How to Write a Business Plan for a Home Health or Hospice Agency

Launching a home health or hospice agency is one of the most rewarding and complex ventures in healthcare. Beyond the mission of delivering compassionate care, success depends on a well-crafted business plan that meets regulatory standards, attracts investors, and supports sustainable operations. A robust plan not only defines your vision—it also ensures your agency aligns with Medicare’s Conditions of Participation (CoPs) and state licensing requirements.

Below is a comprehensive guide to creating a strong, compliant business plan designed specifically for home health and hospice agencies.

1. Executive Summary

Your executive summary is the first impression for readers such as Medicare surveyors, investors, and licensing agencies. It should summarize your agency’s mission, service goals, and operational framework.

Key components:

• Mission Statement: Define your commitment to quality, patient-centered care, and compliance.

• Services Offered: Specify if your agency will provide skilled nursing, physical therapy, occupational therapy, speech therapy, medical social work, and home health aide services (for home health) or nursing, physician services, social work, counseling, and volunteer support (for hospice).

• Target Market: Identify your service area by county or zip code, noting whether you plan to serve Medicare, Medicaid, and/or private pay clients.

• Licensing and Certification Goals: Include your timeline for obtaining state licensure, Medicare certification, and accreditation if applicable.
  

Your executive summary should be concise but powerful—ideally no more than two pages, with language demonstrating awareness of Medicare compliance, such as ensuring patient rights (§484.50) and maintaining a QAPI program (§484.65 / §418.58).

2. Company Description

This section provides detailed information about your agency’s background, ownership, and legal structure. Medicare requires that your governing body maintains oversight over operations, services, and compliance.

Include:

• Legal Structure: Indicate whether you are an LLC, corporation, or nonprofit.

• Ownership and Key Personnel: Identify the CEO, Administrator, and Director of Patient Care Services (DPCS) for home health, or the Administrator and Clinical Manager for hospice.

• Compliance Oversight: Explain how your governing body will ensure adherence to 42 CFR §484 (for home health) or 42 CFR §418 (for hospice).

• Location and Service Area: Specify your physical location, along with counties covered under your license and Medicare provider number.

3. Market Analysis

A strong business plan demonstrates your understanding of the community you intend to serve. This section should include both demographic and competitive analysis.

Steps to follow:

1. Identify the Demand: Use local health department data, CMS Care Compare, or census information to determine the number of elderly residents and patients with chronic illnesses or terminal diagnoses in your area.

2. Evaluate Competitors: List nearby home health and hospice providers, identifying gaps in service, quality ratings, and patient satisfaction scores.

3. Referral Source Analysis: Consider potential partnerships with hospitals, SNFs, physicians, and assisted living facilities.

4. Community Needs Assessment: Align your findings with Healthy People 2030 goals to demonstrate your agency’s commitment to public health improvement.

Your market analysis should show that your agency is not only viable but also necessary—emphasizing quality, compliance, and continuity of care.

4. Organizational Structure

This portion defines how your agency will operate and maintain compliance with CoPs regarding governance, staffing, and supervision.

Include an organizational chart showing clear lines of authority from the governing body to the clinical and administrative staff.
For home health, include roles such as:

• Administrator

• Director of Patient Care Services

• RN Case Managers

• LVNs/LPNs

• Therapists (PT, OT, ST)

• Medical Social Worker

• Home Health Aides
  

For hospice, include:

• Medical Director

• Administrator

• Clinical Manager

• Interdisciplinary Group (IDG) members

• Volunteer Coordinator

• Bereavement Counselor

Staffing Compliance Tip: Ensure that all staff meet qualification standards per §484.115 (home health) or §418.114 (hospice), and outline your onboarding and competency evaluation program.

5. Services and Care Delivery Model

Describe the clinical services your agency will provide, emphasizing your compliance with the Medicare CoPs related to assessment, care planning, coordination, and quality improvement.

For Home Health Agencies:

• Comprehensive patient assessments (§484.55)

• Individualized plan of care developed in coordination with the physician (§484.60)

• Ongoing monitoring and outcome improvement through the QAPI program (§484.65)

• Infection prevention and control (§484.70)

For Hospice Agencies:

• Interdisciplinary group (IDG) care planning (§418.56)

• Bereavement services (§418.64)

• Volunteer services program (§418.78)

• Coordination with attending physicians and facilities (§418.100)

Highlight how your care model supports patient-centered, coordinated, and evidence-based care—demonstrating readiness for Medicare surveys and accreditation reviews.

