How to Start a Hospice Business in 6 Steps: The Complete Guide

As with any business, you must have a solid business plan before you begin. This strategic document is not only required to acquire funding and obtain licensing, but it can also help you figure out essential details well before opening your business — such as the size of your target market or the importance of patient surveys.

While a business plan consists of many different components, this chapter focuses on key aspects that require special attention when opening a hospice.

Understand the regulatory and legal requirements for your area

An important part of your hospice startup checklist is researching any regulatory and legal requirements for the business. For example, as all companies do, you must apply for a Tax ID and EIN. However, there are also hospice-specific requirements, such as a state licensing application and a federal Medicare accreditation application. 

While many hospices are Medicare-certified agencies, you can also be a non-Medicare home agency in some states and serve private clients if that business model works better for you. There are different licensing requirements if you go this route.

Remember that the requirements differ from state to state, so it’s important to look at your specific location. For example, in California, you can choose between starting a home healthcare agency and a hospice care agency, which are similar but with a few key operating differences. 

In Florida, hospice care businesses need a certificate of need from the Agency for Health Care Administration. It’s best to stay up to date on the licensing requirements for your state, as they may change from time to time.

Also consider where your hospice business will provide care. Will you work at a patient’s home, hospital, assisted living facility, or multiple locations? Whether you provide hospice care at home or a hospital depends on your target market and their needs. Depending on your choice, specific licenses may be required for your state, so you need to make this decision during the business plan phase.

Wondering how to get a hospice license? Applying for specific licenses, certificates, and accreditations can be a complex and time-consuming process, so it’s best to start it well in advance of opening your business.

Many business owners use third-party hospice consultants who help them navigate the regulatory and legal process of opening a hospice business. These services ensure you have the correct licenses and accreditations so you don’t run into any regulatory issues at opening or going forward.

Know your target market

Projecting the success of a hospice business is a vital part of the business plan. To do this, you need to know the size of your target market.

Those who qualify for hospice care are terminally ill and have been given a life expectancy of six months or less. However, a medical doctor decides whether a patient requires hospice care, not the patient or a hospice business owner. A hospice business can only provide care to a patient when the medical authority has approved it.

Look at the demographics in your area to determine how many people are in a geriatric age group. This is only a starting point for learning the size of your target market. A small percentage of that demographic will require hospice care. To determine the percentage, you may need to make educated guesses based on hospice market projections for your area. Speaking to medical professionals who frequently refer patients to hospice care may provide additional insight.

Remember that while a hospice business provides services to patients, you won’t market solely to them. Since a medical professional needs to refer a patient to a hospice facility, consider them as part of your target market and have a separate marketing strategy for them. You also need to plan how to market to the patient’s family.

Calculate your expenses

How much does it cost to start a hospice company?

Starting a hospice business involves substantial financial investment. Costs vary according to the location and scale of the business. Initial expenses typically range from the lower to mid-hundreds of thousands. This includes costs for licensing, equipment, and space, as well as operational costs like payroll and marketing. For a more accurate estimate of costs, consult financial projections specific to your region and consider both startup and ongoing expenses. Detailed financial planning, including understanding potential revenue streams and profit margins, is crucial to the long-term success of your hospice business.

In addition, hospices tend to have ongoing monthly operating costs in the low to mid hundreds of thousands. As a result, you’ll need considerable capital to open a hospice business — the startup costs plus enough to cover a couple of months of operating expenses.

Startup costs can include

• Licenses and accreditations
• Commercial operating space
• Medical equipment
• Computer hardware and software
• Insurance

Operating costs can include

• Payroll
• Marketing
• Inventory
• Insurance
• Travel
• Continuing education

The types of expenses may vary based on where you provide care. At-home hospice care costs will be different than assisted living facility hospice care. A hospice consultant can help you determine your startup and operating costs.

Plan to mitigate deficiencies in operating plans

To ensure a high quality of care, state agencies or accrediting organizations regularly review hospice sites to determine whether there are any deficiencies. 

