Healthy Returns

Patients preferring the comforts of home have made home health care a $36 billion industry.
Magazine Contributor
8 min read

This story appears in the February 1996 issue of Entrepreneur. Subscribe »

The word "hospital" may resemble the word "hospitality," but no one confuses a hospital stay with a good time. For this reason-and a host of others-the market for home health-care services is looking increasingly robust.

Home-care companies may not have the cure for everything that ails America's health-care system, but revenues suggest they're onto something. According to New York City research firm Find/SVP, the U.S. market for home-care services should top $42 billion in 1996, up from more than $36 billion in 1995.

What's fueling the growth?

  • Greater availability. "Home care" once referred almost exclusively to visiting nurses and aides. Today, home health-service companies provide everything from infusion (intravenous) therapy to postnatal care, physical therapy and hospice care.
  • Improved technology. According to Find/SVP, the number of medical conditions that can be treated in the home has increased from about 30 to more than 1,200 in the last 15 years. Not only are more equipment and drugs being adapted to the home-care environment, but more physicians and patients now accept home care as an alternative.
  • Cost-effectiveness. Home care usually offers substantial cost savings over hospitalization-a boon for third-party payers such as insurance companies. With patients being discharged earlier and earlier following surgery or childbirth, home care can provide the necessary professional attention to speed recovery and prevent expensive complications.
  • Better care. Why do patients prefer the comforts of home? For a multitude of reasons: one-on-one attention, family support, home cooking, familiar surroundings. Of course, hospitals will always be needed for major surgery or intensive care. But for a variety of less acute services, home is where the health is.

Gayle Sato Stodder covers entrepreneurship for various publications. She lives and works in Manhattan Beach, California.

Home And Health

The market for all types of home care should mushroom through the end of the century. By 1999, Find/SVP predicts the U.S. home-care market will reach $63 billion.

Such growth inevitably creates opportunity. For established services like M.J. Nursing Registry, a $3.2 mil-lion home-care agency in Cincinnati, burgeoning interest means continued community support. "The more we learn about home care, the better we realize it is for patients and their families," says Mary Jane Stumpf, owner and founder of the 12-year-old firm. "People heal better at home, elderly people are less likely to be confused in their own homes, and patients at home aren't restricted by hospital visiting hours and regulations. Once people see what home care means, they almost always choose it over a hospital."

Opportunity also comes from new technology and shifts in insurance-industry practices. In 1982, Englewood Cliffs, New Jersey, entrepreneur Jack Rosen noticed third-party payers had started reimbursing for home infusion services, including intravenous nutrition, hydration, chemo- therapy, and chronic pain management. He launched Infu-Tech to provide state-of-the-art infusion therapy to nonhospitalized patients.

"In the early 1980s, manufacturers started developing equipment and drugs for home infusion," says Rosen. Getting involved early enabled Infu-Tech to gain a foothold in the infusion market-and to grow with it. The company, which has operations in 23 states, had sales of nearly $17 million during the first nine months of 1995.

Of course, pioneering new concepts doesn't always bring immediate results. Chris Morley launched Tender Care Doula Service in Valen- cia, California, seven years ago to provide nonmedical postpartum care workers (or doulas, after the Greek word for "someone who mothers the mother") to frazzled new moms. From the beginning, Tender Care has held its own as a business. But only recently has interest begun to skyrocket.

Why? Legislators, new mothers, insurance companies and physicians are up in arms over postpartum hospital care. To cut costs, some insurance companies are advocating hospital stays of only eight hours post-delivery. Whatever the medical pros and cons, this policy clearly increases a new mother's need for home support. And media debate on the topic has been hot and heavy, furnishing the perfect forum for Morley to promote her services.

"The issue for us isn't early discharge; it's unsupported discharge," says Morley. "When I had my daughter nine years ago, I learned firsthand how hard it is to make the transition to having a baby in the home without experienced help."

Now the national consciousness is catching up. Twenty hours of doula care a week (four hours a day for five days) costs a fraction of a single day in the hospital and puts a human touch to the very human process of becoming a family. Policy makers may debate this issue for months to come, but Morley says her business is enjoying a surge of interest right now.

