How to Start a Home Health Contracting Business

home health contracting

Ever considered working in home health? What about starting a home health contracting business? In this post I’ll explain how this business model works, and why it may be a great move for your PT career.

Some of the most satisfying work I have done as a physical therapist has been in the home health setting. In addition to the flexibility in my schedule and the one-on-one treatments, I really enjoy being able to help someone in their own home as they recover. There is just something so practical about helping people in their own environment as they work on exercises and mobility training in the exact bed or chair that they use throughout the day.  

Working in home health as a therapist means interacting with many different people in unique situations all over town. You may start your day helping a patient recover from a total knee replacement, followed by an older patient who cannot leave their home but still needs help with strengthening and balance training after having fallen a few times in the past month.

If you are a therapist with very little (or no) experience in home health yet are considering this line of work for its flexible hours or increase in pay, you should really give it a try. Check out this article about Home Health Therapy, where I go into even more detail about the work. You can even pick up my Home Health Documentation templates to get a jumpstart in writing efficient and defensible Home Health Documentation.

Starting a Home Health Company

The demand for therapy is ever-increasing (especially in home health), making the opportunity to start your own home health therapy company a lot more attainable than you may think.

By working as a home health therapy contractor, you can build your own practice by contracting with home health agencies that are in desperate need of therapists to treat their patients. Many home health agencies are constantly looking to hire therapists, but with competing incentives and turnaround, it can be challenging for them to retain therapists.

That’s where you step in! As a contractor, you—and any other PTs or PTAs you employ—can perform the therapy visits for a set fee that you bill the home health agency. As a home health contractor, you do not have to worry about billing Medicare or any other insurance. You’re paid directly by the home health agency based on the fees you negotiate ahead of time. The agency is responsible for billing Medicare.

Therapy Documentation as a Home Health Contractor

As a contractor, you’re responsible both for providing all the treatment and for writing notes to support the skilled therapy you performed during each treatment. From evaluations to daily notes, progress or discharge notes, you will document your treatment and send the notes to the therapy agency so they have a record of treatment from a licensed therapist or therapist assistant. 

The beauty of this model is that it allows you to control so many aspects of the work without the headaches of billing insurance or running an entire home health agency. Your overhead costs will be extremely low, minimizing the risks involved in starting your own home health contractor company. 

This model also means that you won’t be tied to using a particular Home Health Documentation software. Many home health agencies use software that is difficult and burdensome for the therapist. But as a therapy contractor, you can choose a better software that’s user-friendly and efficient (I recommend Home Health Soft—see my overview here). 

Contractors often work with multiple home health agencies, some of which use different documentation software. But that won’t be an issue for you, since you and your team control the note-writing and can simply send a copy to the agency. This streamlines the work and keeps the flow of new patients coming in as you continue to expand and include more home health agencies. 

Contracting with Home Health Agencies

When you work as a therapist for a single home health agency, you’re entirely dependent on that one agency to provide enough patients for a full schedule. If that agency cannot supply the volume of patients you want to see, you’ll be the one eating the cost of a low census.

That’s why it’s advantageous to work with multiple agencies. By casting wide your contracting net, you’ll accrue multiple sources of incoming patients, keeping you or your therapists as busy as you want to be. 

Part therapist, part business owner, you’ll be able to build your own schedule while receiving additional revenue from therapists or PTAs you hire to work with you. For example, you might bring on a PTA to provide daily treatments at a rate of $65 per treatment. As the contracting therapist, you’ll bill the home health agency $85 for the treatment. The difference of $20 goes to you, the owner, helping you build and scale your practice. Multiply this by 20–25 visits a week per therapist/assistant, and you can expect to earn an additional $20,000 to $25,000 annually per therapist you employ. 

The beauty of this model is that there is no overhead, you can start small (e.g., as a solo therapist), and you’ll have the opportunity to grow your business so that your other therapists can enjoy home health therapy even more. Plus, the additional therapists you bring onto your team can be considered independent contractors, which means you won’t be required to provide them health insurance or other benefits. At the end of the year, you’ll send them a 1099 (not a W-2), and they’ll be responsible for paying quarterly taxes—just as you are responsible to pay your quarterly taxes as a contractor/business owner. 

