Turning Point Home Health, Business Plan Example
Executive Summary
Turning Point Home Health, Inc. provides comprehensive home health services for the elderly, disabled, and others who require services that are offered in the home environment. The organization also provides support to patients requiring rehabilitation and those who are ill, yet are able to convalesce at home. Home health professionals with many years of experience are available to provide expert knowledge and care for clients, including registered nurses, services such as wound care, injection techniques, self-care, vital signs, and physical and occupational therapy services for clients. The organization accepts Medicare, Medicaid, and other private insurance plans. Services must be requested by a physician; however, the organization offers services to all persons and are available 24 hours per day, seven days per week. The organization will be based in Naperville, IL, and will support a business model that will have a significant influence on local residents in need of home health services. It is expected that Turning Point will secure the necessary capital and resources that are necessary to achieve its desired objectives. Furthermore, employees will be recruited that possess significant knowledge and experience in the home health industry and in the provision of services for older adults. They will strive to improve quality of care and wellbeing for its client base. In addition, Turning Point employees will establish a network with community-based agencies so that all client needs, including social services, are met and coordinated effectively using a tri-fold model of care and treatment. The home health care industry continues to thrive and requires knowledgeable and experienced professionals in all positions so that clients are successfully served, using the resources that are available to meet their needs in a manner that is consistent with successful outcomes.
Mission
The primary mission of Turning Point Home Health, Inc. is to provide physician-approved services to all clients of the highest possible quality. These services are broad in scope and support a collaborative and communicative effort between home health worker and client. This encourages clients to participate in their plans of care and to provide input regarding care at all stages of the process. The organization also strives to keep clients in their homes for as long as possible under the least restrictive conditions and to preserve their quality of life and greater wellbeing. This process will encourage patients to utilize all restorative tools and methods that are offered to restore function as best as possible. Furthermore, the organization provides high quality services at competitive rates and expands its referral system in order to meet patient needs in an effective manner at all times. The organization will also utilize community-based resources so that patients experience greater coping with their current circumstances and are able to achieve maximum recovery under these conditions.
Turning Point Home Health Inc. supports the provision of humanistic and compassionate home health services for all clients in a cost effective way. The organization operates under the requirements of all federal, state, and local laws and the creation of a work environment that supports quality improvement and excellence in all services that are provided to the client base. Home health is a unique areas of health care practice that examines each client’s needs in an individualistic manner; therefore, all services that are provided support the development of a framework to improve and restore maximum function for clients. Each individual is consistently treated with dignity and respect at all times, and all services are offered with minimal restrictions. Finally, throughout all stages of the home health process, clients and family members are active participants and offer their input and feedback to improve the quality and specificity of the services that are provided.
Major Objective
The primary objectives of Turning Point Home Health Inc. include the following: 1) To provide physician-approved services to all clients in a manner that is consistent with physician-based objectives; 2) To enable patients to communicate and contribute regarding their services in order to improve their scope and specificity as necessary; 3) To enable patients to remain in the home environment for as long as possible and limit as many restrictions as possible; 4) To facilitate the improvement of patient wellbeing through the necessary restorative services; 5) To provide high quality services at competitive rates; 6) To establish relationships with referral services in an effort to manage client needs as effectively as possible; and 7) To serve in the liaison role between clients and community-based resources so that they are able to cope more effectively with their health issues.
To accomplish the aforementioned objectives, the organization strives to offer expert knowledge and services in skilled nursing, home health, social services, physical and occupational therapy, speech therapy, nutrition, and follow-up. In addition, continuous evaluations of client needs will be identified so that services may be altered as necessary if these needs change. All employees will be provided with a framework for expanding their education and knowledge as the need permits and to offer membership in professional organizations. The coordination of care is a critical priority for the organization and enables employees to serve as liaisons with community-based organizations to provide comprehensive care to all clients. The organization will provide a stable work environment that is conducive to optimal employee performance, and will recruit potential employees through such strategies as screening, testing, evaluation, probationary status, competitive compensation, and comprehensive benefits.