Doctor's Orders

Because health care is a business unlike any other, succeeding in the home-care industry requires a wide range of skills. On the upside-if you can call it that-illness is an inevitable part of human existence, and medical care is in constant demand.

That said, health care isn't exactly an entrepreneur's dream. Layers of bureaucracy stand between you and your clients. Marketing a new service means winning over physicians and patients-to say nothing of miserly insurance providers. Administration takes know-how; without experience (or experienced staffers), billing alone can become a lifetime project.

Breaking into this business without a health-care background is possible, especially if you specialize in nonmedical care. However, offering services you know nothing about is hardly intelligent, even if others will furnish the actual skills. "Every doula I employ has to be the equivalent of Mary Poppins," says Morley. "If I make a mistake, it's expensive."

It's more than expensive. In health care, quality control isn't just a marketing issue; it's a matter of life or death. "If you want to make big bucks fast, don't go into home care," warns Stumpf. "We have to care more about the patients than we do the money.

"I've taken losses to provide unreimbursable services when I thought they were necessary. I haven't kept a lot of the [revenue] for myself because a quality staff costs money. Profits cannot be your only concern."

Then again, profits aren't negligible. Successful home-care entrepreneurs are both compassionate and resourceful, shrewd and caring. Running a home-care agency is a bit like running a temporary help service. You contract with clients and provide personnel for a fee. But you also take on all the legal, ethical, emotional and bureaucratic issues that go with tending human health.

In The Pink

Entrepreneurs who are up to the task find ample rewards. Not only is this market growing, but it's moving in new and intriguing directions.

For Rosen and Infu-Tech, marketing to managed-care companies seems most promising. "We were marketing to physicians, but for the last two years, we've been concentrating on managed-care networks," says Rosen. "We believe the managed-care industry will control more and more patient referrals in the

future." To entice HMOs, Rosen "bundles" his company's services with those of other home-care subcontractors. "Managed-care companies don't want to deal with a lot of small providers; they want one-stop shopping."

With maternity care in the spotlight, Morley is lobbying legislators and insurance companies alike. Her goal: "Doula care will become an accepted norm in the insurance industry." And then? "I have the formula for a successful business," she says. "It's possible we'll expand."

Would-be entrepreneurs should heed Kaye Daniels, president of Hospital Home Health Care Agency of California in Torrance, California, and chair of the National Association for Home Care: "Set up your business with the community in mind, and change your services as cycles in the community or industry demand."

Daniels says entrepreneurs with the right combination of flexibility, vision, skill and humanity can find a unique success in this industry. "Home care is not just a way to make money," she says. "It's a way to take care of people."

Want To Know More?

  • For information on the National Association for Home Care, write to them at 519 C St. N.E., Stanton Park, Washington, DC 20002-5809.
  • The National Association for Postpartum Care Services (NAPCS) provides information and support to postpartum care providers. Call (206) 672-8011, or write to NAPCS, P.O. Box 1012, Edmonds, WA 98020.
  • Home Health Business Report is a monthly newsletter of business and financial information on the home-care industry. Subscriptions cost $267 annually; call (800) 688-2421 or write to Home Health Business Report, Attn: Lisa Gandy Wargo, P.O. Box 740056, Atlanta, GA 30374.
  • The Home Health Care Business Start-Up Guide, #1369. A complete resource to start your own home health care business including market analysis, marketing, operations, and start-up planning. The Business Start-Up Guide costs $69.50; call (800) 421-2300, Dept. LM15, or click on the SOHO Mall shortcut below.

Contact Sources

Hospital Home Health Care Agency of California, 2601 Airport Dr., #110, Torrance, CA 90505, (310) 530-3800;

Infu-Tech, 910 Sylvan Ave., Engelwood Cliffs, NJ 07632, (201) 567-4600;

M.J. Nursing Registry, 2534 Victory Pkwy., Cincinnati, OH 45206, (513) 961-1000;

Tender Care Doula Service, 26057 Bella Santa Dr., Valencia, CA 91355, (805) 253-2100.


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