A Few Things to Consider Before Opening a Group Home

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. You should have adequate staffing as well as an evacuation plan during these times.

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. 

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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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