doctors know this, and many are measured and paid based on whether their patients return soon after discharge.

Families also face a long-term care problem. A parent who needs help with bathing, meals and safety may not need a nursing home, and may want to stay at home, but family members who work cannot be there all day. Home care agencies fill the gap, and quality varies a lot. Some are slow to start care, short of caregivers, or send a different person each day. Families often learn about problems only after something goes wrong.

Agencies that care for Medicare and Medicaid patients also carry heavy rules: licensing, background checks, nurse supervision, assessments, electronic visit verification, billing and audits. A small agency without a compliance plan can be fined, denied payment or shut down. New agencies also need real cash to start, because they pay caregivers every week and are paid weeks or months later, and Medicare certification takes many months.

Caregiver turnover is the biggest operating problem in home care. When caregivers leave, clients lose someone they trust and the agency pays again to recruit, screen and train. Agencies that pay fairly, schedule well and support their caregivers keep more of them.

We want to be clear about what we know and do not know. Many seniors and doctors want home health, and Medicare is the largest payer, but Medicare rates change often, new agencies face a long certification process and a poorly run agency can lose money for years. We will use the most recent numbers from the Census Bureau, the state and Medicare in our final plan and will not overstate them. We do not know that every referral source will send us patients, and we plan our first year around private-pay and Medicaid clients while we earn Medicare certification.

Products & Services

Harbor Light Home Health will provide personal care, Medicaid attendant care and licensed skilled nursing at home, will start care quickly with a nurse in charge of every plan, and will add Medicare home health after certification.

How it works, step by step:
1. First call. A family, hospital discharge planner or doctor's office calls or sends a referral. A real person answers, and we respond the same day.
2. Nurse assessment. A registered nurse visits the home, usually within 24 to 48 hours, to assess the person's needs, medications, home safety and goals, and writes the plan of care. For Medicare patients, the plan is signed by the doctor and a comprehensive assessment (called OASIS) is completed.
3. Matching and start of care. We match a caregiver who fits the client's needs, schedule and preferences, introduce the caregiver in person and start care. We aim to send the same one or two caregivers each time.
4. Electronic visit verification. Caregivers clock in and out with their phones so we can show each visit happened, which Medicaid requires and families appreciate.
5. Supervision. A registered nurse supervises the caregivers and checks in with the client and family on a schedule, and sooner if something changes.
6. Communication. We send the doctor and the family clear updates, report changes in condition quickly and help families decide when a different level of care is needed.
7. Billing. Private-pay families receive a clear monthly invoice, Medicaid and insurance claims go out on a schedule and our billing specialist follows up on every unpaid claim.
8. Quality. We track on-time arrival, missed visits, caregiver turnover, hospital readmissions and client and family satisfaction, and we fix problems quickly.

Medicare. Before opening we apply for the Texas license. In Year 1 we serve private-pay and Medicaid clients, then pursue accreditation (from an organization such as the Joint Commission, CHAP or ACHC) or a state survey for Medicare certification. We plan for Medicare billing to begin in Year 2. Medicare pays a set amount for each 30-day period of care, adjusted for the patient's condition, and rates change every year, so we plan conservatively.

Why this approach is strong. Starting with private-pay and Medicaid care gives us patients, income and a track record while Medicare certification is pending, and a nurse in charge from day one gives referral sources a reason to trust us. We stay small enough that the owner knows every client.

Market Analysis

Who we serve: older adults and adults with disabilities who want to recover or live at home, and the families, doctors, hospitals and skilled nursing facilities that refer them.

Our primary group is adults age 65 and older, plus younger adults with disabilities or chronic conditions. The number of older adults is growing quickly, and most say they want to stay at home as they age. We will use the most recent Census Bureau, state and Medicare numbers for our service area in our final plan.

Our referral sources are hospital discharge planners and case managers, skilled nursing and rehabilitation facilities, primary care doctors and specialists, assisted living communities, Area Agency on Aging offices, managed care plans and families who find us on their own. In home health, most patients come from referrals, so relationships matter more than advertising.

Payers. Private-pay clients and long-term care insurance pay for personal care. Medicaid managed care plans and state programs pay for attendant care. Commercial insurance and private pay cover some skilled visits. Medicare pays for home health for patients who are homebound and need skilled care, once we are certified.

How we sized our plan. We plan for about 10,000 private-pay hours in Year 1 (about 190 hours a week, or about 12 clients at 16 hours a week) and about 7,000 Medicaid hours (about 135 hours a week). We plan for 300 skilled visits in Year 1, and for 150 Medicare 30-day periods in Year 2 (about 12 or 13 Medicare patients on average at any time), growing to 1,000 periods in Year 5 (about 83 patients). Growth depends on winning referral sources and on hiring enough caregivers, so treat the later years as goals, not promises.

