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Home Health Care Agency Loans – Nursing Service Financing

About the Home Healthcare Industry

With well over 300 million people in the United States today, and a large portion of them aging and retiring, home healthcare has become a vital component of the healthcare ecosystem. Add in the fact that chronic disease is rampant in the United States for people of all ages, and medical advancements are allowing more cost-efficient at home treatments, it is easy to see why home healthcare has become so popular. Overall, the healthcare system is growing at exponential rates, but the home healthcare industry sector is outpacing every single other industry today. According to the Bureau of Labor Statistics, the annual growth rate of the home healthcare industry will be 5 percent from 2014 to 2024 – the highest growth rate among all other industries. This also means the possibility of over 700,000 new jobs in the home healthcare sector.

Not only is the home health care industry the fastest growing industry in the United States right now, but it is also helping to bridge the gap between antiquated healthcare systems that do not provide the right type of senior care. Studies have shown that nine out of ten seniors (65 and older) want to stay at home for as long as possible, and most institutional care today cannot meet the needs of these seniors who need some form of assistance. Home healthcare services provide a bridge for seniors to live at home in between hospital stays, nursing home care, and other care provided by family and friends. These same studies have shown that today, there are more people over 60 than under 15; by 2020, there will be over 56 million seniors; and by 2050, there will be over 84 million seniors. The rates of an aging population are rapidly increasing every single day, and the most effective and innovative way to address this issue is through home healthcare services and professional caregivers.

Forms of Home Healthcare Services

There are two distinct forms of home healthcare service: home health and home care. While some businesses may provide both, some seniors may not require both services right away, which is where other businesses have made their niche. Focusing on distinguishing and differentiating a home healthcare business in this way can help early stage home healthcare businesses to thrive. Home health and home care are also differentiated by the way the services are payed for, and who pays it.

  • Home Health: This is often the traditional way of defining home healthcare services. Technically, home health is a medical necessity with prescribed care through a doctor or medical professionals. Home health is often a combination of physical and occupational therapists, social workers, registered nurses, and other various medical home health aides. They often provide medical help services such as administering medications, addressing would bandages, and helping with exercises. Home health is primarily government funded through Medicaid and Medicare, resulting in over $44 billion in this sector.
  • Home Care: Through home care, many of the employees are not medically certified and tend to focus on helping seniors with day to day activities by keeping them safe, healthy, engaged, and active. Some of the services offered with this form of home healthcare include companionship, wellness and safety, meal preparation, help with housekeeping, grocery shopping, care coordination, and so much more. Families and friends typically fund home care.

Economic Impact of the Home Healthcare Industry

The home healthcare industry is booming while generating plenty of job creation. The home healthcare industry in particular offers unique opportunities and advancements for underutilized work force members – women and minorities. Women currently make up most of the workforce for the home healthcare industry, and minorities represent around half of the caregiver workforce. These numbers are only continuing to increase as demand for more in house healthcare services grow.  The home healthcare industry has rapidly grown – there are over 500,000 caregivers that provide over 1 million hours of care per day, leading to over $5 billion in payroll to employees. This highly innovative sector of the healthcare industry is changing the way healthcare is utilized and viewed, all while creating exponential growth for home healthcare businesses everywhere.

Home Healthcare Industry Trends

While the home healthcare industry is showing positive growth signs, there are three major areas that home healthcare businesses need to be paying attention to in order to stay ahead of the changing industry.

  • Workforce Shortages: This has been an ongoing and devastating issue for all sectors of the healthcare industry in recent years. As mentioned above, the number of seniors is rapidly increasing in this heavily populated country, leaving many home healthcare businesses short staffed. Simply put, there are too many people that need home healthcare services and not enough caregivers to cater to this growing demand. Since this is an issue in all healthcare sectors, competition is fierce and demand for nurses, practitioners, physicians, and support staff is not slowing any time soon. This is one of the biggest issues being faced by the home healthcare industry today, however there are ways to help ease the side effects associated with workforce shortages. One of the biggest ways is through effective staff planning, and the implementation of technological systems to help with this. Effective staff planning, and continuously looking to hire more people, is essential in combating workforce shortages instead of insanely long hours for current staff.
  • Medicare and Medicaid: Time and time again, budget cuts are being made to these important federal programs. Through Medicare, seniors are able to have access to affordable, if not free, home healthcare services, but everything is still up in the air after the election. Changes to Medicare, Medicaid, and the Affordable Care Act could potentially disrupt long standing healthcare systems, or even benefit them. Unfortunately, most home healthcare businesses today are still struggling from recent cutbacks and ongoing labor shortages. There is no definite answer right now for what is going to happen with these programs, or the healthcare industry in general, but staying up to date on these programs is important.
  • Technology: This area is vital for every single industry, but for the home healthcare industry there are a variety of innovative advancements that are becoming vital to success. Innovative devices such as fall detectors, pill reminders, and even smart home technologies (Internet of Things) are revolutionizing the way home healthcare services are provided. Researchers at Harvard Medical School are even developing software that will help caregivers detect and report changes in client’s health. Paying attention to the constantly growing technological advancements for this industry are essential.

Types of Home Health Agency Loans

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
SBA 6-10% 3-7 years 10-30 days
Line of Credit 5-15% 1 – 3 years 7-30 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Home Health Agency Bank Loans

Traditional lenders that offer financing to home health care agencies include traditional large banks, small banks, community lenders and credit unions. Most common types of financing are term loans and lines of credit with rates starting in the mid single digits.

Home Health Care Agency SBA Loans

Very similar to traditional financing in both rates and terms, with the only real difference being that SBA financing includes a guarantee by the Small Business Administration to cover most of the lender’s losses should the health care agency fail to repay their loan.

Alternative Health Care Agency Loans

Non bank lending option that provides fast funding and low documentation requirements. Alternative business lender’s rates start in the high single digits, but you can expect rates to usually end up in the mid teens.

Home Health Care Agency Cash Advance

Process involves selling the home health care agencies future revenue in exchange for immediate financing for the company. Not all revenues are sold — only a portion. After the funder deposits the funds into the agency’s bank account, they will either begin repayments through deduction from bank account via ACH or through credit card processing transactions.

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