Omaha World-Herald: Home Instead Care and Right at Home Reach Sales Milestones

Two Omaha-based businesses are hitting sales milestones by helping senior citizens stay in their homes longer as they age.

Home Instead Senior Care and its smaller competitor Right at Home are part of a growing industry, selling franchise rights for businesses that provide in-home care services for senior citizens. The service is seen as a less-expensive alternative to a nursing home for people who need companionship, help with daily chores or personal hygiene care.

Home Instead, founded in 1994, employs 140 people in its corporate headquarters and in 2012 for the first time had more than $1 billion in franchise-level sales, President Jeff Huber said. The company has locations in 16 countries and is on track to create its 1,000th franchise this year.

“The growth is wherever there are seniors, and that’s everywhere,” Huber said. “We’ve got a rapidly growing population. There’s a fierce desire to stay living in their own home. Home is someone’s identity.”

Omaha-based Right at Home, founded in 1995, now has more than 300 locations and expects to sign 60 new franchise agreements by the end of this year. The company with 48 employed at its headquarters said it had record sales of $235 million in 2012 and projects sales of $300 million this year.

Senior in-home care is part of the $74 billion home health industry, which is highly competitive with no companies boasting a dominant market share, according to IBISWorld market research firm.

Within the senior care sector, the number of franchise corporations is still growing, with 10 new companies selling territories since 2008, according to Caregiverlist.com.

“Omaha has two companies that have been leaders and pioneers, but the competition is coming on strong,” said Julie Northcutt, chief executive officer of Chicago-based Caregiverlist.

There are now nearly 11,000 senior care agencies in the U.S, with 1,000 of those opening in 2012. Franchise Business Review said senior care was one of four “hot industries” in 2012, along with child services, food and fitness.

Home Instead said its research shows its sales are about equivalent to the combined sales of its next four biggest competitors: Comfort Keepers, Home Helpers, Visiting Angels and Right at Home.

Huber sees growth ahead for his firm: Not only is the number of seniors growing as baby boomers age, but hospitals also are increasingly focused on avoiding unnecessary readmissions because of new penalties imposed under the Affordable Care Act. Home care agencies are positioning themselves as a resource to hospital systems, and some hospital systems are buying up home care agencies, Northcutt said.

Right at Home President Brian Petranick said the firm’s RightTransitions program was one of the first to work directly with hospitals on caring for people after a hospital discharge. Home health aides can take seniors to a doctor’s appointment, remind them to take their medication and make sure they are eating and drinking enough.

“Those things are key components for keeping somebody from bouncing back into the hospital,” he said.

Home Instead is also seeking to care for more patients returning home from a hospital stay, and has completed a clinical study that Huber said would show its services can reduce readmission rates.

The industry wants to “help the health care delivery system wake up to the impact that home health care can have,” Huber said. “More and more is going to have to be done at home. That world presently doesn’t recognize the value of home care.”

Right at Home offers an additional service, skilled nursing care, which Home Instead does not. This includes medication administration, wound care, catheter care and hospice support. While it’s not the most frequently purchased service, Petranick said skilled nursing will be an important growth area in the future.

Franchising is a popular business model for home care, Northcutt said, because it combines the backing of a larger business with the personal connection of local ownership.

Right at Home’s total initial costs range from $72,200 to $126,100. For Home Instead, start-up costs range from $75,000 to $100,000, but include a smaller territory Huber said is “manageable” for franchisees. He said Home Instead screens franchisees carefully to be sure they have a passion for serving seniors: “It’s not just about awarding franchises.”

The companies’ marketing materials show happy caregivers interacting with happy elderly people, but in reality, Northcutt said, it’s not an easy job. Clients can be grouchy and family dynamics difficult to overcome, with adult siblings sometimes disagreeing about how to best care for an aging parent.

“It’s actually rather sophisticated to do it well,” she said. Northcutt said both Omaha companies have good reputations in the industry and have fine-tuned their processes to be sure both the franchisee and the caregiver have adequate training and preparation.

For franchise owners, it’s possible to earn a six-figure income, “But you’re going to earn it,” Northcutt said.

http://www.omaha.com/article/20130529/MONEY/705299861/1707