Market Opportunity For Nursing Homes
By and large, nursing homes are a service industry. Many of the tasks that employees perform are routine; employees support residents in performing the activities of their daily lives, provide entertainment and social interaction, and perform basic medical procedures. While the jobs of low-level nursing home employees may seem rudimentary, they are very important to the health and happiness of the residents. Providing compassionate, high-quality care can be difficult given the way many nursing homes are run today.
The jobs of nurses, nursing assistants, and health aides can be very stressful, not only because of the tedium but because of the morbid nature of being surrounded by sickness and death. A nursing home employee can easily suffer burnout. Intensifying the problem of burnout is the low pay that most low-level nursing home employees receive. They typically receive a low hourly wage ($7-12/hr) with few benefits. Low education and training requirements keep the supply of potential employees high and wages low. However, the stress of the job and low pay create high levels of employee turnover. Burnout and chronic turnover are both very detrimental to the quality of the services being provided in nursing homes.
Because there are few requirements to be a nursing home employee and the pay is low, nursing homes have too often treated their nurses and health aides as disposable commodities that can simply be replaced when they burn out. However, the service-based nature of the nursing home business means that happier employees who have a longer tenure will provide better care to residents. This better care can improve customer retention, satisfaction, word-of-mouth, and reduce the threat of malpractice lawsuits.
Improving the service provided by nursing home staff has been a difficult and ignored problem because improved training and wages are often too costly for a nursing home. We intend to provide a consulting service for nursing homes that promises to lower employee turnover and improve employee satisfaction, which will ultimately lead to improved service. We will achieve these goals primarily through operational improvements, with additional improvements made to communication and accountability procedures and improved pay structure.
By utilizing best-practices from the scholarly literature and applying them to the unique environment of each nursing home, employee satisfaction and ultimately the services provided can be improved at a low, fixed cost. We will leverage our unique knowledge with the addition of proprietary technology and software that we will develop as the consulting service grows. There are few, if any, HR consulting services designed solely with nursing homes in mind. This specialized knowledge and experience provides a competitive edge that is hard to match.
Nursing Home Marketing Strategy
As with any consulting service, customer acquisition is one of the most important aspects of our business succeeding. We will begin our consulting service in the Upstate New York region and expand as awareness of our service and our reputation grows. We will create some advertisements, online and in print, which we will publish in websites and magazines catering to nursing homes. However, the bulk our sales efforts will be in person-to-person communication. We will aggressively call and visit local nursing homes and pitch our consulting package.
Gaining our first few customers will be the biggest hurdle in the success of this business. In order to secure our first few customers we will utilize any personal connections we have and also employ a discount to incentivize customers to purchase our services.
Once we provide services to a couple of nursing homes, we can use their positive outcomes and satisfaction as an important marketing tool to recruit new clients. Word-of-mouth will be important in ensuring our success. Additionally, since our outcomes are measurable (decreased turnover and increased employee satisfaction), we can convince potential clients of our past successes.
Initially we will be performing all marketing and recruiting efforts in addition to providing the actual consulting services. Depending on our firm’s growth, we have the potential to hire dedicated sales staff in the future. Since we are largely selling our own expertise, however, it is likely most effective to recruit customers ourselves, since clients will want to meet us in-person in order to gain confidence in our ability to improve their business. healthcare consulting services will be able to help nursing homes establish an excellent marketing strategy.
Financial Outlook For Nursing Homes
The initial startup costs for our business are low. We will require initial capital for (1) design and publication of marketing materials and (2) transportation/miscellaneous costs for client acquisition. We will meet clients at their business; so we do not require a dedicated office in our startup phase.
As we expand, our costs should not increase dramatically. We will require greater capital for transportation and marketing as the geographic region we serve increases. The largest cost increase we will face in the future, however, is the development of proprietary technology and software to automate and improve our services. As we gain consulting experience we will be able to commission software to improve our service and provide a competitive advantage that prevent new entrants into our market.
We expect a slow ramp-up of revenue. Clients will become far easier to acquire as we gain experience and positive word-of-mouth. Our pricing structure will initially be a single “package” of consulting services, outlined in the “Proposed Services” section. We will charge a per-capita price for this package, based on the number of residents each nursing home has. This provides an adequate proxy for the size of the nursing home. We chose a per capita pricing scheme because larger nursing homes will be more time-consuming to serve and will have a greater willingness-to-pay.
Pricing Scheme/Calculations; Also pro forma income statement outlining costs & revenue for first couple of years
Because nursing homes have often been perceived as “strapped for cash”, particularly with regard to low-level employees, few human resources consulting firms have specialized in nursing homes. We believe this is a mistake, as a consulting service can provide great value to nursing homes by reducing employee turnover and increasing employee satisfaction. This can be done at a low, fixed cost for the nursing home through operational improvements, improved communication and accountability, and a more effective payment scheme. The nursing home market is large and competitive, so our services will certainly be in demand once we gain a positive track record. We will also prevent new competitors from entering our market by developing proprietary technology and software based on the experience we gain consulting for actual nursing homes.
Given the low startup costs for this business, it has the potential to be highly profitable if:
- We can recruit initial clients quickly,
- We can quantify our positive short-term results through improvement in employee satisfaction and positive long-term results through decreased turnover,
- We can create satisfied, passionate clients who will provide convincing examples of our service’s value, and
- We can constantly improve our services through proprietary software and a familiarity with the scholarly literature.