Home Hospice Agency

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Executive Summary

Gentle Harbor Hospice is a new home hospice agency in Missouri. Hospice is care for people who are living with a terminal illness and are expected to live six months or less if the illness runs its normal course. The goal is comfort and dignity, not cure. Our team of nurses, aides, a social worker, spiritual care and trained volunteers goes to the patient's home, an assisted living apartment or a nursing home, and supports the family too.

Families often wait too long to ask about hospice or do not know who to call at night when a loved one is in pain. We will be a small, local agency that answers the phone at any hour, explains each step in plain language and stays with the family after a death.

This is one of the most heavily regulated and costly businesses to start in this plan library. It needs a state license where required, certification to bill Medicare, a registered nurse as clinical director, and months of payroll before the first Medicare payment arrives. This plan is for an owner who either has clinical leadership experience or is partnering with someone who does, and who has investors or lenders willing to fund the start.

Here is what our numbers show. We expect about 3,285 patient days of routine home care in Year 1 (an average of about 9 patients at a time), which brings in sales of $647,820, growing to $4,196,240 by Year 5 as we reach an average of about 52 patients. We expect losses of about $262,400 in Year 1 and $19,500 in Year 2, then a profit from Year 3 (about $56,900), growing to about $449,700 by Year 5.

We need $750,000 in total. Of that, $186,600 is startup costs, including about four months of pay before we can admit patients, and the rest is cash to pay a growing team while Medicare and other payers take weeks to pay. I am putting in $150,000 of my own money, and I am asking for $300,000 from an investor or partner and a $300,000 SBA loan.

I am Patricia Nolan, the owner. These numbers are estimates based on the assumptions listed at the end of this plan, not promises.

Company Description

Gentle Harbor Hospice will be a limited liability company (LLC) in Missouri, owned by Patricia Nolan. An LLC is a business type that generally keeps your home and savings separate from the business's debts and lawsuits, although a lender may still ask for a personal guarantee. A business attorney or the Small Business Development Center (SBDC) can explain how it works in our state.

What we believe. Every person deserves comfort, dignity and company at the end of life, and every family deserves clear answers and a real person to call.

What we offer:
- Routine home care. Nurse visits, hospice aide care, social work, spiritual care and volunteer visits wherever the patient lives, with a plan of care written for each person.
- 24-hour on-call nursing. A nurse is reachable day and night, and can visit when pain or other symptoms need quick attention.
- Medical direction. A physician serves as our medical director and works with each patient's own doctor.
- Medicines, supplies and equipment related to the terminal illness, such as pain medicines, a hospital bed or oxygen, arranged through trusted suppliers.
- Short-term inpatient and respite care. When symptoms cannot be managed at home, or a family needs a short rest, we arrange a stay at a contracted facility.
- Bereavement support. Counseling and check-ins for the family for about a year after a death.
- Trained volunteers who sit with patients, run errands and give families a break.

The space. We will rent a small office of about 1,800 square feet in a medical or office building, budgeted at $38,400 a year with utilities, with a private, locked records room and a training room. Most of the care happens in patients' homes, so we do not need clinic space. We spend $8,000 on office build-out and $9,600 for the lease deposit and first month of rent.

Rules, licenses and insurance. Hospice is closely regulated. In general, an agency must be licensed by the state (where the state requires a license), meet Medicare's federal rules for hospices (called the Conditions of Participation), pass a survey by the state or by an approved accrediting organization, and enroll with Medicare before it can bill Medicare. Some states limit how many new hospices can open (through a certificate of need or a similar process), so we will check Missouri's rules before we spend money. The team must include a physician, a registered nurse, a social worker and a counselor, and volunteers must provide a share of patient care hours, as Medicare requires. We must offer round-the-clock nursing and bereavement support. We will carry general and professional liability insurance, protect patient records under the federal privacy law (HIPAA) and keep a written compliance program. Medicare limits how much a hospice can be paid in total each year (called the aggregate cap), and has strict rules about who is eligible and how to document it. It is against the law to pay or reward anyone for sending patients to us, and we never will. These rules change, so we will hire an attorney and a hospice consultant to confirm every requirement.