We do not take every referral. If we cannot staff a case safely or a patient needs more care than we can give, we say so.

Competitive Landscape

Other choices for home care in our area, and what makes us different.

- Large home health companies and national home care franchises. They have brand recognition and many hospital contracts, and they may be slower to start care or send different caregivers each time. We compete on speed, continuity and a nurse who answers.
- Hospital-owned and nonprofit home health agencies. They get many discharge referrals directly. We work with hospital discharge planners to be a trusted option, and we do not compete for referrals we cannot serve well.
- Small private agencies. Some are excellent. Others are unlicensed, under-insured or cut corners. We compete on compliance, quality and clear communication.
- Registry sites and independent caregivers. Families can hire a caregiver directly, which may cost less and puts the family in charge of taxes, insurance, supervision and backup. We offer a licensed, insured, supervised alternative.
- Family caregivers. Most care at home is provided by family members. We aim to support them, not replace them.

What makes us different.
- A registered nurse owner and a nurse manager who write and supervise every plan of care.
- Care that starts within 24 to 48 hours of a referral when we have a caregiver available.
- The same one or two caregivers for each client, whenever possible.
- Clear communication with doctors and families, including honest talk about when a different level of care is needed.
- A compliance-first approach to licensing, billing and Medicare certification.

What we do not claim. We are new. We have no patients yet, and the large agencies have years of history and many referral relationships. We plan to earn trust one referral at a time.

Marketing & Sales Strategy

How we will find clients and referral sources.

Hospital and facility referrals. We will meet discharge planners, case managers and rehab staff in person, bring our license and insurance information and a one-page service guide, and ask what slows them down. We will be fast to answer, clear about what we can and cannot take and careful to report back. We do not pay for referrals or give gifts that could be seen as payment for them.

Doctors' offices. We will visit primary care and specialty offices with a nurse, explain how we communicate and how our plan of care and orders work, and make it easy to refer.

Families. We will provide free in-home care consultations, host short talks at senior centers, churches, libraries and caregiver support groups, keep a simple website with clear prices and a phone line that is answered, and ask satisfied families for reviews.

Community partners. We will work with the Area Agency on Aging, veterans' organizations, elder law attorneys, financial planners and assisted living communities, and offer them useful education, not sales pitches.

Medicaid and managed care plans. We will apply for contracts with the plans in our service area, follow each plan's credentialing and billing rules and keep documentation for audits.

Caregivers. Great caregivers are our most important marketing, so we will recruit through community colleges, faith communities and referrals, pay fairly, schedule predictably and recognize good work.

Pricing. Private-pay care is priced per hour with clear minimums, so families know what they will pay. We expect about $33 an hour in Year 1, with skilled visits at about $135 each. We publish our rates and terms in writing.

Operations Plan

How the business will run.

Licensing and compliance (the 4 to 6 months before the first client). We will form the LLC, apply for the state license and prepare for the state's inspection, complete our policy and procedure manuals with our compliance consultant, buy liability and workers' compensation insurance, set up payroll and the electronic health record and visit verification systems, and complete background and exclusion-list checks on every employee. We will not take a client until we hold the license.

Staffing. In Year 1: I serve as administrator. A part-time clinical manager (a registered nurse) writes plans of care and supervises care. A full-time care coordinator schedules caregivers and handles intake. Caregivers are employees, not contractors, paid hourly. Their pay, payroll taxes, workers' compensation, liability and training are counted in the cost of each hour of care. A director of nursing joins in Year 2, an intake, billing and compliance specialist in Year 2, a quality and OASIS reviewer and a community liaison in Year 3, a field nurse supervisor in Year 4 and more office staff as volume grows.

Caregiver hiring and retention. Each caregiver passes a criminal history check, a registry check and an exclusion-list check, shows proof of work eligibility and completes orientation and annual training. We pay about $17.50 an hour for private-pay care in Year 1 and rates set by the program for Medicaid care, schedule consistently and keep a list of backups for call-outs.

Medicare certification. Medicare-certified agencies must meet federal Conditions of Participation, which cover patient rights, assessments, plans of care, nurse supervision, infection control, quality improvement and emergency planning. New agencies must also show enough starting cash to operate for about their first three months. We have planned for this, and our cash reserve is sized to meet it. We will confirm the current rules and fees with the state, the accrediting organization and the Medicare contractor before we apply.

Billing and payment. Private-pay families are invoiced weekly or monthly and may pay by card or bank transfer. Medicaid and insurance claims go out on a schedule and are tracked until paid. Medicare claims depend on documentation and the plan of care, so every visit note and order is reviewed before we bill. Customers and payers pay on average about 40 days after service in our plan, so we hold cash to cover that wait.

