Read about the Senior Care Franchise Industry and Franchise Business News
Navy veterans Woody Poole and Milton Guerrero teamed to open a FASTSIGNS franchise in North Charleston, S.C. “The comprehensive, procedure-driven, well-focused and well-executed business model seemed to be made for former military men like my partner and me,” Guerrero said. The partners, who received a discount on their franchise fee for being veterans, said they are eager to expand their production capabilities.
Take your first step to owning your own business. CLICK HERE to get started.Read More
Borrowing from your 401K known as a “ROBS Loan” (Rollover for Business Start-up) is used by the majority of franchise buyers. You control the “payback” and it becomes your best performing asset in your 401K portfolio. What are the most important questions to ask your ROBS provider are:
- How experienced is your firm?
- What are your costs?
- What’s your ROBS process and timeline?
- Can the process be expedited?
- Have any of your ROBS transactions been audited by the DOL or IRS?
- Am I allowed to work with external legal counsel during the rollover process?
- Will you help me with ongoing maintenance of my 401(k) plan?
- Do you provide additional funding solutions besides ROBS?
Senior Care Franchises Job Growth
The US franchise industry gained 25,600 jobs last month, according to a report from ADP. “2015 has been a year of very strong employment growth for franchises, as evidenced by the fact gains have already exceeded last year by around 50,000 jobs,” said Ahu Yildirmaz, the company’s vice president and head of the ADP Research Institute. Restaurants saw the largest employment growth, adding 15,060 jobs. CNBCRead More
Home health providers see an opportunity for expanding palliative care, and recently passed laws are bringing this type of care into the spotlight—but not without controversy.
Doctors who offer palliative care in California are grappling with what the state’s Oct. 5 passage of the End of Life Option Actmeans for them and their patients, according to an article published in The Washington Post.
Though California Gov. Jerry Brown (D) signed the End of Life Option Act into state law almost two months ago, the law is not scheduled to take effect until 2016.
The Washington Post article discusses the goal of palliative care, and explains that although the practice has become more widespread in recent years, gaps in its availability still exist. Citing a recent report by the California HealthCare Foundation, the Post said that individuals living in one-third of California counties do not have access to inpatient palliative care.
Meanwhile, doctors who offer palliative care say the California law highlights the need to increase awareness about what they do and to increase access to the services they offer.
R. Sean Morrison, a professor of geriatrics and palliative-care medicine at Mt. Sinai’s Icahn School of Medicine in New York, said support for aid-in-dying law is an indication of “how terrified patients are of what they will experience at the end of life,” The Washington Post reported.
Morrison added that once patients who ask to end their life get their spiritual needs addressed and their symptoms controlled, the overwhelming majority wish to keep living.
Carin van Zyl, the head of palliative care medicine at Los Angeles County+USC Medical Center, explained her personal dilemma with the law.
“I don’t have a logical answer why I would want it for myself but not want to offer it to my patients,” she told the Post. “I don’t know why I am still sitting on this fence that is increasingly pointy and uncomfortable.”
Written by Mary Kate Nelson f
They rank among the fastest growing and most profitable
The home care industry has enormous potential for business people. One segment of the business world has already figured this out: franchise business owners.
“Home health care franchises are thriving due to a growing demand for their services derived from both demographic and economic factors, including an aging population, the rising cost of traditional care and a desire by many seniors to receive ‘in-home’ care rather than receiving care in a nursing home,” said Matthew Haller, vice president, public affairs and chief of staff to the president and CEO of the International Franchise Association, a member organization representing the franchising industry.
Last spring, Entrepreneur.com listed home care service franchises for senior care as one of the hottest franchise sectors to watch. The magazine noted that the home care franchise sector, although hardly making a blip 15 years ago, is the single largest category in its Franchise 500 – a ranking of the country’s top franchise opportunities – with more than 34 companies represented in the ranking process and 24 of those actually making the ranking.
Around the same time, the Franchise Business Review, a national market research firm researching franchisee satisfaction, ranked home care franchises for senior care as one of the top five most profitable franchise sectors.
“The median initial investment required to open a single senior care franchise office in 2012 is $66,148, and the potential return on investment is significantly higher than many other franchise businesses,” noted FBR’s senior care franchises report. “It is not uncommon among the top senior care franchises to build gross revenues to a million dollars or more, with gross margins of 30 to 40 percent.”