Market Analysis: Background Information
The home health care service industry continues to grow on an annual basis, with over 12 million patients and 428 million patient visits annually (Ankota, 2014). Furthermore, there are approximately 35,000 home health care organizations currently in existence in the United States, with a 50 percent growth in employees over the past several years (Ankota, 2014). The current home health care service population is primarily persons over the age of 65, with 70 percent of all clients fitting this category for conditions such as diabetes, cerebral vascular conditions, and heart disease (Ankota, 2014). For clients under the age of 60, rehabilitation, disabilities, and chronic diseases are the most common reasons for these services (Ankota, 2014). Over eight million elderly persons are classified as disabled and typically require some form of assistive device (i.e. wheelchair, walker) (Ankota, 2014). Furthermore, there is a marked increase in sports-related injuries and motor vehicle accidents that often require some form of home health assistance as part of the rehabilitative process (Ankota, 2014).
In future years, it is expected that the home health industry will continue to increase in scope and purpose throughout the United States in response to the needs of patients who are discharged from the hospital but require additional health care services; the increased life expectancy rates for males and females; the ability to use current and emerging technologies to improve the scope and frequency of home-based treatments; and the continued expansion of treatments associated with chronic illness (Ankota, 2014). It is also evident that many long-term care facilities do not possess adequate staffing to meet the needs of patients, thereby mandating an increase in home health care services for many clients (Ankota, 2014). Furthermore, due to lack of adequate staffing in many home health care agencies, some clients are not able to obtain services and are turned away (Ankota, 2014). Each of these factors plays a significant role in the need and demand for emerging home health care services to ensure that the needs of all clients are met (Ankota, 2014). It is expected that by the year 2020, there will be an increase in home health care workers to new levels, an increase of 70 percent over 2010 figures (Farnham, 2013). These statistics demonstrate that there is a significant need to establish new organizations to meet demand and to improve outcomes for individuals who require home health care services (Farnham, 2013).
SWOT Analysis
Strengths: One of the key advantages of the home health care industry is that there is an ever-increasing need for specialty workers in this area in order to accommodate an ever-increasing elderly population. The industry continues to increase in scope, knowledge, and profitability and often bridges the gap between hospitalization and long-term care within a facility. Home health services provide unique and continuous services to clients in need of this type of care that are able to recover and rehabilitate in the home environment. In addition, the industry supports an ever-increasing gap in services between the hospital and other facilitates where patients are treated. Home health care services are also specialized for each patient and provide a structured framework to achieve optimal recovery and wellbeing. Home health services also support the development of a large and comprehensive network of community-based agencies and organizations that are designed to offer home health care clients a variety of services that are required to achieve maximum quality of life. This industry is also advantageous because it supports the ability of clients to convalesce in the home environment with the ability to contribute and communicate regarding their care preferences. In addition, it supports the utilization of current and emerging technologies in order to accomplish the objectives of the industry as a whole in serving its vast client base.
Weaknesses: In spite of the advantages of the home health care industry, it remains a difficult industry in which to compete because there are fewer educational requirements and restrictions for home health care workers at entry level. This lends itself to a lower level of credibility for home health care services in some circles and limits the ability of the industry to demonstrate its overall value as part of the larger healthcare industry. The competitive nature of the industry and the ever-increasing number of home health care agencies also limits the ability to earn a respectable profit in many regions throughout the United States, particularly in areas where there is a significantly high concentration of agencies that specialize in this type of care. Furthermore, the lack of employees to fill available positions and to meet demand makes it difficult for many home health care agencies to take on new clients and to provide the level of services that is expected. This creates a gap between those agencies who have established themselves as successful and profitable with those who are perhaps new and struggle to survive in this competitive environment, in spite of the level of demand. This creates a significant challenge for these organizations in their ability to secure the resources that are necessary to thrive within the industry.
Opportunities: In spite of the challenges that are evident throughout the home health care industry, there are a number of opportunities to expand growth and achieve the desired outcomes. For example, home health care continues to increase in prevalence and scope due to an aging yet surviving population. There is a larger number of elderly persons living in the United States; therefore, they require increased care and treatment as provided by the healthcare system. However, many individuals are able to remain in their homes with the support of home health care services. Therefore, as the baby boomer population continues to grow, there will be a much greater need for these healthcare services in the future. It is expected that new home health care agencies will be established to meet this demand and to provide the comprehensive care and treatment services that are necessary to improve outcomes for patients and improve profitability. The efforts that are made by home health care agencies offers a means of achieving a greater stake in the healthcare market and the ability to provide much-needed service to those requiring these services. Home health care agencies such as Turning Point must address these opportunities in order to achieve excellence in the provision of these services, particularly in communities where the need is significant and there is a lack of available services.