Our startup costs include $22,000 for the license, Medicare enrollment and accreditation fees, $28,000 for the attorney and consultant, and $12,000 for the first insurance payments. We budget $14,000 a year for licensing, accreditation and compliance.

Where things stand today. This plan is my starting point. Before I spend money, I will meet with at least 20 hospital discharge planners, nursing home and assisted living directors, physicians and home health agencies to ask how families find hospice today and what is missing, and I will ask for at least 5 letters of interest from future referral partners. I will also confirm that Missouri allows a new hospice to open, learn how long licensing and the Medicare survey are taking and get insurance and equipment quotes. If I cannot confirm those, I will change the plan before I spend money.

Problem & Opportunity

Families who are caring for someone near the end of life often do not get the help they need, when they need it.

1. Late referrals. Many families hear about hospice only in the last days, so they miss weeks of support.
2. Nights and weekends. When pain or fear hits at 2 a.m., families do not know who to call.
3. Too many visits to the hospital. Without help at home, a symptom can send a patient to the emergency room.
4. Caregiver exhaustion. Family members carry heavy loads with little rest, training or support.
5. Grief. Support often stops when the patient dies, just when families need it most.

How we will find out if there is room for another hospice before we spend money. Before I sign any loan, I will study how many hospices serve our area, what their average daily patient counts are (called the census), and how long families wait for a first visit. Our Year 1 plan needs an average of about 9 patients at a time, so I will ask referral partners whether they would send us patients and ask for at least 5 letters of interest. I will not move forward until the state confirms we can open.

Products & Services

What we sell. We provide hospice care and are paid mostly by Medicare, Medicaid and private insurance for each day a patient is in our care. Our plan has two kinds of care.

1. Routine home care. A daily payment for each day a patient is under our care at home, which covers the team's visits and the on-call nurse. Our plan assumes an average payment of about $188.00 per patient day in Year 1, rising to about $208.00 by Year 5. This is a planning figure, and the real rate depends on the payer, the length of stay and your area, so we will check the current Medicare hospice rates before we finalize the numbers. We expect about 3,285 patient days in Year 1, which is an average of about 9 patients at a time, growing to about 18,980 days (about 52 patients) by Year 5.
2. Inpatient and respite care. For short stays at a contracted hospital or nursing facility, when symptoms cannot be controlled at home or the family needs a rest. We are paid a higher daily rate and pass most of it on to the facility. Our plan assumes about $840.00 per day and a cost of about $740.00, and about 36 days in Year 1, growing to about 270.

What it costs us to provide care, apart from pay. About $42.00 per patient day in Year 1, rising to about $46.00 by Year 5, for medicines, medical supplies and equipment, mileage and visit supplies. The team's pay is counted separately, as payroll.

How care works:
1. A doctor, hospital, facility or family asks about hospice.
2. A nurse visits, explains hospice and checks that the patient is eligible. Two physicians must certify that the illness is terminal.
3. The patient or family chooses hospice and signs the consent.
4. Our team writes a plan of care and begins visits within the first day or two, with the on-call nurse always available.
5. The nurse, aide, social worker, spiritual care and volunteers visit as the plan of care says, and the team meets regularly to adjust it.
6. After a death, we support the family with grief counseling and check-ins for about a year.

Gross margin, explained. "Gross margin" is the share of each sale left after the direct cost of medicines, supplies and equipment. Ours is about 75% in Year 1. The team's pay, rent, insurance, software and other bills come out of that, and the pay is the largest cost, which is why hospice needs steady patient numbers to be profitable.

Market Analysis

Who will use us:
- Patients with a terminal illness and their families, in their homes, in assisted living and in nursing facilities.
- Hospitals and discharge planners who refer patients leaving the hospital.
- Nursing homes and assisted living communities that need a hospice partner.
- Physicians, home health agencies and clinics that refer their patients.

