There’s a growing demand for hospice care in the United States. Thanks to an increasing number of seniors, the hospice market is expected to grow 7–8 percent annually, making it the second-fastest growing healthcare segment nationwide. So if you’re considering starting a hospice facility of your own, now is a great time.
But as with any new venture, you’re likely asking this important question: How much does it cost to start a hospice business?
Calculating the startup cost isn’t a straightforward exercise, as there are many factors that affect it, including the following:
- What state your hospice will operate in
- Whether it will be a Medicare-certified facility (or non-Medicare business)
- Whether it will exist as a standalone facility, integrate with a hospital, or offer only at-home care
- How many patients your hospice will plan to care for initially
- How many staff members your hospice will employ and what level of experience they will have
- Whether your hospice will purchase brand-new medical equipment and furniture or seek out used items
These factors can significantly impact how much it will cost to start a hospice, which makes it difficult to know how much you need to save or request in the form of a business loan.
Below, we look at a few key areas that impact hospice startup costs. Keep reading to get a general idea of how much capital you may need to get your hospice business off the ground.
How much does it cost to start a hospice business?
Note: All costs noted below are based on internet sources and rough estimates for a hospice business operating in Texas. Adjust these estimates to correlate to your state’s cost of living and operational requirements.
Licensure can sometimes be expensive and challenging to obtain given the exacting regulations and state statutes that govern hospice care. Plus, annual license renewals add to the expense. A hospice license in Texas costs $2,625 and lasts for three years.
Licensing costs: $2,625
Labor costs often represent over half of a business’s expenses, and that’s true for hospices as well. Your labor costs will vary based on the number of staff you have, but you can estimate those costs by assuming a skeleton crew and using data from Salary.com for the following roles in Texas:
- Physician: $187,719
- Nurse: $80,823
- Social worker: $53,997
- Chaplain or other spiritual leader: $52,627
- Administrative assistant: $46,676
Staffing costs (first three months): $105,461
Insurance is important for any business, but it’s critical in healthcare. General liability is a common policy that covers a number of scenarios. At a minimum, every hospice should have this type of policy, which can run you $500–$750 per year for $2 million of coverage.
In addition, workers’ compensation insurance will be required for your employees in every state but Texas. Still, you should secure this type of insurance even if you operate in the Lone Star State. Expect to pay an average of $372 per year.
Insurance costs: $1,122
4. Medical equipment and supplies
Caring for patients requires not only trained professionals but also essential medical equipment such as hospital beds, ventilators, and wheelchairs. Costs for this type of equipment span a broad range, so consider a rough estimate of at least $50,000 for a small hospice operation.
Medical equipment costs: $50,000
So how much does it cost to start a hospice business? If we add up the estimates in the four cost categories above and add $20,000 for marketing and miscellaneous expenses, the total comes to $179,208, so you’d need at least $180,000 to offer only at-home care. Leasing or purchasing a facility could significantly increase this figure by tens to hundreds of thousands of dollars.
Another consideration: Hospice management software
A bare-bones hospice business can operate without software, but saving a few bucks in this area isn’t worth the potential cost of a disorganized operation. At the very least, it’s advisable to purchase software that supports the smooth functioning of operations such as admissions, discharges, and approvals.
One option is Jotform Enterprise, a secure hospice management solution that helps streamline your management processes, from admissions to care delivery. One of its key features is its easy-to-build forms that enable HIPAA compliance and help you do more in less time. Easily address hospice referrals, transfers, nursing assessments, and a number of other hospice needs.
You can also use Jotform to quickly build approval workflows, simplify scheduling, take advantage of analytics and reporting capabilities, and much more. Essentially, Jotform helps improve your hospice’s efficiency so you can focus less on paperwork and more on patient care.
Pricing varies based on your business needs. You can request pricing here and start building forms for your hospice business today.
Depending on your vision for your hospice and where you plan to operate, the estimate above can be much lower or higher. Make sure to do your due diligence in understanding everything it takes to start a hospice before moving forward.
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