Threats: Home health care agencies possess a number of important issues that must be addressed on a continuous basis. For example, the ever-changing scope of healthcare practice in the United States is represented by a new wave of uncertainty with the Affordable Care Act, of which the true impacts have yet to be realized. However, home health care services are likely to be influenced by these changes and the availability of new health insurance plans for the uninsured. It is difficult to measure this impact; however, the coverage of these services is likely to shift in one way or another. Home health care agencies must consider the impact of reimbursements and other services as they craft their strategies to address changes in health care laws and to determine how to best move forward to promote a greater understanding of the issues that impact their business. The conditions under which organizations must operate in the modern era pose a threat to the integrity of the home health care industry, particularly when economic conditions are not ripe for growth and improvements in this focus area. From an economic point of view, the home health care industry could also suffer from saturation, as many agencies continue to be created, some perhaps without the resources and expertise that are necessary to achieve great success in the field. This is a significant threat to the industry and the people who are served.
Marketing Strategy Plan: Who is the Market?
The primary market for clients of the home health care industry is persons over the age of 65 who require some degree of assistance, yet no longer require hospitalization and are able to reside at home. This market continues to increase because it supports an ever-increasing aging population that requires health care services in some capacity. It is important to identify the specific target market because it enables key stakeholders within the industry to evaluate their worth and to focus on the needs of its clients above all else. With a primary focus in place, home health care agencies are able to recognize the needs of their target market and the steps that are required to achieve those needs successfully. Home health care should be recognized as a viable opportunity for many prospective clients during hospitalization as a means of addressing post-hospital care and treatment in the home environment (Ray, 2014). Therefore, obtaining access to clients through their caregivers and social service workers at the hospital is a critical step towards making contacts that may turn into clients in the future (Ray, 2014). Identifying a target market from hospital-based referrals is essential to a home health care agency and its focus on providing comprehensive care and treatment services to its client base post-discharge (Ray, 2014).The desired target market must be sought out, as the clients must be on board with the concept and the services that will be offered (Ray, 2014).
Competition/Current Practice Methods
Most importantly, home health care agencies must identify the resources that are required to meet client demand and provide high quality services. The market must support the development of new approaches to ensure that organizations are able to satisfy demand and the needs of their clients. Competition within this industry is an important consideration for all organizations to consider; therefore, their primary mission and objectives must convey what clients need with respect to resources and services. These efforts must support the continued growth of the home health care industry and its impact on clients who are able to convalesce in the home environment. In particular, the home health care market possesses significant competition; however, it is often very difficult to measure the quality of care that is provided to clients (Jung and Polsky, 2013). Therefore, competition may be fierce in some areas, but quality of care may be very different from one organization to the next (Jung and Polsky, 2013). These efforts require home health organizations to examine their resources on a consistent basis to reduce disparities and improve quality over time (Jung and Polsky, 2013). Turning Point strives to be one step ahead of the competition and in a viable position for continued growth and change. The organization will take its cues from existing home health agencies in an effort to establish itself as a formidable competitor from its inception.
Currently, there are approximately ten home health care agencies in the Naperville, IL area (Care Pathways, 2014) to serve a population of 143,684 total residents, of which 8.7 percent of residents are over the age of 65 (Census.gov, 2014). Therefore, the competition poses a challenge for Turning Point Home Health and requires a unique and distinct service delivery model that will enhance the quality of care that clients receive in the home environment. This is distinguished from other agencies because the knowledge and expertise of all employees will stand above the rest, along with a level of compassion and understanding that goes above and beyond what other agencies have to offer to their clients. The coordination of care will also distinguish the organization from others because it reflects the importance of all phases of care that go beyond traditional home health services.
Research and Development
Turning Point Home Health Inc. is based upon a proven business model that mimics the success stories of other organizations within the industry. Prior industry research indicates that there are considerable opportunities available for home health agencies due to healthcare reforms, including an anticipated reduction in hospital readmission rates due to fines (Wyatt Matas & Associates, 2010). Since home health care is a lower cost alternative, it is poised to grow significantly in the future in response to the demand for healthcare services that do not require hospitalization or readmissions (Wyatt Matas & Associates, 2010). Furthermore, the Independence at Home Act (IAH) was signed into law in 2010 as a component of the Affordable Care Act to perform the following functions: “IAH allows for physicians and other licensed, independent practitioners (LIPs), such as nurse practitioners, and physician assistants, to serve as primary care providers (PCPs) for high-risk patients with one or more chronic diseases. Most importantly these healthcare professionals will coordinate care with other providers such as home care, hospice and specialty pharmacy (e.g. infusion therapy)” (Wyatt Matas & Associates, 2010, p. 3). This is a critical step towards the creation of new initiatives to improve the quality of care that is offered by home health care agencies such as Turning Point Home Health. Therefore, it is anticipated that the organization will incorporate these regulations as part of its operations so that a greater number of clients will gain access to these services and to the opportunities that are available for the organization to achieve its intended objectives.