6. Marketing and Referral Development Strategy

This section should detail your strategies for building referral networks and reaching potential clients.

Strategies include:

• Building relationships with hospital discharge planners, physicians, and case managers.

• Hosting community outreach events to educate the public about your services.

• Maintaining a strong online presence with SEO-optimized content (such as “Medicare home health services,” “compassionate hospice care,” or “in-home nursing near me”).

• Ensuring all marketing materials comply with Medicare’s patient rights and nondiscrimination regulations.

Always ensure marketing and advertising practices are truthful, non-deceptive, and compliant with federal and state rules, as outlined by the Office of Inspector General (OIG) and CMS.

7. Operations Plan

This section outlines the logistics of running your agency—from patient intake to discharge.

Include:

• Workflow Process: How referrals are received, verified, admitted, and documented.

• Electronic Medical Record (EMR): Identify which system you’ll use (e.g., Kinnser, Axxess, WellSky).

• Policies and Procedures: Note that your agency will maintain written policies aligned with the CoPs, covering clinical, administrative, and personnel functions.

• Quality Assurance: Explain your internal audit, chart review, and mock survey processes to maintain compliance.

• Emergency Preparedness Plan: As required by §484.102 (home health) and §418.113 (hospice), describe your emergency training, communication plan, and continuity of operations.

Your operations section should show regulators and investors that your agency is structured, consistent, and compliant.

8. Financial Plan

The financial plan demonstrates the sustainability of your agency. Medicare-certified agencies must maintain financial stability as part of their ongoing certification.

Include:

• Startup Costs: Licensing, office setup, equipment (e.g., BP machines, thermometers, computers), and initial staffing.

• Projected Revenue Streams: Medicare reimbursement, Medicaid, private insurance, and out-of-pocket payments.

• Operating Budget: Include expenses such as salaries, insurance, EMR subscriptions, medical supplies, and marketing.

• Break-Even Analysis: Estimate the patient census needed to achieve profitability.

• Cash Flow Projections: Outline expected inflows and outflows over the first 3–5 years.

Tip: Use Medicare’s current payment systems—PDGM (for home health) and per diem rates (for hospice)—to project realistic revenue figures.

9. Quality Assurance and Performance Improvement (QAPI)

Medicare requires every certified agency to operate a QAPI program that continuously monitors and improves performance.

Include:

• Program Structure: How your agency collects and analyzes data on outcomes, adverse events, and patient satisfaction.

• Performance Measures: Readmission rates, infection rates, patient goals met, and CAHPS scores.

• Improvement Projects: Describe how you’ll use data to implement corrective actions and evaluate effectiveness.

• Leadership Oversight: Ensure the governing body reviews QAPI reports quarterly, in compliance with CoPs.

This section reassures both CMS and investors that your agency prioritizes continuous improvement and quality outcomes.

10. Risk Management and Compliance

Every agency must have mechanisms to identify, report, and mitigate risks. Include a compliance program in accordance with OIG’s Compliance Program Guidance for Home Health and Hospice.

Your plan should cover:

• Code of Conduct: Ethics and integrity in all operations.

• Fraud Prevention: Accurate billing and documentation practices.

• HIPAA Compliance: Policies to protect patient privacy and data security.

• Incident Reporting: Procedures for identifying and addressing safety events.

• Ongoing Training: Regular education for all staff on compliance standards and regulatory updates.

Demonstrate that compliance is not a one-time activity—it’s a continuous process embedded into your agency’s culture.

11. Implementation Timeline

Finally, develop a timeline that outlines the milestones from startup to Medicare certification.

Sample Timeline:

1. Month 1–2: Finalize business plan, secure funding, and apply for state license.

2. Month 3–4: Hire key staff and complete policies and procedures.

3. Month 5: Complete mock survey and finalize readiness review.

4. Month 6: Submit CMS Form 855A and begin the Medicare certification process.

5. Month 7–9: Receive initial state survey and begin operations.
   

Conclusion

Writing a business plan for a home health or hospice agency requires balancing vision, compliance, and practicality. By structuring your plan around Medicare Conditions of Participation, you ensure your agency meets all regulatory expectations while building a foundation for sustainable growth. Each section—from market research to financial planning—should reflect your dedication to quality care, patient safety, and operational excellence.

If you need assistance developing a compliant and results-driven business plan or implementing management systems that meet CMS and state standards, reach out to SummitRidge Consulting. Our team specializes in guiding healthcare providers through licensing, Medicare certification, QAPI programs, and ongoing compliance management—helping your agency succeed with confidence and integrity.