In fact, according to the U.S. Department of Health and Human Services, almost all hospices that provided care to Medicare patients were reviewed onsite, and 80 percent had at least one deficiency. Common deficiencies include poor care planning, poor management of aide services, and inadequate quality control, all of which can affect the quality of care.

To run a successful hospice business, familiarize yourself with the top hospice deficiencies and how to avoid them. Providing better service to patients leads to a better reputation among patients, their families, and medical professionals. In turn, this can lead to increased referrals from doctors. In your hospice business plan, be sure to include details on how you will operate the business and how you will ensure quality care for patients.

Prepare for feedback

The Centers for Medicare & Medicaid Services (CMS) uncovers hospice deficiencies by surveying the families of patients who have passed away under hospice care. The Consumer Assessment of Healthcare Providers and Systems (CAHPS) Hospice Survey is conducted by CMS-approved survey vendors, allowing families to share feedback about their hospice experience.

The data collected through these surveys helps other families choose which hospice to use for their terminally ill family member. To ensure your business does well on these surveys, learn how to prepare for hospice accreditation surveys.

Have detailed operating procedures in place so that every patient gets the highest quality of care. In your business plan, remember to include details about the standards of care you’ll offer patients and their families.

Now that we’ve covered key aspects of creating a hospice business plan, it’s time to review your business model. Will you start a hospice business from scratch or take the franchising route?

The business plan and the business model work hand in hand. Sometimes, business owners determine the business model first, then write a business plan. In other cases, they need to do it the other way around. Regardless of which you do first, you must decide how your hospice business will create value and make money.

In the hospice industry, there are two main business models to choose from — starting from scratch (independent) or franchising. Each option has benefits and drawbacks. We’ll cover them in this chapter.

Starting from scratch

An independent hospice business is one you start from scratch. This business model’s most significant advantage is that the owner has complete control over business decisions. They don’t need to answer to a corporation or franchise entity. Plus, the owner can pivot their business strategy at any time.

Starting from scratch also allows the company to develop its own brand, which will help it stand out from cookie-cutter franchises in the market. However, building a brand from the ground up takes considerable time. With this model, there is no built-in brand recognition like there is with a franchise.

While starting any business comes with some risk, creating a hospice business from scratch can be especially risky. The healthcare sector is complex, and an organization that doesn’t have its licensing or accreditation in order can be closed down.

Starting from scratch also comes with higher investment costs because you don’t have immediate access to helpful resources — like marketing collateral or talent — that often come with franchising. This business model also has fewer economies of scale, so a business owner has higher operating costs and a lower profit margin.

Day-to-day operations can be challenging if taking the non-franchise route, especially in the first few months after opening the business. There is no built-in franchise operating handbook or training manual for staff, so the business owner needs to figure out all these details and ensure everything is well documented.

Being an independent owner is ideal for those who have an entrepreneurial spirit and are interested in building their brand. You don’t need any medical experience or a background in the healthcare industry as long as you’re willing to learn and gain knowledge from experts in the area. However, being business savvy is vital to succeeding in this business model.

Franchising

For many business owners, franchising comes with the promise of financial stability. However, that doesn’t mean a considerable investment isn’t involved. While the initial startup costs may be lower compared to starting a business from scratch, as part of a franchise, you may need to pay a percentage of monthly revenues to the franchise on an ongoing basis.

The major benefit of working within a franchise model is that it comes with access to operational resources, such as corporate support, supplier networks, marketing resources, and human resources. In addition, franchises have operational expertise in the industry. Even if you don’t have hospice experience, you can rely on the franchise to provide it via training, onboarding, operating manuals, and more.

Keep in mind that with a franchise, a business owner has much less control over certain decisions, such as branding and marketing, hours of operation, location, décor, etc. However, it does come with brand recognition and publicity.

After reviewing these two business models, it’s time to look at how to choose a proper legal entity for your hospice business. We’ll cover that in the next chapter.

The business structure, or type of legal entity, you choose for your hospice business will affect how much you pay in taxes, the extent of your personal liability, and what kind of paperwork you need to file to get up and running. It also affects whether you can raise money for your business if you need an influx of capital.