Another critical area of development is the promotion of value-added services, as home health care services must provide value to clients as part of the focus towards greater wellbeing (Wyatt Matas & Associates, 2010). Furthermore, a trifold model should be considered in order to address the need for home health services to provide value to clients, beginning with basic home health services and transitioning into specialty areas, followed by a larger umbrella that encompasses the delivery of care for chronically ill patients (Wyatt Matas & Associates, 2010). Turning Point must also demonstrate its added value and distinguish itself from the competition so that clients are provided with the best possible service to achieve improved health and wellbeing. As a result, specialty care will offer clients the best possible outcomes to ensure that their needs are served, while also providing a framework to contribute to decisions regarding their care if possible. This also supports the creation of a value-added service environment for Turning Point clients to support business growth and productivity that is fully aligned with targeted objectives. Turning Point, therefore, will make all possible efforts to engage its clients in all phases of care and treatment so that quality and delivery are appropriate.
The home health care industry represents a critical component of modern healthcare practice, and the need for these services is substantial. Nurses in this capacity must utilize their skills and knowledge to make advanced decisions on behalf of their home health patients because they are the first line of defense in conveying important information regarding a patient’s health status to a physician and other healthcare providers (Ellenbecker et.al). In the home environment, the delivery of healthcare services is an entirely different experience and requires home health providers to understand boundaries and recognize the importance of recognizing a client’s personal space (Ellenbecker et.al). In some cases, clients may refuse treatment, even if the risks are high (Ellenbecker et.al). Nonetheless, nurses must evaluate the home as best as possible in order to monitor and reduce safety risks that could place clients in harm’s way (Ellenbecker et.al). Each of these issues must be fully addressed by Turning Point as the business begins to grow and expand so that clients are offered an environment that is professional, compassionate, and of the highest possible quality.
Ownership
Many home health care agencies operate using a franchise model, whereby they are involved in many aspects of the care and delivery model and the return on investment is higher than in many other areas of the healthcare industry (Kennedy, 2012). Turning Point Home Health is independently owned and operated, with its senior leadership responsible for all areas of the organization, including its financial and organizational strategies and the provision of services for all clients. The ownership structure is also responsible for making all significant business decisions on behalf of its employees and clients in order to improve and sustain business operations for the foreseeable future. Nina Osaghae is the owner and operator of Turning Point and is a Certified Family Nurse Practitioner with many years of experience. She will serve as the administrator and will oversee all daily operations of the organization. She will continue to seek methods to improve their infrastructure and acquire resources as necessary to improve organizational capacity, quality of care, and the physical environment. The organization must focus on its future through its decision-making and leadership structure so that employees and clients participate in a productive and high quality work environment.
Organizational Structure
The organization includes a strong leadership and managerial structure, in addition to a network of employees that include Family Nurse Practitioners, Registered Nurses, Licensed Practical Nurses, Certified Nursing Assistants, Physical Therapists, Speech Therapists, and Social Workers. This structure is designed to accommodate the needs of a large group of clients in the Naperville, IL area, in addition to Cook, Will, Kane, and Gundy Counties. In addition, as needs change and new regulations emerge, the organizational structure will make modifications as necessary in order to accomplish new and existing objectives accordingly. These efforts will encourage the development of new strategies as necessary to encourage effective outcomes and the growth of the organization to meet its value-added service model. The structure will encompass experts from the aforementioned areas; however, support staff will also be provided to accommodate client requests, to manage insurance-related matters, and to schedule clients with the appropriate services on a regular basis. These efforts will promote greater efficiency and cost effectiveness at all levels. However, clinical personnel will provide core services and will serve as liaisons to community agencies and other experts as necessary to serve client needs effectively. Turning Point Health Care Inc. will utilize its strong infrastructure in order to accomplish its objectives and to establish a framework to offer value-added services to its clients in their own homes.