“Home care in general is just exploding,” said Shelly Sun, the CEO and co-founder of BrightStar Care, a leading home care franchise.
Sun started BrightStar in 2002 with her husband and expanded to a franchise business model in 2006. In 2009, BrightStar was a $52 million business, she said. In 2011, it was $181 million and she forecasts 2012 will find the company around $215 million. And she expects continued rapid growth through 2050, due mostly to the aging population.
But the key to continued success is not in demographics alone. “Home care is going to be a great industry,” she said, “but I think where the real value is going to be is in the ability to influence patient outcomes, and that is going to be with nurses and high clinical oversight and coordinated programs.”
Home care franchises have historically not required a background in healthcare to make a go of it. But Sun believes offering families a full-service experience, from the traditional personal care services to skilled medical services, is what will give companies like hers an edge.
“I think what you’ll start to see are companies that are really focused only on companion care and personal care versus being able to have the skilled care and nurse oversight differentiation losing market share to BrightStar and companies like BrightStar that have the clinical component to our business model,” she said. “If I was looking to invest in the sector, I’d want to be looking at companies that are able to influence the entire continuum of care, not just the companion care, which is where a lot of the industry has been.”
Offering a continuum of care is a smart move in light of the push within the healthcare industry toward reducing hospital readmissions and keeping seniors and those with disabilities in their homes instead of in skilled nursing facilities noted John Stein, national market executive, for-profit healthcare, Bank of America Merrill Lynch. Home care, he said, “is one of the large opportunities to really bend the cost curve for healthcare.”
To bend the cost curve, home care businesses will by necessity have to expand to offer more clinical services, and with more skilled medical services there will be more regulation, he said, and savvy business owners will need to think ahead about how they will finance the greater scrutiny they will subject to.
If anything will slow down the meteoric rise of home care franchises, it could be regulations said Jay Perron, vice president of government relations and public policy for the International Franchise Association.
Like many small businesses, home care franchise owners are concerned about regulations resulting from the Affordable Care Act, but the most pressing concern is the current attempt by the U.S. Department of Labor to extend minimum wage and overtime protections to in-home workers who currently fall under the companion exemption in the Fair Labor Standards Act.
“The exemption allows the industry to provide 24/7 care for seniors and the disabled while keeping the cost affordable,” Perron said. “You can imagine how the increased cost will affect the industry and the people they provide service to. In all likelihood, seniors will have to go to the ‘gray’ market in order to find reasonably affordable care.”
Another looming challenge, noted the Franchise Business Review – likely brought on by the sector’s success – is increasing competition in the market. A decade ago, noted the FBR, there were six home care franchise brands but now there are more than 40.
With the increased competition, summarized FBR’s report, “(f)ranchises will need to work extra hard to make their business stand out among others. But with the right support people, a strong focus on delivering exceptional care and the right franchise brand, franchisees in this sector have the potential for a very successful business.
WASHINGTON – A new report lists home health care as one of the top five most profitable franchises in the U.S., even as the industry fights new Department of Labor rules calling for mandatory overtime and minimum wage requirements for home health employees.
Franchise Business Review, a market research firm, found that the median amount paid for a new franchise in 2012 was about $66,000, and the “potential return on investment is significantly higher than many other franchise businesses.”
The company surveyed home care owners two years ago and found the fairly new industry was growing fast, but this report, company President Michelle Rowan said, shows it’s not just a trend. “It’s a very strong business,” she said. “It was neat to come back two years later and see that they’re still performing well.”
The surveys also showed owner satisfaction was high.
“In senior care, they’re more involved in the day-to-day operations,” Rowan said. “That’s opposed to someone who owns a fast-food franchise who might be dealing with lower-end employees who make $10 an hour.” Many home care givers are “doing what they want to do for the rest of their lives.”
The survey, released last week, showed top franchises grossed $1 million or more, with gross margins at 30% to 40%. As a comparison, opening a food or retail franchise can cost $500,000 in initial investments while operating with slim margins.
The report found owners kept their costs low by operating out of their homes, and that the economy did not affect the industry as much as others because the number of seniors needing care continues to grow. Rowan said more families have adults who both are employed, so there’s no one to stay home with an aging parent.