Questions and Answers about Home Health Therapy Contracting

How does a home health contracting business work?

  1. You contract with home health agencies to provide therapy services to patients.
  2. The home health agency sends you a patient.
  3. You accept the request and schedule the evaluation and treatments with the patient.
  4. You submit the therapy documentation and treatment summary to the agency with a bill of services.
  5. The agency pays you and deals with Medicare (you don’t have to!).

    As a contractor, you can bring on additional therapists and pay them a flat rate for visits. As the owner of the contracting business, you may receive $100 from the agency but pay the therapist $80 for the visit. You keep the difference, which helps grow your contracting business. 

What are the steps to getting started with a Home Health contracting business? 

You’ll need to establish a contractual agreement between the home health agency and your company. Download the sample home health therapy agreements for contractors and modify them to fit your needs.

Do I need to put any money down to start this business?

There is very little overhead in starting a home health contracting business. You need to have a reliable car and a computer or tablet to type your notes. The largest cost you’ll encounter will likely be the documentation software. But you’ll find a discount to the software I recommend when you visit

Do I need to hire employees right away? 

No; you can be the sole provider as you get started. You are in control of how many patients you accept from each agency. As you bring on more help, you can accept more patients from different agencies to help fill additional schedules for contractors you hire. These contractors are considered 1099 employees, so you are not required to provide benefits or pay taxes on their behalf. 

What kind of business do I need to get started? 

The recommended business setup for a home health contracting company is to establish an LLC (Limited Liability Company). You could even establish an S-Corp, depending on the size of your operation. But for most contractors, an LLC is the business entity that makes the most sense. 

Do I have to provide benefits for therapists I hire? 

No, because they are contracted labor and receive a 1099 from you at the end of the year. 

Do I need to deal with insurance companies? 

No; you simply submit an invoice to the home health agency and receive payment based on your negotiated rate. The agency submits the claim to Medicare or other insurance companies. You don’t have to worry about this headache!

Do I need liability insurance? 

Yes, you need to have liability insurance and require that contracted therapists have their own policies as well. The average cost for physical therapy liability insurance is less than $200 per year. It’s well worth the investment for peace of mind and insurance coverage.  

Do I need my own EMR for documentation?  

You can ask a home health agency to use their software, but it’s best to have your own software. That way you can manage your notes and avoid clunky home health documentation systems. I recommend Home Health Soft for your documentation software. It’s intuitive, easy to use, and simple to send documentation reports to your agency. You can even submit invoices directly from the software, simplifying your business all the more!

How much money can I make as a home health contractor?  

As a treating therapist, you can make as much as you are able to work! If you see 25 patients a week and make $80 per visit, you can expect to earn $2,000 a week. With a PTA, you can earn about $20,000 more annually by filling the PTA’s schedule with 20–25 visits a week. You earn this by the spread or difference you receive from the negotiated rate paid by the agency and the rate you pay your PTA. As your business grows and you bring on additional therapists and assistants, so does your income.

How do I reach out to home health agencies? 

One of the best ways to reach out to home health agencies is to inquire about their job postings online. You can also contact the therapy director or director of nursing. Let them know you are a contractor in the area and ready to accept patients on a consistent basis. Provide them a copy of your home health agency contract for review and start seeing patients!

What do I need to get started?

You’ll need to set up your business, obtain an EIN (employer identification number), create a business bank account, and establish contact channels for your business (email, website, phone, address, etc.). 

You can download the quickstart guide below for creating your own home health contracting business here.

Home Health Soft: Documentation System for Home Health Contractors 

When you’re ready to streamline your patient treatments, note-writing and invoicing, use the promo code PTProgress and sign up for Home Health Soft, the home health contracting documentation software I recommend. It’s extremely straightforward, easy to use, and simplifies your work so you can focus on helping your patients and growing your business. Plus, you’ll get one month free when you use the promo code “PTProgress.”

Tim Fraticelli, DPT Physical Therapist

Tim Fraticelli is a Physical Therapist, Certified Financial Planner™ and founder of He loves to teach PTs and OTs ways to save time and money in and out of the clinic, especially when it comes to documentation or continuing education. Follow him on YouTube for weekly videos on ways to improve your financial health.