How to Start a Hospice Business

Hospice, also known as palliative care, offers clients a safe and caring environment as they prepare to pass on. Terminal patients are kept comfortable, receiving round the clock medical attention. Family members are offered support and education as they prepare for the passing of a loved one.

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Learn how to start your own Hospice Business and whether it is the right fit for you.


Start a hospice business by following these 10 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your hospice business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Check out our How to Start a Business page.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What are the costs involved in opening a hospice business?

Your start-up costs will vary depending upon the type of hospice care you with to provide and which state your business is located in. If your business plan includes opening a licensed home health non-Medicare facility, start-up costs are an estimated $60,000 to $100,000, while Medicare-certified hospice agencies should budget for $150,000 to $350,000.

Investments include:

  • Licensing for faculty and staff
  • Computer hardware and software
  • Commercial space for office and/or medical facility
  • Accreditation
  • Website, logo, business cards and other printable material
  • Marketing strategy and materials
  • Insurance
  • Inventory

Due to strict regulations, many looking to enter the hospice industry choose to invest in consulting services or a franchise. While this requires additional start-up capital, entrepreneurs receive guidance throughout the process. Profits are maximized, as time and resources are properly allocated from the moment the facility’s doors are opened.

What are the ongoing expenses for a hospice business?

In addition to the standard operational expenses, you’ll face a number of ongoing costs, ranging from $375,000 to $425,000 (and higher). Exact numbers vary, depending upon the size of your facility and specific services you offer. Payroll will consume the greatest portion of your budget, with fees and licenses coming in second. Business owners should also budget for travel and continuing education for employees, which will ensure the highest level of care for each patient.

Who is the target market?

Hospice care is reserved for terminally ill patients with a life expectancy of 6 months or less. If an individual lives beyond that timeframe, the medical director or physician must recertify that they are terminally ill.

How does a hospice business make money?

Both nonprofit and for-profit hospices receive funds from multiple sources. For many, charitable donations and grants comprise a great portion of their revenue. Additionally, they’re reimbursed by private insurance, Medicare, and Medicaid for each terminally ill patient they care for. Most facilities are reimbursed on a per diem basis, offering a set payment amount for each day the patient is enrolled in the program, regardless of services required. For patients who require around-the-clock home nursing care, hospice is reimbursed on an hourly basis.

How much can you charge customers?

Hospice facilities are reimbursed a daily rate for each patient, regardless of the level of services provided that day. Final payment amounts vary each year, but the average for routine care is approximately $146/day. If continuous care is necessary, Medicare reimburses at an hourly rate of approximately $40/hour.

How much profit can a hospice business make?

Successful hospice care business owners have reported $120,000 to $175,000 profit. Specifics vary depending upon: the number of patients your business cares for, the average billable hour rate for services provided, the number of hours each patient is provided each month. This figure, minus expenses and financing costs determines your total annual profit.

How can you make your business more profitable?

The following are a few strategies other hospice care business owners have implemented to ensure a more profitable business:

  • Identify underserved segments of the community and tailor to their needs.
  • Work with hospitals, physicians, and other facilities in the community to educate consumers on the benefits of hospice care. By creating awareness, you establish yourself as a leader in the industry and develop a strong referral base.
  • For those who would benefit, stress the importance of hospice care earlier in the disease process.
  • Develop a community outreach program.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Hospice Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

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STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your hospice business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can start an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

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You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.

Learn how to get an EIN in our What is an EIN guide or find your existing EIN using our EIN lookup guide.

Small Business Taxes

Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).

You can learn more about small business taxes in these guides:

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.
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Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

Open net-30 accounts

When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.

Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.

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Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

Federal Business Licensing Requirements

To participate in Medicare, a hospice and must complete and submit an enrollment application. Hospices will be surveyed to determine if they meet federal requirements. Detailed information on the certification process can be found at the Centers for Medicare & Medicaid Services State Operations Manual.

State & Local Business Licensing Requirements

Each state has its own regulations regarding hospice care licensing. Here you can check out your state’s information and make sure your hospice center is operating according to state law.

If you are serving food at your hospice center, you will likely need to pass a health inspection with your local health department. Here are some tips for faring well on a health inspection.