Operations Management: Personnel
Turning Point Health Care Inc. supports a service model that will conduct operations in a realistic and cost effective manner. This approach will enable the organization to provide greater service to its client base and to recognize the importance of quality in enhancing the care that is provided. From an operations perspective, the organization will offer its services at competitive rates that align with current market demand. As employees are hired, they will undergo a strict and rigorous training program to obtain expert knowledge regarding the business model and their roles and responsibilities, while also demonstrating their skills and level of competency through individual evaluations before they are able to work with clients (Brown, 1997). This will enable the business to provide skilled and experienced personnel in the field to provide service to clients in need (Brown, 1997). Furthermore, all areas of operations will be subject to continuous monitoring and evaluation as a means of exploring new dimensions of care and to obtain greater insight into operational weaknesses or deficiencies as they emerge (Brown, 1997). It is also expected that the organization will monitor and record all communications between employees, physicians, and other community-based service providers so that records are accurate, concise, and comprehensive in all critical areas (Brown, 1997). The sustainability of the organization’s business operations and portfolio depends on these objectives and the ability to scale back or expand as necessary to promote cost effectiveness, while also maintaining excellence in quality of care at all times (Brown, 1997). Turning Point’s business operations must also be modernized and incorporate cost effective technologies as necessary so that clients are well served, and employees are provided with the tools that are necessary to perform their duties effectively (Brown, 1997).
Physical Resources
Turning Point will provide office space for employees to address concerns with management, to complete forms as necessary, to conduct meetings, and to store supplies that are necessary for the provision of services. This office space will be located within the Naperville, IL city limits and will provide a physical structure to conduct operations. Management and support staff will be housed at the facility. Furthermore, upon review of each prospective client and his or her needs, it is important to conduct an assessment that will provide addition information regarding the home environment and the physical space in which each client resides. This physical assessment will address safety and emergency measures so that clients are well protected from unnecessary risks as best as possible. The physical environmental assessment must be available so that in the event that there is a change in the client’s health or specific needs, the physical environment is clearly described. Employees will conduct assessments for each new client and will also address any changes that have occurred that could impact the selected care plan. These contributions play a role in shaping outcomes for clients and in securing a safe and friendly physical environment in order to preserve quality of life and to address client needs effectively.
Durable Goods
Turning Point Home Health Inc. will address the needs of all clients individually and will secure any necessary durable goods in the form of medical equipment, such as wheelchairs, walkers, canes, diabetes testing supplies, pumps, and other forms of equipment that are necessary to treat clients in the home environment. All durable goods must also be considered in the context of insurance coverage and provisions. Durable goods will be provided to clients on the basis of need and will be replaced as necessary. Furthermore, all home health employees will be provided with any type of durable goods that are necessary to perform their roles effectively and seamlessly. Durable goods for employee use will also be replaced on an as needed basis.
Financial Plan Over Three Years
Over a three-year period, it is expected that Turning Point Home Health Inc. will establish itself as a formidable competitor in the Naperville, IL area with a unique approach to home health care that is unlike any other. However, accomplishing this effort requires a sound and reasonable strategy that will accommodate objectives satisfactorily and with the client’s best interests in mind. The necessary capital will be secured to support the business from its inception and into the coming years. This process requires strong financial and human capital in order to earn a profit in the years to come. Turning Point Home Health Inc. will establish a feasible financial plan that will enable the leadership core to obtain the necessary physical resources, recruit and hire staff members, train new staff, secure durable equipment, purchase technology to manage records, while managing its debt load and securing new financial resources as necessary to grow the business from the ground up and to sustain its viability over the long term.
Operating Personnel, Capital Budgets
Turning Point Home Health Inc. will utilize its mission and primary objectives to encourage investment in the organization and to secure capital for its inception. Once capital resources are available, operating personnel will be hired and an office space will be secured in order to begin the process of advertising, employee recruitment, and obtaining a client base. The management team will also continue to secure new forms of capital and investors so that operations may begin in a timely manner. In the startup phase, Turning Point will also obtain bank loans as necessary to facilitate the organizational vision in its early stages. Bank loans will provide the upfront capital that is required to rent space, recruit personnel and provide training, and to begin the process of obtaining clients for the business.