Safety and emergencies. Caregivers are trained to recognize an emergency and call 911, then us. We keep an on-call nurse for every shift, a written emergency plan for storms and outages and an incident log. We do not allow caregivers to give medications beyond what the plan and the law permit.

Records and privacy. Patient records are kept in a secure electronic system under our HIPAA policies. Staff have access only to what their job requires, and we train them on privacy every year.

Insurance. We carry general and professional liability, workers' compensation, abuse and molestation, cyber liability and commercial auto liability for staff who use their own vehicles. Our insurance and licensing costs are in the budget.

Management & Organization

The people who will run Harbor Light Home Health.

Denise Alvarado, owner and administrator. A registered nurse with 14 years of experience in hospital medical-surgical nursing, case management and home health, including four years as a clinical supervisor at a Medicare-certified agency. She leads referral relationships, finance, hiring and compliance, and meets the administrator requirements for state licensing and Medicare certification. (Replace this paragraph with your own background.)

Clinical manager, registered nurse (part-time in Year 1). Writes and updates plans of care, supervises caregivers and handles clinical questions. We will seek a nurse with home health or case management experience.

Care coordinator and scheduler (full-time). Takes referrals, matches caregivers, manages the schedule and handles call-outs.

Director of nursing (full-time from Year 2). Leads clinical quality and Medicare compliance, supervises clinical staff and prepares for surveys.

Intake, billing and compliance specialist (from Year 2). Verifies insurance, submits claims, follows up on payment and keeps compliance records.

Quality and OASIS reviewer (from Year 3). A nurse who reviews Medicare assessments and supports quality scores.

Community liaison (from Year 3). Builds relationships with hospitals, facilities and doctors.

Outside advisors. A healthcare attorney, a compliance consultant, an accountant and an insurance broker who knows home care.

Staff pay in this plan is a full year per person: administrator $70,000, part-time clinical manager $52,000, director of nursing $90,000, care coordinator $44,000, intake, billing and compliance specialist $48,000, field nurse supervisor $82,000, quality and OASIS reviewer $74,000 and community liaison $56,000. Replace them with the pay you can offer where you live.

Milestones Narrative

Our goals and when we plan to reach them.

- Before opening (6 to 9 months ahead): talk with at least 15 hospital discharge planners, facilities and doctors' offices and get at least 3 letters of interest, get insurance quotes, form the LLC, get an EIN, hire the compliance consultant and healthcare attorney, find an office, and open a business bank account. Do not hire caregivers or take a client until the license is in hand.
- Year 1 (the first year after we are licensed): care for private-pay and Medicaid clients, serve about 10,000 private-pay hours, 7,000 Medicaid hours and 300 skilled visits, begin accreditation and the Medicare enrollment process, and finish with $510,500 in sales and a loss of about $217,600.
- Year 2: become Medicare-certified and bill about 150 periods of care, add a full-time director of nursing and a billing and compliance specialist; $1,139,100 in sales and a loss of about $102,400.
- Year 3: about 450 Medicare periods, a quality and OASIS reviewer and a community liaison; $2,076,500 in sales and a profit of about $63,800.
- Year 4: about 750 Medicare periods and a field nurse supervisor; $3,001,500 in sales and a profit of about $200,900.
- Year 5: about 1,000 Medicare periods and a second community liaison; $3,839,200 in sales and a profit of about $324,100.
Growth depends on winning referrals, hiring caregivers and Medicare rates, so treat the later years as goals, not promises.

What we check every week: referrals received and accepted, time from referral to start of care, hours delivered, missed or late visits, caregiver turnover, unpaid claims and cash in the bank.

Funding Request

How much we need and how we will use it. Total we are raising: $600,000.

How we got that number. The Funding Need Calculator in this plan adds up three things:
- Startup costs of $79,000, listed item by item in the Startup Costs section: $19,000 for computers and office equipment, $6,000 for the office build-out, $5,500 for the lease deposit, $6,500 for clinician supplies, $4,500 for licensing, $24,000 for legal, compliance and accounting help, $4,500 for a website and brochures, and $9,000 for background checks, orientation and the first insurance payments.
- The cash the business uses before it breaks even, about $290,320: because we pay caregivers and staff each week and are paid later, and because Medicare billing starts in Year 2.
- A cash cushion of about $75,975: three months of Year 1 operating costs, about what Medicare asks a new agency to show.
- Together that comes to about $445,295, rounded up to the nearest $500: $445,500.
We are raising $154,500 more than that, $600,000 in all, to cover the loan payments and the extra cash that Years 2 and 3 take while Medicare volume grows and payers pay slowly. With this funding, the lowest year-end cash balance is about $40,200, at the end of Year 3.