Home care representatives have appeared before Congress to argue that overtime pay would force them to charge seniors more — and that home care workers already make minimum wage and above.
One of the industry’s leading companies, Home Instead Senior Care, spent at least $362,000 in 2011 fighting the proposal.
Sheila McMackin, president of the National Private Duty Association, said her group has asked the Labor Department to consider that home care often includes overnight care, and seniors won’t be able to afford that if workers receive overtime.
And, she said, industry numbers have shown revenue growth has gone down overall since 2009.
Net profits, she said, typically average 12% to 15%. New companies average first year revenue of $248,000, she said.
But Dorie Seavey, director of policy research at the Paraprofessional Healthcare Institute, an employee training and advocacy group, said that 15 states already require overtime payment and minimum wage for home health workers, and that the businesses in those states are still making a profit.
And, according to a 2009 National Private Duty Association survey, businesses charge clients twice as much as they pay employees. She said there’s not enough overhead to justify not paying employees more.
“I find it really hard to reconcile that one of the most profitable sectors is pinching pennies when it comes to workers,” Seavey said.
The Department of Labor received 26,000 comments about the proposed rules, three-quarters of them positive, she said. The department now will decide if any changes need to be made and then send the rules to the Office of Management and Budget, where the rules will be made official. Seavey said she hopes that will happen by the end of summerRead More
Home Health Medicare Spending Steady, Hospice Soars
While younger Medicare beneficiaries are going to the hospital less frequently, older beneficiaries are spending more on skilled nursing and hospice care, leading to some dramatic changes in how the government insurance program for older adults distributes its payments.
Between 1999 and 2012, the age at which Medicare spending per beneficiary was highest increased from 89 to 97, according to a recent working paper from the Congressional Budget Office.
“More rapid growth in spending on care provided in skilled nursing facilities and hospice care—services that are more widely used by older beneficiaries—than in spending on other Medicare services contributed to the faster growth in spending per beneficiary among the older groups; that growth also accounted for the increase in the age for which Medicare spending per
beneficiary was highest,” the paper’s abstract states.
To calculate their estimates, the researchers looked at Master Beneficiary Summary File information for Medicare fee-for-service claims.
Spending per beneficiary did slow for the 65- to 74-year-old age cohort during the period in question, the researchers determined. They attributed that to a reduction in use of acute inpatient hospital care. In 1999, nearly 50% of Medicare spending for the 65-74 group went toward hospital care; by 2012, that had dropped to about 37%.
During that same time period, hospice use skyrocketed among the oldest Medicare beneficiaries. It accounted for 4.2% of Medicare payments among 95- to 105-year-olds in 1999, and 18.6% in 2012.
Home health payments stayed relatively steady among the oldest old, going from 9.4% in 1999 to 9.3% in 2012.
Overall, home health spending per beneficiary grew from 5.1% of all spending in 1999 to 5.7% in 2012. Hospice spending grew from 1.4% to 3.9%.
The data may be useful to policymakers as they weigh how to keep Medicare solvent as the massive Baby Boom generation ages, and particularly as these seniors begin to enter age into the highest-spending categories, the authors wrote.
“After rising from 1.9 percent of GDP in 2000 to 2.9 percent of GDP in 2014, net Medicare expenditures under current law are projected to rise to 3.6 percent of GDP by 2025 and increase further in subsequent years,” they wrote. “Such growth over the long term probably cannot be sustained without reducing other federal spending, raising tax revenues above their historical levels relative to GDP, or adopting a combination of those approaches.”
Written by Tim Mullaney
New program seeks to protect seniors from financial exploitation
Banks and credit unions in Maine have trained more than 300 tellers to identify and report suspected financial abuse of seniors as part of a state-sponsored program that is becoming a model for the nation.
So far, eight training sessions have been held in Portland and Bangor as part of the Senior$afe program.
The program targets front-line employees of financial institutions and their managers because they are often in the best position to notice warning signs of elder financial abuse, the organizers said.
The U.S. Department of Justice estimates that one in 10 seniors age 60 and older is a victim of abuse, neglect or exploitation each year. In Maine that number is about 32,242 people annually. In national prevalence studies, financial exploitation was either the most frequently or second-most frequently self-reported form of elder abuse, with 3.5 percent to 5.2 percent of older adults reporting financial exploitation by a family member, according to the Justice Department. A MetLife study in 2011 estimated seniors lose a minimum of $2.9 billion annually due to elder financial abuse and exploitation.