When starting a hospice business, you’ll need to select your legal entity in order to register your business with the state and get a tax ID number. This is an important step because it’s not always simple to change the legal entity later — so be sure to think ahead for the long term.

Sole proprietorship

The simplest business entity is the sole proprietorship, which makes no legal differentiation between the business and the business owner. This means that the assets and liabilities of your business aren’t separated from your personal assets and liabilities. If the business goes into debt, for example, this would affect your personal finances.

While a sole proprietorship is simple to set up and requires minimal paperwork, keep in mind that sole proprietors can’t sell stock to raise money, which limits the amount of capital available for the business. In terms of taxes, the sole proprietor pays taxes on income from the business as part of their personal tax return.

A general partnership legal entity is similar to a sole proprietorship; however, it’s for businesses owned by two or more people.

Limited liability company (LLC)

If you set up a limited liability company, your personal assets and liabilities will remain separate from those of the business. This is a major advantage for business owners because their personal assets — such as their home or car — won’t be affected if the business fails. Essentially, an LLC combines some of the characteristics of a corporation with those of a sole proprietorship.

As the owner of a hospice business that’s an LLC, you won’t be required to create a board of directors like a corporation, but you will be able to take the company public in the future if you want to convert it to a C corp or S corp (see below). Remember that if you have an LLC, you are considered self-employed and must pay self-employment taxes for Social Security and Medicare.

Limited and limited liability partnerships (LP and LLP)

Partnership legal entities are a good choice for two or more business owners who want to run a hospice together. One partner has unlimited liability in a limited partnership, while the other partners have limited liability. In a limited liability partnership, each partner has limited liability. The entity you choose may depend on your partners and the extent of their involvement in the business.

C corporation

A corporation is an entirely separate legal entity from the business owner. The corporation can be taxed, held liable, and make profits.

Corporations are complicated to set up and maintain in terms of record keeping and reporting, but they offer the best protection for personal liability. Keep in mind that a corporation requires a board of directors to operate and must also have shareholders.

When it comes to taxes, corporations pay income tax on their profits. Shareholders may also pay tax on any dividends on their personal tax return, which is a type of double taxation.

Corporations may also issue stocks to raise funds.

S corporation

An S corporation is a type of corporation where business owners can avoid the double taxation that happens with C corps. In an S corp, the profits can be passed to the owner’s personal income, bypassing corporate tax rates. Keep in mind that not all states tax S corporations the same way, so it’s important to check whether there are any limits or special rules for your state.

We’ve covered the different legal entities you can choose for your hospice business. Next up, it’s time to learn how to market your services.

To build your business, you’ll need to develop a comprehensive marketing strategy that resonates with your unique audience. Effective marketing for a hospice business involves a mix of traditional and digital methods to reach two key segments: terminally ill patients and their families, and referring medical professionals. Consider adopting strategies like community outreach, in-person networking, online content creation, and social media marketing. Communicate compassionately and clearly, highlighting the specialized care and support your hospice provides. Remember, your marketing efforts should not only attract new clients, but also help you build a trustworthy reputation in the community.

This chapter has everything you need to know about marketing a hospice program, including strategies you might want to include in your hospice business development plan.

How to market your hospice program effectively

When marketing a hospice business, it’s essential to use both in-person and digital marketing. You’ll need to reach two key audience segments — 1) terminally ill patients and their families and 2) referring medical professionals. Communicating with these groups via multiple marketing methods is best to ensure they learn about your business.

In-person marketing

A critical component of in-person marketing is networking.

Most hospice patients and their families first hear about local hospices from their doctor, so it’s important to have a good relationship with local medical professionals.

If you’re wondering how to get hospice referrals from doctors, start by researching medical professionals dealing with terminally ill patients in your area. Attend local medical conferences to get to know more medical professionals, and send out hospice information marketing materials to inform doctors about your services.

Community outreach programs are also a great way to market your hospice services to the people in your area. Partner with existing community outreach programs or start your own to support people in need and educate them about what hospice is and how it can help terminally ill patients and their families.

Remember to go where your target audience is — senior centers and assisted living facilities are good examples. Ask if you can leave behind some informational pamphlets.