Where we work. A defined service area within about a one-hour drive of our office in Missouri, so nurses can reach patients quickly, day or night.

How we sized the plan. Our Year 1 plan needs an average of about 9 patients at a time, which is 3,285 patient days over the year. That is a small number for a new agency in a metro area with many referral sources, and the plan grows to an average of about 20 patients in Year 2 and 52 by Year 5. Census grows through referrals, so I will check the real numbers before spending money.

Season. Referrals can rise in winter, when more people are hospitalized, and dip around holidays. We plan staffing a month at a time and use an on-call rotation so no nurse is overloaded.

Where our supplies come from. Medicines through a hospice pharmacy partner, medical equipment through a supplier that delivers within hours, and inpatient and respite care through contracts with local hospitals and nursing facilities. We keep written agreements with each.

Competitive Landscape

Other choices people have:
1. Existing hospice agencies. They have established referral relationships, so we must earn trust by being responsive and reliable.
2. Large hospital-owned or national hospice companies. They have resources, but a small agency can offer a personal touch and quick answers.
3. Home health agencies. Some families start with home health and move to hospice later; we will work with them, not against them.
4. No hospice at all. Many families go without help until a crisis.

How we will win referrals: someone answers the phone at any hour, we visit within a day, we explain every step in plain language, we keep referral partners informed and we do right by every family. These are promises we have to keep, and any agency could make them, so we will measure ourselves on them every week. We will never pay or reward anyone for referrals.

Marketing & Sales Strategy

How referrals will find us.
- Community liaisons visit hospital discharge planners, physicians, nursing homes and assisted living communities, explain hospice and leave clear information. The liaison is a clinical educator, not a salesperson who is paid per patient.
- Free education sessions at churches, senior centers and community groups about hospice, advance planning and what to expect.
- Relationships with elder law attorneys, funeral homes and social workers who meet families early.
- A simple website and Google business listing with our phone number and what to expect.
- Thank-you notes and updates for every referral source.

Marketing budget. About $14,400 a year in Year 1 for community education and materials, growing about 10% a year, plus a community liaison starting in Year 2. The logo, website and brochures are paid for from startup costs ($6,000). We will follow all federal and state rules about marketing and referrals.

Operations Plan

How the business runs day to day.

A normal day:
1. The intake and billing specialist takes calls and referrals and schedules the first visit.
2. The clinical director assigns nurses and aides and reviews the day's visits and any urgent needs.
3. Nurses and aides visit patients, record what they see and adjust the plan of care.
4. The social worker and spiritual care coordinator meet with patients and families, and volunteers visit.
5. A nurse is always on call at night and on weekends.
6. The team meets regularly to review each patient's plan of care, and the medical director signs the required orders and certifications.
7. We submit claims on time and follow up on anything unpaid.

Quality and compliance. A compliance and quality nurse (hired in Year 3) will audit charts, track documentation and training and prepare us for surveys, with an outside consultant helping in the first years. We keep written policies, a compliance program, a conflict-of-interest policy and a hotline for staff concerns.

Safety. Every employee and volunteer completes background checks and training, and we follow infection control rules and visit safety rules for nurses and aides who drive and work alone.

Equipment. About $28,000 to start for laptops, tablets, phones and office furniture, plus $12,000 for starter medical supplies and clinical equipment. We set aside about $5,000 to $8,000 a year after that to replace and add equipment as the team grows.

Software. About $26,000 a year for an electronic health record and billing system built for hospice.

Running costs in Year 1: medical director and physician services about $48,000, insurance about $20,000, health record and billing software about $26,000, licensing, accreditation and compliance about $14,000, office rent and utilities about $38,400, marketing and community outreach about $14,400, legal, accounting and consulting about $18,000 and staff training and background checks about $8,000. That is $186,800 in all, in addition to the per-day costs and pay.

