How to Start a Home Health Agency: A Guide for Entrepreneurs in Healthcare

The U.S. is experiencing a demographic shift that’s reshaping the healthcare system. By 2030, all baby boomers will be age 65 or older, and one in five Americans will be considered a senior adult.¹ This trend, commonly referred to as the Silver Tsunami, is driving a surge in demand for home-based care, especially for patients with chronic conditions, limited mobility, or post-acute care needs.

Employment of home health and personal care aides is projected to grow by more than 20 percent through 2033, with hundreds of thousands of new job openings expected annually to help meet this demand.²

For healthcare professionals and entrepreneurs, this presents a compelling opportunity: starting a home health agency or home care business to meet the growing need for skilled and supportive services delivered directly in the home.

This article provides a structured overview of the foundational steps needed to launch a home health agency, from licensing and compliance to building a skilled team and setting up your operational infrastructure. We’ll also address how the right tools can help streamline clinical delivery and staff training—two areas that are key to long-term success.

1. Understand the Different Types of Home Care Services

Before registering a business or applying for a license, it's important to clarify the type of services your agency will offer. Home care and home health are often used interchangeably, but they refer to different models of care:

• Non-medical home care involves assistance with activities of daily living (ADLs) such as bathing, dressing, meal prep, and transportation. Care is typically provided by home care aides or personal care attendants.

• Home health services are delivered by licensed professionals (RNs, therapists, social workers) and include services like wound care, medication management, post-acute care, and rehabilitation. These services require a physician referral and are often reimbursed by Medicare, Medicaid, or private payers.

Determining your business model is a necessary step that informs licensing requirements, clinical staffing, payer strategy, and operational setup.

2. Complete State Licensing and Federal Certification Requirements

Every state has specific licensing processes for home care agencies, and requirements vary significantly depending on whether you are starting a non-medical or Medicare-certified home health agency. In general, you can expect the following steps:

• Register your business entity with your state (LLC, S-Corp, etc.).

• Apply for a home care or home health agency license through your state’s department of health or human services. Requirements typically include:

  • Administrator qualifications

  • Proof of liability insurance

  • Initial policies and procedures

  • Office location (must meet zoning and health code requirements)

• Obtain a National Provider Identifier (NPI) and Tax ID for billing purposes.

• If offering skilled services and planning to serve Medicare beneficiaries, you must complete the Medicare certification process through your Medicare Administrative Contractor (MAC). This includes:

  • Submitting a Form CMS-855A application

  • Undergoing a survey from an approved accreditation body (e.g., ACHC, CHAP, or The Joint Commission)

Note that Medicare-certified agencies must also comply with Conditions of Participation (CoPs), which include requirements for quality assurance, staff supervision, patient rights, and clinical governance.³

3. Hire and Train Qualified Staff

Your agency’s success depends heavily on the quality and competency of its staff. A home health agency must build a multidisciplinary team that may include:

• Registered nurses (RNs)

• Licensed practical nurses (LPNs)

• Physical therapists (PTs)

• Occupational therapists (OTs)

• Speech-language pathologists (SLPs)

• Medical social workers

• Home health aides (HHAs)

You’ll also need non-clinical staff for scheduling, intake, billing, and human resources. Agencies must develop structured onboarding processes and maintain clinical competency evaluations as required by both state and federal regulations. Ongoing training is also a requirement under CMS guidelines and a key element of risk mitigation.

Building clinical consistency is a top concern for new agencies. Consider investing early in a clinical education and competency platform to support your team’s knowledge and reduce variation in care delivery.

4. Build Operational Infrastructure for Care Delivery and Billing

Operational setup involves far more than hiring staff. Agencies must have systems in place for scheduling, charting, compliance, billing, communication, and documentation. Several areas should be addressed early in your business plan:

• Electronic Medical Record (EMR): Choose an EMR system built for home health. This should support interdisciplinary care plans, visit documentation, medication reconciliation, care coordination, and audit preparation.

• Compliance monitoring: Set up systems to track clinical documentation accuracy, supervise care delivery, and prepare for surveys or audits. A Quality Assurance and Performance Improvement (QAPI) program, required under Medicare’s Conditions of Participation, helps agencies monitor and continuously improve the quality of care they provide. Understanding the fundamentals of QAPI for home health can help ensure your program not only meets CMS requirements but also drives meaningful improvements in patient outcomes.

• Billing and revenue cycle: New agencies must prepare for the complexity of home health billing, especially if serving Medicare beneficiaries. This includes understanding PDGM (Patient-Driven Groupings Model) case mix groupings, OASIS assessments, and submitting accurate claims under CMS rules.

Operational efficiency is key to long-term viability, particularly as payment models shift toward value-based care. Startups should prioritize automation and streamlined workflows that allow staff to focus more on patients and less on paperwork.

5. Develop Referral Partnerships and Growth Strategy

Referral generation is one of the most challenging parts of starting a home care business. Most referrals to home health agencies come from:

• Hospitals and discharge planners

• Skilled nursing facilities (SNFs)

• Primary care physicians and specialists

• Medicaid waiver programs

• Private individuals and families

To grow your agency, you’ll need a marketing and referral strategy that emphasizes service quality, timeliness, and your ability to communicate across care teams. Professionalism and responsiveness go a long way when building trust with referring providers.

Be prepared to show how your agency meets payer requirements, closes care gaps, and tracks quality measures such as hospitalization rates, medication reconciliation, or patient satisfaction.

Support Growth with the Right Tools

Starting a home health agency involves more than meeting regulatory requirements. It requires a scalable approach to education, compliance, and clinical delivery. Medbridge supports home health organizations with industry-leading education, skills verification tools, and a digital care platform that helps agencies improve care consistency, reduce onboarding time, and improve staff retention.

To learn how Medbridge can support your home health agency, visit our Home Health & Hospice Solutions page.

Frequently Asked Questions About Starting a Home Health Agency

How long does it take to start a home health agency?

Timelines vary by state and agency type, but launching a Medicare-certified home health agency typically takes six to twelve months, factoring in licensing, certification, staff recruitment, and operational setup.

How much does it cost to start a home health agency?

Startup costs depend on your business model. Estimates range from $60,000 to $100,000 for a non-medical home care agency and $150,000 to $350,000 or more for a Medicare-certified home health agency.

Do I need a medical background to start a home health agency?

Not necessarily. Many agency owners come from business or healthcare administration backgrounds. However, if your agency offers skilled services, you must hire licensed clinicians to meet regulatory and patient care requirements.

How do home health agencies get paid?

Home health agencies typically receive payments through Medicare, Medicaid, private insurance, or direct patient pay. Agencies must develop systems to manage billing, revenue cycle processes, and compliance with payer requirements.

What are some common challenges new agencies face?

Common challenges include navigating complex licensing and certification processes, recruiting and retaining skilled staff, building strong referral relationships, and maintaining clinical consistency while scaling operations.

References

1. America Counts Staff. (2019, December 10). By 2030, all baby boomers will be age 65 or older. U.S. Census Bureau. https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html

2. Bureau of Labor Statistics, U.S. Department of Labor. (2025, April 18). Home Health and Personal Care Aides. In Occupational Outlook Handbook. Retrieved June 9, 2025, from https://www.bls.gov/ooh/healthcare/home-health-aides-and-personal-care-aides.htm 

3. Centers for Medicare & Medicaid Services. (2024, September 10). Home health agencies: Conditions of participation. CMS. Retrieved June 9, 2025, from https://www.cms.gov/medicare/health-safety-standards/conditions-coverage-participation/home-health