Regardless of your in-person marketing methods, it’s important to craft the message carefully. Considering hospice care is difficult for patients and their families, and pushy sales tactics won’t help in such stressful and emotional situations. The message should focus on ways your hospice can alleviate pain and suffering for the patient and their family while making their last few months as comfortable as possible.

Digital marketing

To complement your in-person marketing methods, it’s vital to have a robust digital presence. Terminally ill patients and their families will likely search online to learn about their options before deciding which hospice to choose. Even if a doctor has recommended a specific hospice, the family will probably want to research it — and look for reviews — online.

Create a robust website that offers information about your services and the quality of care you provide. Be sure to include testimonials from family members of patients who have stayed at your hospice.

In addition, use search engine optimization to help people find your website. Include key search phrases strategically in the content. You can also use search engine marketing to target people searching for hospice-related terms online.

Other great digital marketing tools include social media, blogs, and email newsletters. Use these avenues to make connections online and share information about your business. Remember that photographs and videos perform well online, so show people what the facility looks like, and the kind of service people can expect. You can even include interviews with staff or family members of patients in the photos and videos.

Regardless of which marketing tactics you use, be sure to measure your performance with key performance indicators (commonly referred to as KPIs). For example, how much has your hospice revenue increased since you started your new marketing campaign?

To grow the business, you’ll need to adjust your marketing over time and periodically evaluate how well it’s drawing in new patients (i.e., increasing the hospice census). Try different marketing methods till you find a combination of strategies that work well for your business. You may need to test certain messaging and mediums to see what affects performance the most.

Now that we’ve covered how to market your hospice business, it’s time to move on to another important topic — HIPAA compliance.

In a hospice setting, there’s often a need to share confidential medical information with various people. For example, in an interdisciplinary group, medical professionals will discuss care for the patient with their team members. In addition, hospice may want to include patient stories in marketing materials.

Information sharing of any kind involving a patient requires special oversight. In this chapter, we look at the rule governing information-sharing and the actions you’ll need to take as a hospice owner to comply.

What is HIPAA, and why does compliance matter?

The Health Insurance Portability and Accountability Act, commonly referred to as HIPAA, is a federal U.S. law designed to protect patients’ health-related information from being shared with anyone without the patient’s consent and knowledge.

Hospice workers contact many people daily — family members of the patient, medical professionals, funeral home staff, and more — who may request patient information. Knowing what information can be shared, with whom, and when is important. Violating HIPAA regulations could cause financial harm to the business and negatively affect its reputation.

Strategies for maintaining HIPAA compliance

Maintaining HIPAA compliance is a critical and complex aspect of running a hospice business. A hospice setting brings specific challenges, such as when patients are unable to provide consent to share health information. You need to have rigorous protocols and staff training in place to navigate these complexities. 

Consider incorporating detailed scenarios in your training programs to prepare staff for various situations they may encounter. Additionally, ensure all marketing materials and patient stories are used with proper consent, aligning with HIPAA regulations to protect patient privacy. 

Here are some strategies to ensure all hospice workers in your business meet HIPAA compliance regulations.

Ensure proper training for hospice employees and volunteers

HIPAA compliance training should be a part of the onboarding process for all employees. Remember that volunteers are considered part of the hospice workforce under HIPAA privacy rules, which means they require the same HIPAA training as paid employees. It’s also good to provide frequent refresher training about HIPAA rules to ensure everyone keeps the regulations in mind.

Carefully review permissions for marketing content and images

Many hospice businesses use patient and family testimonials and images as part of their marketing and fundraising efforts. Remember that the patient must provide written consent before you can use any of those materials. This also applies to memorials after the patient has passed. Have a process in place to acquire consent for sharing information when a patient arrives at the hospice.

Follow protocols for IDG meetings

In hospice, one of the most critical components is the interdisciplinary group (IDG) meeting, where a team gathers to discuss the patient’s care plan. The team can include medical professionals, social workers, religious personnel, and more.