Billing and getting paid. Medicare and other payers pay claims weeks after the care is given, so the plan assumes payers pay in about 44 days on average. At the end of Year 1 payers owe us about $77,738, and by Year 5 about $503,549, money we have already spent on payroll and supplies. Before we can bill Medicare at all, we must be licensed and certified, which can take many months, so we raise enough cash for that wait, including $61,000 for about four months of pre-opening pay for the administrator and clinical director.

Management & Organization

Who runs the business. Patricia Nolan, owner and administrator. As administrator, Patricia leads the agency, manages the budget and compliance, works with referral partners and answers to the board and lenders. The administrator must meet Missouri's requirements, so I will either qualify myself or hire an administrator who does. Planned salary: $95,000 a year.

Clinical leadership. A registered nurse serves as clinical director ($88,000 a year) from the first day. The clinical director oversees patient care, hires and trains nurses and aides and makes sure our care follows the plan of care and the rules.

The team. Pay figures are full yearly costs for each person.
- Registered nurse case managers: 1 in Year 1, growing to 7 by Year 5, at about $80,000 a year each.
- Licensed practical nurses: starting in Year 2, growing to 4, at about $60,000 each.
- Hospice aides: 3 in Year 1, growing to 14, at about $38,000 each.
- Social workers: 1 in Year 1, growing to 3, at about $62,000 each.
- Spiritual care coordinators (part-time): 1 growing to 2, at about $30,000 each.
- Volunteer coordinator from Year 2 ($46,000), bereavement coordinator from Year 3 ($50,000), intake and billing specialists (1 growing to 3, $46,000 each), community liaisons from Year 2 (growing to 3, $55,000 each), and a compliance and quality nurse from Year 3 ($70,000).
- A physician medical director, under contract, is included in our running costs.

We hire people who are calm, caring and organized, and we support them with training, fair pay and an on-call rotation that does not overload any one person.

People who will help us: a hospice attorney, a hospice compliance consultant, an accountant who knows Medicare billing, an insurance agent, a free mentor from SCORE or the Small Business Development Center (SBDC) and a board of advisors that includes a physician and a community leader.

Milestones Narrative

Our goals and when we plan to reach them.
- Before admitting patients (about 9 to 12 months ahead, which depends on state and Medicare timelines): interview at least 20 referral sources and get at least 5 letters of interest, confirm that Missouri allows a new hospice, register the LLC and get an EIN, hire an attorney and consultant, write the required policies, apply for the state license and Medicare enrollment, hire the clinical director, set up the health record and billing system, and prepare for the survey. We admit our first patient only after we are licensed and certified.
- Year 1: an average of about 9 patients at a time (3,285 patient days), $647,820 in sales and a loss of about $262,400, because we pay a full team before the patient numbers grow.
- Year 2: an average of about 20 patients (7,300 days), $1,494,900 in sales and a loss of about $19,500. We add nurses, aides, a volunteer coordinator and a community liaison.
- Year 3: an average of about 32 patients (11,680 days), $2,453,440 in sales and our first profit, about $56,900.
- Year 4: an average of about 42 patients (15,330 days), $3,309,990 in sales and a profit of about $209,400.
- Year 5: an average of about 52 patients (18,980 days), $4,196,240 in sales and a profit of about $449,700.
Growth depends on referrals and on keeping our care quality high, so treat the later years as goals, not promises.

What we check every week: patients under care, new referrals, how fast we make the first visit, missed or late visits, staff on call, claims paid and unpaid, and cash in the bank.

Funding Request

How much we need and how we will use it. Total we are raising: $750,000.