Projected Revenues
In the first three years of operation, it is expected that Turning Point Home Health Inc. will start slow, but then gradually progress and increase its earnings potential from year to year. Revenues are expected to rise annually and will enable the business to fulfill its obligations and provide high quality care as promised with its mission. Turning Point will utilize its available knowledge and resources, its growing network of contacts, and its vast body of knowledge and experience to commence operations and to begin generating revenue as quickly as possible through the provision of service to its new clients. It is also anticipated that revenue generation will also increase by word of mouth and advertising for the business so that there is an increased number of clients and consistent revenue stream. Revenue generation must be considered at a practical level and should be evaluated on a monthly basis so that in periods where revenues are lower than anticipated, there are alternatives in place to secure additional revenue in future months and throughout the first three years.
Projected Expenditures
It is expected that in the first three years of business, expenditures will begin high but will level off as initial startup costs are no longer required. This is an important step because it enables the business to have cash on hand and sufficient funding to fulfill its obligations. The required expenditures include space rental, utilities, cell phones, insurance, payroll, and payroll taxes. Each of these areas is essential to maintain effective operations and to employ staff who are qualified and experienced in providing services to home health clients. In particular, the payroll established by the business is an integral component of operations and requires sufficient revenue in order to pay employees the expected wage. The expenditures required to operate the business must be fulfilled on a monthly basis to sustain operations.
Required Investments
A number of investments are required to startup the business and to commence operations, including but not limited to bank loans and other forms of financial support. The ability to obtain capital through investments is critical for the business in order to achieve the anticipated outcomes and to provide value added service to the client base. Turning Point will secure the necessary investments through its business model and approach to home health care services and its unique strategy. Each of these factors will play a contributing role in securing the necessary investments and in supporting a long-term strategy to sustain these investments to achieve greater growth and possible expansion in the future.
Financing Strategy
The proposed financing strategy will include a combination of investments that demonstrate trust in the business model and the leadership in place. For example, bank loans and private investments will serve as the two primary forms of financing at startup, in addition to personal investment in the business so it may grow and thrive over time. These elements are critical to the success of the firm in providing service to all clients with the highest possible quality in mind. Financing the organization, however, is not a one-time deal and requires a continued investment so that the firm is able to succeed and thrive. Private investments, in particular, must continue to grow in scope and be secured so that the organization is able to achieve great success in its efforts to distinguish itself from all other home health care agencies.
Break-Even Analysis
The following break-even analysis depicts the revenues required on a monthly basis in order to break even, in addition to the average percent variable cost monthly.
Break-even Analysis | Year 1 | Year 2 | Year 3 |
Monthly Revenue Break-even | $15,344 | $17,543 | $16,568 |
Assumptions: | |||
Average Percent Variable Cost | 7.00% | 7.50% | 7.00% |
Estimated Monthly Fixed Cost | $14,270 | $16,312 | $15,840 |
Profit and Loss Summary
The following profit and loss summary provides an overview of sales, expenses, taxes, and net profit. All numbers are estimates.
Pro Forma Profit and Loss | |||
Year 1 | Year 2 | Year 3 | |
Sales | $350,145 | $402,126 | $460,683 |
Direct Cost of Sales | $32,985 | $33,450 | $34,028 |
Other Cost of Sales | $0 | $0 | $0 |
Total Cost of Sales | $32,985 | $33,450 | $34,028 |
Gross Margin | $317,160 | $368,676 | $426,655 |
Gross Margin % | 90.48% | 91.68% | 92.61% |
Expenses | |||
Payroll | $90,457 | $95,279 | $102,934 |
Payroll Taxes | $22,614 | $23,820 | $25,734 |
Depreciation | $0 | $0 | $0 |
Rent | $2,750 | $3,000 | $3,000 |
Heat and Lights | $1,750 | $1,750 | $1,750 |
Phone | $2,000 | $2,000 | $2,000 |
Cell Phones | $1,900 | $1,900 | $1,900 |
Water and Garbage | $650 | $650 | $650 |
Internet Access | $275 | $275 | $275 |
Professional Liability Insurance | $7,500 | $9,000 | $9,000 |
Workman’s Comp Insurance | $500 | $500 | $500 |
Premises and Content Insurance | $500 | $500 | $500 |
Advertising and Marketing | $1,500 | $1,500 | $1,500 |
Meals and Entertainment | $500 | $500 | $500 |
Professional Development | $1,000 | $1,000 | $1,000 |
Office Equipment and Supplies | $5,000 | $5,000 | $5,000 |
Contracted Therapists: OT/PT/ST | $18,000 | $18,000 | $18,000 |
Nursing Supplies | $10,000 | $10,000 | $10,000 |
Total Operating Expenses | $166,896 | $174,674 | $184,243 |
Profit Before Interest and Taxes | $150,264 | $194,002 | $242,413 |
EBIDTA | $150,264 | $194,002 | $242,413 |
Interest Expense | $3,500 | $3,500 | $3,500 |
Taxes Incurred | $34,066 | $45,001 | $57,103 |
Net Profit | $116,198 | $149,001 | $185,310 |
Net Profit/Sales | 33.19% | 37.05% | 40.22% |
Balance Sheet
The following balance sheet provides a summary of assets, liabilities, capital, and net worth as projected over the next three years. All numbers are estimates.