For more information about local licenses and permits:

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

For information about local licenses and permits:

Service Agreement

Hospice care businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your hopsice care business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Certificate of Occupancy

Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a hospice business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for you business’ location to ensure your hospice business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Learn more about General Liability Insurance.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Recommended: Learn what business insurance for your Hospice Business will cost.

Business Insurance for
Hospice Business

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

How to promote & market a hospice business

In addition to traditional marketing strategies such as advertisements in community newspapers and magazines, there are a number of things you can do to promote your business. Even in the face of death, knowledge provides power. Educate those within the community by maintaining an online presence and making guest appearances in local and national blogs/mailers.

Additionally, establish relationships with doctors, surgeons, hospitals, and post-operative clinics. Work with them to create educational seminars and pamphlets that will educate their patients on what they can expect to face next. These relationships within the medical community will provide a strong referral base.

How to keep customers coming back

Like many businesses, word of mouth is one of the most effective components of a marketing strategy. It’s important to keep in mind that current and prospective clients are facing the most difficult time in their lives. They’re struggling to say goodbye to family and friends, often while in pain. The best thing you can do for them is to educate and show compassion.

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Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.

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Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.

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Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.

Start A Hospice Business In Your State

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Is this Business Right For You?

This business is best suited for individuals who are passionate about helping others and can offer compassion and understanding to their clients. Additionally, owning a palliative care facility requires a leader who is ready to face the challenges that come with running a multi-faceted facility, meeting the needs of employees spanning several departments.

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Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

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What happens during a typical day at a hospice business?

Your day-to-day activities will vary, depending upon how large of a role you wish to take within the organization. Initially, many palliative care facility owners serve as the hospice administrator, which requires them to wear many hats. Their typical duties include:

  • Answering emails and phone calls from prospective clients/patients
  • Meeting with prospective clients/patients to identify their needs
  • Keeping up with local, state, regional, and national regulations to ensure the facility is in compliance
  • Identifying organizational policies that require updating and implement changes
  • Budget management
  • Maintaining relationships with vendors, medical professionals, and support staff
  • Fundraising
  • Education
  • Overseeing the recruitment, hiring, training, and supervision of workforce

As the business expands, you’ll want to employ team members to take over many of the above duties, as well as the day-to-day administrative duties you’ll initially be tasked with.

What are some skills and experiences that will help you build a successful hospice business?

While not required, experience in the healthcare industry would prove beneficial. If you’re lacking this experience, hire an administrator that can offer their expertise in operating a medical facility of this magnitude.

Given the sensitive nature of the business, it’s critical that one possess strong interpersonal skills. Aside from patients and family members, you must be able to effectively communicate with staff, pharmacists, healthcare professionals, religious clergy, and funeral directors. Additional skills that would prove beneficial are:

  • Critical thinking - Must be able to identify strengths and weaknesses in your business’ care programs.
  • Problem solving and decision-making, particularly under pressure
  • Time management
  • Organizational
  • Analytical
  • Networking
  • Leadership
  • Compassion and empathy

What is the growth potential for a hospice business?

Due to changes in patient needs and preferences and an increasingly aging population, the hospice industry has grown to almost $19 billion over the last decade. It’s projected to grow another 7.4% annually through 2017. Through strong marketing campaigns and cost-saving initiatives, many hospice founders report aggressive growth, beginning their first year of business. Dedicated and innovative entrepreneurs have a unique opportunity to participate in a profession with virtually unlimited growth potential.

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Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a hospice business?

The following are some tips from successful hospice professionals:

  • To realize long-term success, you maintain a commitment to networking within the medical and religious community.
  • Proper program planning is critical from Day 1.
  • Carefully choose your Board of Directors to include the talent and experience required to run a successful program.
  • Make sure you staff your facility with caring, knowledgeable employees and volunteers.
  • Avoid competition between other hospice providers in your area. Instead, work with them to clearly define and highlight each facility’s strength in services and educate the public.

How and when to build a team

Your hospice care business will require an experienced team from the onset. Your team will consist of volunteers, nurses, physicians, billing, human resources, and administrative staff. Each team member must maintain a high level of professionalism and maturity at all times, so it is critical that you choose your staff wisely.

Read our hospice business hiring guide to learn about the different roles a hospice business typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.

Next Steps

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