How we got that number. The Funding Need Calculator in this plan adds up three things:
- Startup costs of $186,600, listed item by item in the Startup Costs section: $28,000 for laptops, tablets, phones and furniture, $12,000 for starter medical supplies and clinical equipment, $9,600 for the lease deposit and first month of rent, $8,000 for the office build-out, $22,000 for the license, Medicare enrollment and accreditation fees, $28,000 for the attorney and consultant, $61,000 for about four months of pre-opening pay, $12,000 for the first insurance payments and $6,000 for a logo, website and brochures.
- A cash cushion of about $561,200: the deepest hole our cash falls into in the first months (about $385,800) plus about three months of running costs (about $175,500). Lenders call this "working capital."
- Together that comes to about $747,800, rounded up to the nearest $500: $748,000.
We are raising $2,000 more than that, $750,000 in all, because a hospice pays a full care team before payers pay it. With this funding, the lowest year-end cash balance is about $174,700, at the end of Year 3, which is more than the monthly pay of $123,250 for our whole team that year.

Where the money comes from:
- My own money: $150,000.
- From an investor or partner: $300,000.
- SBA 7(a) loan: $300,000.

Kind of funding we are looking for. An SBA 7(a) loan through a bank or community lender with experience in healthcare, plus investor or partner money. Investor or partner money is not paid back with interest, but the person gets a share of the business. Put any agreement in writing. Because hospice is heavily regulated, we expect funders to ask for the owner's or partner's clinical or management experience, the licensing plan and a hospice attorney's review.

How we will pay it back. We expect losses of about $262,400 in Year 1 and $19,500 in Year 2, then a profit from Year 3 (about $56,900), growing to about $449,700 by Year 5. With this funding, the business has money in the bank at the end of every year of the plan. The loan is planned at 12.75% interest over 10 years, so payments are about $4,435 a month (about $53,222 a year) and are already included in our cash flow. We chose 12.75% as a cautious planning rate. Ask the lender for the real rate, which may be lower or higher.

What we are offering the lender: my personal guarantee (my promise to repay from my own money if the business cannot), and a claim on our equipment and unpaid claims if the lender asks for one.

If the licensing and survey process takes longer than planned. We will need more cash for payroll and rent while we wait. We will track the timeline with our consultant, delay hiring where we can, and talk to our lender early if the timeline slips.

A smaller first step, if needed. A new hospice cannot be started in small pieces the way many businesses can, but you can make the start safer: first work as a leader in an existing hospice or home health agency to learn the rules and referral relationships, or partner with an experienced hospice owner or management company. Another option is to start with a smaller non-medical home care or palliative support agency, which has fewer rules and a lower cost, then apply for hospice licensing once you have referral relationships and a clinical team. Get advice from a hospice attorney before you choose.

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 (one page is fine) and the resumes and licenses of your clinical director and administrator.
- 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).
- Proof that your state allows a new hospice, and your license application or timeline.
- Your Medicare enrollment plan and accreditation or survey plan.
- Insurance quotes and the medical director agreement.
- Your written policies, compliance program and privacy (HIPAA) plan.
- Signed letters of interest from referral partners such as hospitals, nursing homes and physicians.
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):
- Routine home care: about $188.00 per patient day in Year 1, rising to $208.00; about $42.00 per day in medicines, supplies and equipment, rising to $46.00; about 3,285 patient days in Year 1, growing to 18,980. Check current Medicare hospice rates for your area.
- Inpatient and respite care: about $840.00 per day in Year 1, rising to $920.00; about $740.00 per day in cost; about 36 days in Year 1, growing to 270.
- Pay (a full year, per person): administrator $95,000, clinical director $88,000, registered nurse case manager $80,000, licensed practical nurse $60,000, hospice aide $38,000, social worker $62,000, part-time spiritual care coordinator $30,000, volunteer coordinator $46,000, bereavement coordinator $50,000, intake and billing specialist $46,000, community liaison $55,000, compliance and quality nurse $70,000.
- Other yearly costs in Year 1: medical director $48,000, insurance $20,000, software $26,000, licensing and compliance $14,000, office rent $38,400, marketing $14,400, legal, accounting and consulting $18,000, staff training and background checks $8,000. These grow between 6% and 12% a year.
- Payers pay about 44 days after we bill them. Income tax at 21%.
- Every dollar amount is an estimate. Replace them with your own quotes and research.

Startup Costs