Pro Forma Balance Sheet | |||
Year 1 | Year 2 | Year 3 | |
Assets | |||
Current Assets | |||
Cash | $105,345 | $256,743 | $359,874 |
Accounts Receivable | $89,467 | $92,321 | $96,742 |
Other Current Assets | $4,000 | $4,000 | $4,000 |
Total Current Assets | $198,812 | $353,064 | $460,616 |
Long-term assets | $0 | $0 | $0 |
Accumulated Depreciation | $0 | $0 | $0 |
Total Long-term Assets | $0 | $0 | $0 |
Total Assets | $198,812 | $353,064 | $460,616 |
Liabilities and Capital | Year 1 | Year 2 | Year 3 |
Current Liabilities | |||
Accounts Payable | $19,374 | $17,485 | $18,346 |
Current Borrowing | $0 | $0 | $0 |
Other Current Liabilities | $0 | $0 | $0 |
Subtotal Current Liabilities | $19,374 | $17,485 | $18,346 |
Long-term Liabilities | $45,000 | $45,000 | $45,000 |
Total Liabilities | $64,374 | $62,485 | $63,346 |
Paid-in Capital | $23,000 | $23,000 | $23,000 |
Retained Earnings | $2,387 | $145,964 | $188,934 |
Earnings | $134,938 | $153,943 | $182,304 |
Total Capital | $160,325 | $322,907 | $394,238 |
Total Liabilities and Capital | $224,699 | $385,392 | $457,584 |
Net Worth | $134,938 | $153,943 | $182,304 |
Sales Forecast and Projected Revenues
Sales Forecast | ||||
Sales | Year 1 | Year 2 | Year 3 | |
Client Direct Payments | $15,000 | $23,000 | $31,000 | |
Reimbursements | $185,000 | $220,973 | $275,034 | |
Miscellaneous | $5,000 | $5,000 | $5,000 | |
Total Sales | $205,000 | $248,973 | $311,034 | |
Direct Cost of Sales | Year 1 | Year 2 | Year 3 | |
Client Direct Payments | 58% | $8,700 | $13,340 | $17,980 |
Reimbursements | 58% | $107,300 | $128,164.34 | $159,519.72 |
Miscellaneous | 58% | $2,900 | $2,900 | $2,900 |
Subtotal Direct Cost of Sales | $118,900 | $144,404 | $180,400 |
Projected Expenditures
Projected Expenditures | Year 1 | Year 2 | Year 3 |
Payroll | $90,457 | $95,279 | $102,934 |
Payroll Taxes | $22,614 | $23,820 | $25,734 |
Depreciation | $0 | $0 | $0 |
Rent | $2,750 | $3,000 | $3,000 |
Heat and Lights | $1,750 | $1,750 | $1,750 |
Phone | $2,000 | $2,000 | $2,000 |
Cell Phones | $1,900 | $1,900 | $1,900 |
Water and Garbage | $650 | $650 | $650 |
Internet Access | $275 | $275 | $275 |
Professional Liability Insurance | $7,500 | $9,000 | $9,000 |
Workman’s Comp Insurance | $500 | $500 | $500 |
Premises and Content Insurance | $500 | $500 | $500 |
Advertising and Marketing | $1,500 | $1,500 | $1,500 |
Meals and Entertainment | $500 | $500 | $500 |
Professional Development | $1,000 | $1,000 | $1,000 |
Office Equipment and Supplies | $5,000 | $5,000 | $5,000 |
Contracted Therapists: OT/PT/ST | $18,000 | $18,000 | $18,000 |
Nursing Supplies | $10,000 | $10,000 | $10,000 |
Total Operating Expenses | $166,896 | $174,674 | $184,243 |
Required Investments
Startup Expenses | ||||
Buildings/Real Estate | ||||
Lease | $ 2,750 | $ 2,750 | $ 2,750 | |
Construction | – | – | – | |
Remodeling | ||||
Other | – | – | – | |
Total Buildings/Real Estate | $ 2,750 | $ 2,750 | $ 2,750 | |
Leasehold Improvements | ||||
Paint | $ 1,000 | $ 1,000 | $ 1,000 | |
Total Leasehold Improvements | $ 1,000 | $ 1,000 | $ 1,000 | |
