Bright House

Start your own business plan »

Nursing Home Business Plan

Market Analysis Summary

We are basing our Market Analysis on data from Middlesex and Hartford counties, affluent portions of which, such as Glastonbury, are within a short drive of our facility.

Base Numbers for private residents:

The current total population of residents 65 and older, according to the 2000 U.S. Census, is 155,071 in Middlesex County, and 857,183 for the same group in nearby Hartford County. (The percentage of elderly in both counties is slightly higher than the 12.4% of the overall Connecticut population.) Our projections reduce that number by 70% to account for those healthy enough to care for themselves, or with family members able to care for them, leaving us with a total potential market of 303,676. We then reduce that number again by half to get the total potential customers living within a 35 minute drive of Middletown (these are small counties, and we are situated at their juncture), leaving us with 151,838. Of these, we estimate roughly 8.5% will have the means ($150,000 or more family income) to pay for full-time private care at our facility (based on the 2000 census data about Connecticut income).

This leaves us with roughly 12,906 nearby upper-income residents of Hartford and Middlesex County who are 65 or older, and in need of medical or other daily assistance in their living situation. To project into the future, we again looked to the 2000 Census. The Census' Projected Population of Connecticut is as follows:











While the overall population of Connecticut is projected to decline over the next five years, before rising again, we know that the proportion of the overall population age 75 and older (our target market age) is slowly rising. We therefore include a modest projected increase in potential customers of 1% over the next five years.

Medicare residents and short stays:

A study published recently in the journal Health Affairs by Morrissey, Sloan, and Valvona found that the proportion of Medicare patients transferred to post-hospital care has doubled since the Prospective Payment System (PPS) was introduced. Rather than staying in the hospital until recuperated, the current system preferentially delegates recovery care to private non-hospital facilities, leaving room in hospitals for urgent or crisis care. We base our projections for Medicare residents on the same figures listed above, but looking at the percentage of elderly with family incomes between $30,000 and $75,000 dollars,* rather than just the highest bracket, we get 40% of the population, or 60,735. We apply the same conservative 1% growth rate, below.

*This income range was chosen because it correlates with the kind of higher education levels that most families choosing non-hospital model skilled nursing care report. Although residents with lower incomes may have a need for our service, they are traditionally less likely to seek out alternative care.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Privately-paying Full-time Residents 1% 12,906 13,035 13,165 13,297 13,430 1.00%
Medicare Patients 1% 60,735 61,342 61,955 62,575 63,201 1.00%
Other 0% 0 0 0 0 0 0.00%
Total 1.00% 73,641 74,377 75,120 75,872 76,631 1.00%

4.1 Market Segmentation

Although we have broken our target population into two groups based on income, our marketing strategies rely on another level of breakdown—marketing to potential residents, and marketing to the families of potential residents, who may or may not have similar needs.

4.2 Target Market Segment Strategy

The overall populations we wish to serve are older people (65 and older), in need of daily assistance, who value community and the contributions of their peers. Since Bright House will become their home, we especially are seeking residents willing to make this house a home, and learn from and teach each other.

We also recognize that we must meet the somewhat different needs of our residents' families, who will help them make the decision to live with us, or recuperate here, and who will almost certainly be contributing to the monthly payments necessary to provide for their care.

“In the old days, families just took care of families and that took care of the problem of aging, but we can no longer do that. Churches and other organizations can’t always take up the slack in this area, and so we are left with public policy decisions about what happens.”

-Senator John Glenn, April 27, 1998 “Elder Care Today and Tomorrow,” Fielding Hearing of the U. S. Senate Special Committee on Aging, Columbus, Ohio

As mentioned in our Market Analysis, the percentage of the population over 75 is growing rapidly, thanks to better nutrition, preventative health care, and living conditions in our country over the course of the last century, not to mention the Baby Boomers. At the same time, the increasing kinds of career opportunities for women, and the growing cost of health care, have contributed to a nursing shortage which threatens the quality of professionally-provided elder care.

Phyllis Moen and Emma Detinger of Cornell University point out, in a paper for the Sloan Work Family Policy Center, that the quote above, "...reflects an issue emanating from structural lag, as policies and practices fail to keep pace with changes in the workforce, in families, and in gender roles (Riley and Riley 1994, 2000). The organization of both work and career paths reflects a continued reliance on the male breadwinner template, assuming a workforce without family responsibilities (Moen and Yu 2000). But the new reality is that almost half the workforce is now female, meaning that most workers—male and female—have no one at home to provide care to older ailing or infirm relatives, much less child care (see discussion in Harrington 1999 and Moen 1992). Moreover, most cannot afford to purchase comprehensive, round-the-clock care. The 21st century will witness concerns over childcare policies and practices morphing into concerns over dependent care policies and practices—an amalgam of both childcare and elder care."

