Hospice Care Business Loans: What to Know
Hospice Care Business Loans
Hospice care is an important part of the medical industry. By providing end-of-life care to patients with terminal illnesses or other conditions, they offer peace and comfort for families while taking care of the critical needs of the patient including food, water, and pain management. They also offer emotional and spiritual support when people need it the most.
Hospice businesses provide services to patients in their homes, at a hospital, or in a long-term care facility. Most people choose to receive care in their homes to improve their comfort levels and to be around family as much as possible. Starting and operating a hospice care business comes with numerous expenses and challenges that might make a hospice business loan ideal.
What Are Hospice Business Loans?
Hospice business loans are loans designed for owners of hospice businesses. Whether the business is mobile—operating in people's homes—or you own a hospice facility, these loans can help with everyday expenses, cash flow, buying equipment, paying staff, and more. Business loans for hospices help keep these companies afloat so they can continue providing compassionate care to patients at the end of life. There are many different loan types including SBA loans, cash advances, lines of credit, and even term or installment loans. Hospice businesses may even qualify for equipment loans to buy things like hospital beds or other medical equipment.
How Do Hospice Business Loans Work?
Hospice businesses can apply for lending through their banks or a commercial lender. The application process can take a while depending on the loan type. Many hospice businesses will easily qualify for lines of credit and cash advances, but may need more time, revenue, or information to qualify for term, installment, and SBA loans. Many hospices want to know how to get a small business loan so they can operate their company more efficiently.
It's important to understand what business problem you are trying to solve with a hospice business loan. Do you need better cash flow while you wait for insurance payments to come in? Do you need new equipment or a vehicle for making home visits? Understanding the business need will help you apply for the right type of lending.
How Much Do Hospices Cost to Run?
The costs to run a hospice business vary widely depending on the business model. A home health model will be less expensive. You'll need to pay office staff, nurses, doctors, and other care professionals as well as having software, a website, and proper business and professional licensing. All supplies can be ordered as needed for patients and shipped to their homes and things like hospital beds and machines to monitor vital signs can be leased temporarily.
Home health agencies cost around $60,000-$100,000 to start if they are not Medicare certified. An inpatient model will be significantly more expensive because you'll need to pay for the building, 24/7 staff on the floor, and beds and equipment for each room. Plus, you'll need cleaning staff and other considerations for running a hospice facility. You could expect to pay upwards of $150,000-$350,000 for a Medicare-certified facility, plus significant monthly expenses and overhead.
How Do Hospices Earn Money?
Hospices earn money in a few ways. One of the most common sources of revenue for hospice businesses is Medicare. Medical insurance is another source of income, and of course, private pay is also possible for hospice care.
What is Usually Included in a Hospice Care Program?
Patients receiving hospice care typically get the following services at a minimum:
Medical care that's limited to pain and symptom management
Supplies related to medical care
On-call care team 24/7
Spiritual, emotional, and mental health support
Volunteers for meal prep or cleanup
Respite care to give family caregivers a break
Additional Things to Consider
Running a hospice care business requires employing people with specialized training to care for patients at the end of their life. This comes with many different regulatory considerations, whether you offer home care services or you operate a hospice facility. Hospice care business loans can help your home health business.
Is Hospice a Profitable Business?
Yes, hospice care is one of the most profitable medical businesses. Since patients often want to receive care in their own homes, it alleviates a lot of the overhead associated with running a hospice location. While you will still need at least a small office, you can run a hospice business on a very lean staff and infrastructure. Medicare pays out very well for this type of business.
Is the Hospice Industry Growing?
As more and more people decide to receive basic care in their homes, the hospice industry continues to grow. This means that there is more demand than ever before for quality hospice businesses to provide care and support to patients and families at home.
How Long Does it Take to Get Approved for a Hospice Business Loan?
SBA loans are a loan type that can take a long time to get approval. You may wait from 3-4 months to find out if you qualify for an SBA loan. Other commercial lending types have significantly shorter wait times. Companies who do their own underwriting can have your application processed and approved sometimes in as little as a day. For more complex loan types, you may end up waiting several days to find out if you got approved and for how much.
What are the Biggest Challenges in Hospice or Palliative Care?
While operating a hospice care business can be rewarding financially, it also comes with numerous challenges. Because most of your pay comes from insurance companies and Medicare, these businesses often face cash flow problems that make it difficult to operate without leveraging some type of commercial lending. Business loans in healthcare are common for this reason alone. Other challenges include finding qualified staff who want to work long-term with hospice companies, staying current on Medicare licensing, and even providing the high-quality care needed for each patient.
Consider an Installment Loan to Help With Your Hospice
Acquiring a home health care loan like an installment loan is a great option for hospice businesses. These loans are typically given in one large sum with repayments happening monthly until the full amount of the loan plus interest has been repaid. Most people are familiar with car and home loans which are two different types of consumer installment loans. Installment loans for hospice care businesses may be used for any aspect of the business. This includes paying salaries, covering the cost of vehicle leases, paying for equipment, and more. If you have money to put down as well, they often offer a lower interest rate than other types of commercial lending.
How to Go About Receiving a Home Health Care/Hospice Loan?
If you're reading to get lending for your home health care/hospice business, Fora Financial can help. We offer many different types of lending to meet your business needs. Contact us today and get started on the application process. Make sure you have details like your time in business and your annual revenue available so that we can process your application as quickly as possible. We'll let you know the different loan products we can offer and the repayment terms.
