Opening a Smaller Assisted Living Program and Not Sure What to Charge?

Assisted Living

Entrepreneurism ranks among the items that makes people happy.  It provides a set of controls in one’s life and for many, a degree of financial independence.   Those entering the group home business often have the shared goals of helping others while also creating a better financed retirement.

One primary struggle for many is how much do I charge?  This is especially true for homes serving the medically fragile elderly and who are paid from that resident’s assets.  Here are some helpful tips:

Know Your Basic General Costs.  These are the expenses spread across every resident.  For example, let’s say its going to be a 6-bed home and the monthly expenses you know of amount to:

$1,575.00 – Mortgage (Property taxes included)

$  787.00 – Combined utilities (From when  a family of 5 occupied the home)

$1,400.00 – Contemplated food budget

$   555.00 – Liability and Related Insurance Coverage

$1,000.00 – Resident Transportation

$14,410.00 – Staffing


$19,727.00 – In obligatory expenses to run the home

When you divide that by 6 you end up with this business costing you $3,287.83 per resident before you figure the cost of any taxation, overtime pay or administrative salary.  So if we were to round up to $3,500.00 and each resident was charged a base of not less than $4,000.00 you have a $500.00 per month profit per resident or $3,000.00/mo – $36,000.00/yr profit from this home as a start.

The more sophisticated operators, of course, start with a base price and then itemize what additional needs might exist that impact cost of care.  For example, a non-ambulatory person who is assisted by two, (2) staff seven, (7) times per day for toileting and cleaning will have higher staffing cost.  Extra attendant care is always going to increase the cost of services.

Even homes that serve the catastrophically injured and charge a base daily rate of say $450.00 to $550.00, often have to build in the cost of added care for those who are susceptible to wounds, injury and worse as a result of limited or no independent ambulation.  Cots of care must be charged appropriately or you are going in the hole from day one.

Add to this whether or not your regulatory representative may insist on staff overlaps at shift change or two, (2) staff 24/7 to accommodate the special needs of residents or to comply with recommended fire safety/evacuation standards.

At the end of the day you will decide what to charge.  Just be sure you have explored all the numbers before deciding on final prices.

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Assisted Living

Another Blog Post by Direct Care Training & Resource Center, Inc.  Photos used are to complement the written material.  They do not imply an endorsement by or affiliation with any organization nor individual.