Where the money comes from:
- My own and family money: $200,000.
- SBA 7(a) loan for startup and working capital: $400,000.

Kind of funding we are looking for. An SBA 7(a) loan through a bank or community lender that lends to healthcare businesses, plus our own equity. Lenders often want to see that the owner has put in at least 20% to 30% of the total.

How we will pay it back. We expect a loss of about $217,600 in Year 1 and a loss of about $102,400 in Year 2, then a profit from Year 3 ($63,800), growing to about $324,100 by Year 5. With this funding, the business has money in the bank at the end of every year of the plan. The SBA loan is planned at 12.75% interest over 10 years, so payments are about $5,914 a month, which is already included in our cash flow. We chose this as a cautious planning rate; ask the lender for the real rate, which may be lower or higher.

What we are offering the lender: a personal guarantee, a lien on business assets and our written compliance and referral plan.

A smaller first step, if needed. If we cannot raise the full amount right away, we can start smaller and grow into this plan:
- Phase 1: start with licensed personal care and skilled visits for private-pay and Medicaid clients, with a part-time nurse manager, and build a track record. Check first what your state requires for a license.
- Phase 2: once you have steady income and referral relationships, pursue accreditation and Medicare certification and follow this plan.
To plan the smaller start, make a copy of this plan (use Duplicate) and lower the numbers to match.

All numbers in this plan are estimates. We will update them as real results come in.

Appendix Notes

Documents to attach before you send this plan:

- Your resume with your nursing license, and any administrator credentials.
- A personal financial statement (a list of what you own and what you owe; lenders usually provide a form).
- Business registration papers and your EIN (your business tax number from the IRS, free at irs.gov).
- Your state license application, or proof that you have applied.
- Insurance quotes or proof of insurance, including professional and general liability and workers' compensation.
- Your policy and procedure manuals and your emergency plan.
- Your patient service agreement and HIPAA forms, reviewed by an attorney.
- Signed letters of interest from hospital discharge planners, facilities or doctors' offices.
- Your caregiver hiring, screening and training program.
- Your accreditation and Medicare enrollment plan, with a timeline.
If you don't have any of this yet, no worries - let's continue.

The assumptions behind our numbers (change them in the Financials section to match your own):
- Private-pay personal care: about $33 an hour in Year 1, rising to $37; about $21.50 an hour in direct costs (caregiver pay $17.50, payroll taxes $1.55, workers' compensation $1.20, liability and bonding $0.45, mileage, training and supplies $0.80), rising to $24.10; about 10,000 hours in Year 1, growing to 28,000.
- Medicaid attendant care: about $20.00 an hour in Year 1, rising to $22.40; about $16.40 an hour in direct costs (caregiver pay $13.50, payroll taxes $1.25, workers' compensation $0.95, liability $0.40, other $0.30), rising to $18.40; about 7,000 hours in Year 1, growing to 18,000. Replace with your state's actual rates.
- Skilled nursing and therapy visits: about $135 a visit in Year 1, rising to $150; about $92 in direct costs (nurse pay $75, mileage $7, payroll taxes and workers' compensation $10), rising to $104; about 300 visits in Year 1, growing to 2,200.
- Medicare 30-day periods of care: about $1,950 a period (an average after adjustments; check the current Medicare rate), rising to $2,070; about $1,150 in direct costs (about 11 visits at about $95, plus about $105 for supplies and clinical documentation), rising to $1,290; none in Year 1, about 150 in Year 2, growing to 1,000.
- Pay (a full year, per person): administrator $70,000, part-time clinical manager $52,000, director of nursing $90,000, care coordinator $44,000, intake, billing and compliance specialist $48,000, field nurse supervisor $82,000, quality and OASIS reviewer $74,000, community liaison $56,000.
- Other yearly costs in Year 1: state license, accreditation and medicare enrollment fees $16,000, professional and general liability, cyber and office insurance $14,000, electronic health record, visit verification, scheduling and payroll software $18,000, office rent and utilities $24,000, marketing and referral development $18,000, accounting, legal, compliance and staff training $12,000, caregiver recruiting, background checks and orientation $10,000, phones, supplies and office staff mileage $6,000, payroll taxes and benefits for office staff $19,900. These grow between 8% and 22% a year.
- Startup costs and equipment ($79,000 in Year 1, then $6,000, $8,000, $8,000 and $8,000) are spread evenly over five years in the plan's books.
- Customers and payers pay about 40 days after service. Income tax at 21%.
- Every dollar amount is an estimate. Replace them with your own quotes and research.

Startup Costs