During this meeting, all decisions must be appropriately documented to comply with HIPAA rules and Medicare hospice regulations. Use a hospice IDG meeting template to streamline the meeting process and meet compliance regulations.

Use proper hospice documentation tools

When selecting hospice documentation tools, it’s best to ensure they are HIPAA-friendly so that any patient’s personal health information remains private.

Jotform provides features that help with HIPAA compliance on Gold and Enterprise plans and offers many HIPAA-friendly hospice form templates that are secure and easy to use. Each template is customizable, so you can simply drag and drop fields to create a form that works perfectly for your needs. Templates include palliative care assessment forms, patient supply order forms, hospice patient satisfaction forms, and more.

Now that you’re up to speed on HIPAA compliance, it’s time to look at hospice management software. In the next chapter, we show you how Jotform can fulfill your many hospice software needs.

As your hospice business grows, you’ll need to optimize your operational efficiency. Implementing the right hospice management software is a key step in this process. Advanced software solutions can significantly reduce the time spent on administrative tasks, allowing for a greater focus on enhancing patient care. Evaluate various software options to find one that best fits your specific needs, considering factors like patient record management, scheduling, and regulatory compliance. A well-chosen software system not only streamlines operations, but also supports your team in delivering compassionate and effective care.

Jotform is an excellent solution for any hospice looking to use software for multiple aspects of its business. Jotform can help with everything from patient consent forms to physician referrals.

Jotform Enterprise

Jotform Enterprise for hospice is an all-encompassing tool that includes templates, tables, approval workflows, and much more. It comes with unlimited APIs and webhooks, so hospices won’t be limited in the number of forms, submissions, and payment options they can handle.

In addition, hospice administrators can assign custom permissions to different users, ensuring only the right people see confidential patient information.

Jotform Teams

A shared workspace, Jotform Teams is ideal for any size team, especially interdisciplinary groups that collaborate to provide patient care in a hospice setting. With Jotform Teams, an IDG can keep all of their meeting documentation in one place, assign permissions for each document, and work collaboratively to provide the best care.

Jotform templates

Jotform offers HIPAA-friendly, ready-to-use form templates, such as a Hospice Referral Form, Online Medical Consent Form, and Hospice Volunteer Application Form. Each template is secure and easy to customize using Jotform’s intuitive drag-and-drop form builder. Hospice businesses can change the form’s branding, colors, and visuals, as well as add and remove form fields.

Jotform Tables

Jotform Tables makes it easy to store essential data from multiple people, such as assets for hospice IDG meetings. Incoming form responses are saved to the associated table. Staff can also import existing data from other documents into a table and enter data manually.

Jotform Tables enables hospice businesses to securely save and manage large amounts of vital information.

Jotform Approvals

Jotform Approvals is designed to help hospice businesses organize their workflows and automate key approval tasks.

For example, one of the most important tasks the platform streamlines is getting consent from a patient for a procedure or treatment.  With Jotform Approvals, you can set up an approval workflow that begins as soon as someone fills out a Medical Consent Form. Once everyone involved in the workflow signals their approval, the treatment can go forward.

Because all of the information submitted through the form and all of the steps in the approval process are recorded in Jotform Tables, you won’t need to do any manual data entry or paperwork.

Jotform Apps

Jotform Apps provides a great way for hospice businesses to create customized apps. The platform comes with easy-to-use app templates like the Symptom Tracker App, a great way for doctors to track their patients’ symptoms and keep all the data in one easy-to-access location. You can also use Jotform Apps to help patients and families access important forms on their phones.

Conclusion

The decision to start a hospice business is driven by a desire to support terminally ill patients and their families through their most challenging times. Setting up a hospice business, including navigating through various licenses and accreditations, can be daunting. However, providing hospice care gives you the opportunity to have a significant impact on others’ lives. To make the journey of starting a business easier, take advantage of available resources and consider seeking guidance from experienced consultants in the field. Their insights and support can help you navigate the complexities of the hospice business landscape.

Jotform can fulfill all your document and process management needs when you’ve got the company up and running. Its powerful, flexible capabilities will help you manage and grow your business and its commitment to providing compassionate, effective care.