Group homes have proven to be an extremely profitable business over the last decade or so. With many states moving toward community-based services, group homes are in demand more than ever before. However, there are several questions that need to be considered before diving into the group home business.
1. Are you ready for the commitment?
Group homes operate just like hospitals and many other
medical facilities and are required to be staffed 24 hours a day and 7 days a
week. Plans also need to be put in place in case of inclement weather or any other disaster.
2. Are you aware of
liability concerns?
Group homes carry a very high liability risk. Many group
homes serve individuals who may exhibit physical and verbal aggression. Support
staff are often the target of this aggression and should be prepared and
trained in managing aggressive behaviors. Residents who display aggressive behaviors might also
destroy property and injure themselves, other residents, and staff.
3. Can you afford a
slow start?
Group homes often incur large amounts of debt when starting
out. A loan is often obtained from a bank or group of investors to purchase a
property and get it up to licensing standards. Of course then there is the most
difficult part, actually getting clients so you can begin to pay back the debt.
This is often the area where many group homes either sink or swim. The group
home owners often have to pay a mortgage on the group home and their personal
home along with utilities. This can create a huge financial and emotional
burden and can create an insurmountable financial hole. The revenue in the
first year of a group home is pretty much used to catch up on debt and usually
yields very little profit. The key is to develop relationships with local
Community Service Boards and case manager/service coordinators who will be your
primary referral source. It’s also
important to note that some states issue a conditional license when a group is
started. However, the license is taken away if the home does not get a resident
within a year. This is why many new group homes accept any client regardless of
behavioral history. Here’s a little secret: Case managers with difficult to
place clients often look for new group homes trying to establish their
clientele for this exact reason.
On the bright side, I’ve seen start up group homes flourish
after getting that first resident. Referral sources (i.e. case managers) often
find homes based on word of mouth. Getting that first resident is critical in
building confidence and reputation as a service provider.
Related: Group Home Marketing Strategies
4. Can you handle
rapid growth?
Group homes tend to take off once they get the first client.
This means more revenue but also requires additional support staff. New staff
will need to be trained in all the usual areas such as behavioral management
and medication administration. The key here is to be able to handle the growth
without losing quality of care. This is
a problem I’m sure most homes would rather have instead of number three but is
still needs to be considered. Group homes should have adequate staffing to
prevent behavioral problems, ensure safety, and provide more opportunities for
community activities.
5. Are you prepared for potential neighborhood
scrutiny?
Sadly, some neighborhoods are not receptive to
group homes for the disabled. Some feel that group homes lower the property
value of the surrounding homes. Police are sometimes called to the home to
address aggressive behaviors and this can cause unwanted attention. There are
also rare occasions when residents wander away from the home and cause
disruption in their neighborhood. In this case, group homes must consider the
type of resident they can handle. Once established, group homes should only
accept residents that they can manage. Of course this is easier said than done
in an increasingly competitive group home market.
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