4.2.2 Market Needs

The aging of the Baby Boomers is a well-known and much discussed fact of our times. More and more of this population, many of whom were instrumental in creating the counter-culture of the 1960's and 70's, are unhappily surprised about the options available to them as they age. Fortunately, just as AARP (formerly known as the American Association of Retired Persons) has become a major representative of this non-traditional group, elder-care alternatives along the Eden Care model are being founded.

Residents'/Patients' Needs

Our own experience, based on years of caring for elderly patients, is that people seeking assisted living care and skilled nursing care have many of the same needs:

  • To be treated with respect and dignity
  • To be actively engaged in a community of some kind
  • To be involved in his/her own treatment and living plan
  • To be cared for by skilled, medically-knowledgeable clinicians and caregivers, working as a team

You may notice that our list of "needs" seems to go in the opposite order to that of most hospital-model nursing homes; this is not an accident. Unfortunately, most of our elderly population who need care are treated with the billing system's needs, and not their own, in mind. 

Families' Needs

Similarly, the families of people seeking caring environments have their own set of needs they are seeking to fulfill:

  • Peace of mind about their loved-ones' physical and mental state
  • Relief from the time-consuming job of caring for their family members themselves
  • Relief from the feelings of guilt which often overcome them when they find they do not have the physical, emotional, or intellectual resources to personally provide appropriate care for those they love

The big, unstated elephant-in-the-room for families seeking care is the feeling of being a bad daughter or son or spouse, who is not willing or able to put her life on hold to take care of a much-loved family member. At Bright House, we do not seek to dismiss this feeling, but to reassure families in everything we do that the choice to let us take care of their family member is a loving, kind, and generous act.

4.3 Service Providers Analysis

There are a number of different options for families seeking nursing home care, from in-hospital recovery centers, to for-profit chains, to specialized care for people with Alzheimer's, AIDS, diabetes, and so on. The specialized care facilities, which are usually nonprofit, and offer individualized nursing care, come closest to our care model, but are usually reserved for people with a particular ailment in need of intensive medical assistance.

4.3.1 Organization Participants

There are 125 Medicare-licensed senior care providers within 25 miles of Middletown (out to Hartford, Glastonbury, and Farmington). These can be broken down into four rough groups (in descending order):

  • Private, for-profit nursing homes
  • Church-based nursing homes
  • Veterans' Homes
  • Others (like the Alzheimer's Resource Network)

Of these, 57 are part of a multi-home chain, and only 15 are nonprofit. None of them combine both assisted living and skilled nursing care with the alternative, non-hospital model we use.

4.3.2 Alternatives and Usage Patterns

Families choose one elder care facility over another for a variety of reasons. The most common issues involved in their decision are distance from their home(s), affordability, quality of staff and facilities, and particular medical specialties necessary for their family member. Families will usually choose the highest level of care affordable within 45 minutes to one hour of their homes, in order to make visiting their family member easier.

4.3.3 Main Alternatives

The following three organizations are representative of the types described above:

Fox Hill Center, Rockville

  • For-profit, part of a chain
  • 3.37 nursing staff hours/resident day
  • 150 beds (not 150 rooms)
  • 11 deficiencies in Medicare inspection

Fox Hill Center is typical of the hospital-model nursing home. It is large (150 beds), for-profit, and has a fairly low rate of nursing hours per resident day. Its size makes it able to care for many patients, but often at the expense of individual attention.

Sister Anne Virginie Grimes Health Center, New Haven

  • Nonprofit, religious based, located in a hospital
  • 4.16 nh/rd
  • 125 beds
  • 3 deficiencies

The Grimes Health Center, like many religious care centers, is nonprofit, and has a slightly higher rate of nursing hours per resident day than the for-profit centers, despite its large size. Quality of care, however, is noticeably higher (3 deficiencies in inspection, compared to 11 at Fox Hill).

Leeway, Inc., New Haven

  • Nonprofit
  • 5.04 nh/rd
  • 40 beds
  • 4 deficiencies

Leeway is a typical specialized private (not in a hospital) nonprofit care facility. It is much smaller than the other two described, has the highest rate of nursing care per resident day, and high quality marks in inspection. Its small size and nonprofit status allow it to focus on providing individual attention. Leeway is Connecticut's first and only skilled nursing home dedicated solely to the treatment of people living with AIDS.