How to Start an Assisted Living Facility

Over 800,000 Americans currently live in assisted living facilities, and over half of them are age 85 or older. While there are nearly 29,000 assisted living facilities in the United States, demand for assisted living is expected to outpace its availability in the next few decades. For entrepreneurs with a caregiving mindset, now might be the ideal time to start an assisted living facility. 

In this post, we’ll explain everything you need to know about how to start an assisted living facility. 

Challenges of Starting an Assisted Living Facility

While starting an assisted living facility is rewarding, it also comes with a few challenges. But when you’re aware of the challenges, you can develop a plan to address them. 


There’s a growing demand for good assisted living facilities, but you’re also likely to face competition from other homes and residential communities.

A potential resident and their family may consider two to five options (and sometimes even more) before deciding on a facility. As a result, you’ll need a strong value proposition — how will you convince people that your facility is the best choice?  

Recruiting and retaining qualified staff

Attracting and keeping qualified staff can be a significant challenge for assisted living facilities. 

Many skilled nurses may prefer to work in other environments, including home health care or in hospitals. And in some cases, entry-level jobs at companies like Target or Amazon may offer higher pay than non-medical caregiving jobs. 

Some job applicants may lack basic qualifications like CPR certifications, and others may not have formal healthcare training or even a high school diploma. Assisted living facility administrators may have to invest a lot of effort into finding applicants with the right mix of education and experience and offer the pay and benefits that attract top talent. 

Lack of affordability for prospective residents

Assisted living facilities are expensive, sometimes prohibitively so for residents. The annual national median cost of assisted living facility care services was $54,000 in 2021, with monthly costs that ranged from $3,000 in Mississippi to $6,978 in the District of Columbia. 

Medicaid might help cover these costs, but that depends on where the facility is located, as coverage is determined on a state-by-state basis

Startup and ongoing costs

Wondering how much it costs to start an assisted living facility? 

The cost of land and your building will be the most substantial costs, and those may vary considerably based on the area in which you build. 

The highest ongoing cost of running assisted living homes (estimated to be around 30% of total expenses) is labor, as you need to pay caregivers around the clock. You might have administrative, dietary, housekeeping, maintenance, accounting, and marketing staff. 

Other costs may include:

  • Food and commercial kitchen equipment
  • Insurance (including property and liability insurance)
  • Benefits for team members
  • Taxes
  • Utilities
  • Medical supplies
  • Security systems or personnel

Complying with regulations

Assisted living facilities need to comply with state-level regulations. Some states may have specific regulations to follow for Medicaid-certified services.  

If, however, you offer skilled nursing care in your facility, you’ll also need to follow federal regulations. 

Residential Facility Types

There are several different residential facility types that you may want to consider when choosing whether to start an assisted living facility. 

Adult family homes/care homes

Adult care homes (ACH) may also be known as “group homes” or “residential care homes.” They’re single-family homes in residential areas that offer care to people with disabilities or seniors. 

Skilled nursing facilities

Skilled nursing facilities are in-patient medical centers specializing in medical care and rehabilitation. The staff includes trained medical professionals who can provide round-the-clock assistance, such as nurses, physical therapists, and speech pathologists. 

Assisted living facilities

Assisted living is an excellent option for people who need daily help with tasks like medications, personal care, or housekeeping, but not at the level that a nursing home provides. Residents often live in individual apartments or rooms, and may share common areas like a cafeteria. 

Adult day care

Adult day care centers typically operate during regular business hours during the week, though some may be open during weekend or evening hours. They’re designed for people who may need help with daily activities and/or social interaction, but who want to continue living in their own home.

Residential hospice

Hospice facilities specialize in caring for patients with terminal illnesses. Residents can take comfort in a home-like living situation where they’ll have access to 24-hour-a-day nursing care and specialty staff familiar with comfort care measures. 

Independent living community

Independent living communities allow residents to live outside of facilities but have access to specific amenities. Retirement communities, for example, offer independent living with access to community pools, planned social activities, and group transportation. Communities may allow residents to purchase or lease properties.

Continuing care communities offer independent living but provide additional services like in-home care, memory care, and skilled nursing home health care. ​​

9 Tips on How to Start an Assisted Living Facility

Thinking about launching your own assisted living facility? Let’s look at 10 steps that will get you started. 

  1. Create a detailed business plan.

A detailed business plan provides focus and helps you assess how you’ll achieve and maintain profitability. Your business plan should answer the following questions:

  • Who is your target audience? 
  • How will you set your rates? 
  • What startup costs do you expect?
  • When can you expect to start earning profit? 
  • What services do you want to offer? 
  • What are your staffing requirements?
  1. Find reliable sources of funding.

Grants and loans are often strong funding options when launching a new assisted living facility. Grants are ideal, as you don’t need to repay them like loans. Federal and state grants may also be an option for launching your business.. 

  1. Establish a legal business entity and register for taxes.

Creating a legal business entity and registering for taxes is essential. Many assisted care facility owners choose a limited liability company (LLC) structure, because it protects them from personal liability, in the event of litigation. 

Once you establish your business entity, you’ll need to register for state and federal taxes. Make sure you obtain an EIN through the IRS website. 

  1. Open a bank account.

Establishing a legal entity and opening a business bank account protects your personal assets and makes tracking your business’s finances more manageable. Most banks, including local credit unions, offer business bank accounts. 

  1. Choose a location and builder.

You typically can’t rent a building and convert it into a long-term care center, so in most cases, you’ll need to build the facility yourself. Get at least three quotes from builders and ask for references, and ideally consider unique amenities that help you stand out. 

Regarding location, consider proximity to services and providers that might appeal to residents, such as: 

  • A fitness center, especially if it offers SilverSneakers discounts or classes
  • Learning environments like community centers or local colleges 
  • Healthcare specialists
  • Popular restaurants, shopping, or activities
  1. Get insurance, licenses, and permits.

The permits, licenses, and insurance that you need will depend on your state, and potentially your county or city. You’ll typically need to file an application to receive a certificate of authority to conduct business, and you’ll need to comply with all state regulations. 

  1. Develop your brand and promote your services.

Your branding includes messaging and visuals like your logo; make sure that these communicate your core values. 

Set up a website so potential residents can learn more about your business, but don’t rely on organic website traffic alone — you’ll need to market your facility, too. You can do that by: 

  1. Use a CRM.

CRM software can help you keep track of every client’s needs, including medication management and emergency contacts. It can also help with managing office needs like staff scheduling and may offer advanced reporting and branded portal options. 

  1. Invest in online training.

Online training is an enormous asset for assisted living facilities. It’s convenient for you and your team, affordable, and allows you to track your team’s progress. Online training may shorten onboarding times and improve training completion rates.

How CareAcademy Can Help

Training is crucial not only for new hires, but also for continuing education throughout a caregiver’s career. It can help your staff grow and is essential to maintaining compliance with many state regulations. 
Ready to start your own assisted living facility? CareAcademy offers online training specifically for assisted living facilities. Learn more about who we are and how we can help today!

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