Capital Equipment List | ||||
Furniture | $ 12,500 | $ 2,000 | $ 2,000 | |
Equipment | 5,000 | 1,000 | 2,500 | |
Fixtures | 1,000 | – | – | |
Machinery | – | – | – | |
Total Capital Equipment | $ 18,500 | $ 3,000 | $ 4,500 | |
Location and Admin Expenses | ||||
Rental | $ 1,000 | $ – | $ – | |
Utility deposits | 2,000 | – | – | |
Legal and accounting fees | 1,500 | – | – | |
Prepaid insurance | 1,000 | – | – | |
Pre-opening salaries | 65,000 | – | – | |
Other | – | – | – | |
Total Location and Admin Expenses | $ 70,500 | |||
Opening Inventory | ||||
$ – | $ – | $ – | ||
Total Inventory | $ – | $ – | $ – | |
Advertising and Promotional Expenses | ||||
Advertising | $ 2,500 | $ 2,500 | $ 2,500 | |
Signage | 1,250 | – | – | |
Printing | 2,000 | 2,000 | 1,500 | |
Travel/entertainment | 500 | 500 | 500 | |
Total Advertising/Promotional Expenses | $ 6,250 | $ 5,000 | $ 4,500 | |
Other Expenses | ||||
Supplies | $ 3,000 | $ 3,000 | $ 3,000 | |
Total Other Expenses | $ 3,000 | |||
Reserve for Contingencies | $ 1,000 | $ 1,000 | $ 1,000 | |
Working Capital | $ 30,000 | $ 25,000 | $ 25,000 | |
Summary Statement | ||||
Sources of Capital | ||||
Owners’ and other investments | $ 100,000 | $ 30,000 | $ 30,000 | |
Bank loans | 225,000 | 30,000 | – | |
Other loans | 50,000 | – | – | |
Total Source of Funds | $ 375,000 | $ 60,000 | $ 30,000 | |
Startup Expenses | ||||
Buildings/real estate | $ 2,750 | $ 2,750 | $ 2,750 | |
Leasehold improvements | 1,000 | 1,000 | 1,000 | |
Capital equipment | 18,500 | 3,000 | 4,500 | |
Location/administration expenses | 70,500 | – | – | |
Opening inventory | – | |||
Advertising/promotional expenses | 6,250 | 5,000 | 4,500 | |
Other expenses | 3,000 | – | – | |
Contingency fund | 1,000 | 1,000 | 1,000 | |
Working capital | 30,000 | 25,000 | 25,000 | |
Total Startup Expenses | $ 133,000 | $ 37,750 | $ 38,750 | |
Security and Collateral for Loan Proposal | ||||
Collateral for Loans | Value | Description | ||
Real estate | $ 25,000 | Home | ||
Other collateral | 10,000 | Misc | ||
Other collateral | 10,000 | Misc | ||
Other collateral | 10,000 | Misc |
References
Ankota (2014). Industry stats. Retrieved from http://www.ankota.com/industry-stats/
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Care Pathways (2014). Naperville Home Care IL 60563. Retrieved from http://www.carepathways.com/illinois-il/home-health-care-agencies.cfm?city=naperville
Census.gov (2014). Naperville (city), Illinois. Retrieved from http://quickfacts.census.gov/qfd/states/17/1751622.html
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Orsini, M. (2007). Using public relations and marketing to generate referrals and sales. Home Health Care Management & Practice, 163-168.
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Wyatt Matas & Associates (2010). How home healthcare thrives with healthcare reform. Retrieved from http://www.doctorsmakinghousecalls.com/wp-content/uploads/2011/09/Wyatt-Matas-White-Paper-How-Home-Healthcare-Thrives-with-Healthcare-Reform-Final.pdf
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