The program is a joint initiative launched in early 2014 by the Maine Department of Health and Human Services’ Office of Aging and Disability Services; the Maine Department of Professional and Financial Regulation, which includes the Maine Office of Securities; the Maine Bankers Association; the Maine Credit Union League, the state’s Legal Services for the Elderly; and all five Area Agencies on Aging.
Since the program began, banks and credit unions have reported nearly 30 suspected cases of abuse to a special hotline set up for the Senior$afe program that have been investigated by the state Office of Securities and other agencies. Maine Securities Administrator Judith Shaw, who co-chairs the program, testified before the U.S. Senate Special Committee on Aging this year to tout the program’s effectiveness. In November, U.S. Sen. Susan Collins, R-Maine, co-sponsored a bill that would expand the Senior$afe program nationwide.
PeoplesChoice Credit Union in southern Maine is one of the dozens of financial institutions in the state that have signed on to the program, said Brenda Piecuch, the company’s vice president of compliance.
“Financial elder abuse is probably one of the greatest concerns we have in the financial industry right now,” she said. “They (seniors) are prime targets for abuse, and we’re seeing that right now.”
While Piecuch and others involved in the program declined to give names and descriptions of suspected victims and perpetrators for privacy reasons, they described several observed cases of extortion, coercion and financial scams that have targeted seniors.
In one instance, a prominent municipal employee allegedly had threatened to burn an older woman’s house down unless she changed her will to make him the beneficiary of her estate, Piecuch said. The incident has been referred to the Maine Attorney General’s Office, she said.
In another, a senior was sending money to a man claiming to be an investment adviser living in Maryland. But an Office of Securities investor educator traced the address to a gas station and used a Google Earth picture to convince the senior that the adviser wasn’t legitimate.
The Senior$afe program has identified a number of “red flags” that financial professionals should watch out for. They include:
• A person accompanying a senior shows excessive interest in the senior’s finances or accounts, does not allow the senior to speak for himself or herself, or is reluctant to leave the senior’s side during conversations.
• A senior shows an unusual degree of fear, anxiety, submissiveness or deference toward a person accompanying him or her.
• The sudden appearance of previously uninvolved relatives claiming their rights to a senior’s affairs and possessions.
• Abrupt changes to financial documents, such as power of attorney, account beneficiaries, wills and trusts, property title and deeds.
• Frequent large withdrawals, including daily maximum currency withdrawals from an ATM machine.
• A senior displays unexplained or unusual excitement over a financial windfall or prize check but may be reluctant to discuss the details.
• Noticeable neglect or decline in a senior’s appearance, grooming or hygiene.
• A new caretaker, relative or friend suddenly begins conducting financial transactions on behalf of a senior.
In many cases, bank tellers are in a better position than anyone else to spot behavior that could indicate elder financial abuse, said Chris Pinkham, president and CEO of the Maine Bankers Association. The purpose of Senior$afe is to provide those employees with tools and strategies to follow up on those warning signs and alert the proper authorities if necessary.
“There’s all kinds of problems and they vary,” Pinkham said. “Sometimes you need law enforcement. Sometimes you need legal assistance.”
The program makes it easier for bank and credit union employees by giving them a single number to call. The administrators of Senior$afe then decide which agency to alert, whether it’s Adult Protective Services, Legal Services for the Elderly or the local police.
The program is working, co-chairwoman Shaw said, although she was unable to provide data on criminal investigations or prosecutions. As of now, the focus remains on getting everyone in the state’s financial sector to participate and get trained.
Some of the more remote rural areas have yet to be offered a reasonably accessible training session, a problem Shaw said she hopes to rectify.
“I would really like to get a training done in The County,” she said.
In the meantime, Shaw, Pinkham, Piecuch and others continue to raise awareness about elder financial abuse by speaking out about its prevalence and reminding employees of financial institutions not to look the other way.
In one recent incident, a report of suspected elder financial abuse led to an investigation by Adult Protective Services that found a senior who was being neglected at home and was at risk of dying as a result, Shaw said.
“Not only are they helping to protect people’s finances,” she said. “They’re saving lives.”
Staff Writer Kelley Bouchard contributed to this report.