Home Health & Hospice Week

Rapid expansion of franchises may lead to fraud and abuse problems, industry veteran fears.

When you hear the word “franchise,” you may think “private duty.” But franchises providing skilled home care services have boomed in the past 10 years too.

In fact, Forbes Magazine’s 2014 top-10 Best Franchises list for up to $150,000 investment includes three home care brands: BrightStar, Right at Home, and Synergy HomeCare. Two of those furnish medical home care.

There were just 13 home care franchise brands in 2000, but that’s shot to 56 companies today, Forbes report. And 45 of those franchise brands that are members of the International Franchise Association currently operate 6,000 locations, compared to 300 locations by IFA members in 2001.

“Senior care is a natural fit for franchising,” says market research company Franchise Business Review in its Spring publication. “It’s a business that’s highly regulated and systems-oriented, while, at the same time, highly personal.”

In addition, elements that make the home care industry attractive for franchises include a relatively low initial investment requirement, high volume and revenues, and growing demand as Americans age, Forbes notes.

The unprecedented growth of home care franchises brings a downside for existing home care providers, experts note. Increased competition in already crowded marketplaces has made growth and even holding steady tough for some agencies.

Plus, “my concern is that as we have poor oversight of them, we will have fraud and patient endangerment,” says Tom Boyd with Simione Healthcare Consultants in Rohnert Park, Calif. “The resulting press will label all of us and damage the home health care community,” Boyd fears.

The complexities of fraud and abuse in Medicare are sometimes hard for new entrants to grasp, experts point out. What is good practice in another business line, such as giving lavish holidays gifts to referral sources, is a definite no-no in Medicare-funded home care.