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As more home care franchise companies begin to embrace company-owned or corporate-owned locations, veterans in the space are analyzing the return on investment of their long-held locations.
While company-owned locations are more recent additions at a number home care agencies, BrightStar Care got its start with a handful of company-owned locations in 2002. In fact, the company didn’t open its first franchise location until 2006.
“Our first three locations ever were company-owned locations,” Shelly Sun, founder and CEO of BrightStar Care, told Home Health Care News. “Having company-owned locations is how we had the ability to document all the policies and procedures for growing a successful home care company that we then franchised.”
Chicago-based BrightStar Care is a home care and medical staffing franchise with more than 350 locations nationwide. The company provides medical and non-medical services to clients in their homes, as well as supplemental care staff to corporate clients.
Currently, BrightStar Care has five company-owned locations and seven under contract.
BrightStar Care returned to form and began adding more company-owned locations about three years ago. Like most of the company’s peers, BrightStar Care has utilized these locations as testing sites for the organization-at large.
“We have our own technology platform, we’ve been investing very heavily – even during COVID – retooling and adding capabilities, as well as doing data studies,” Sun said during a recent HHCN Talks appearance. “In order to continue to do that, we need to have locations with which to roll that out, and work through that transition.”
Sun noted that company-owned locations allow BrightStar Care to accomplish this without causing disruption across the franchise network.
The company has also used these locations to test out different reimbursement models.
“We are very bullish on the business, as it relates to value-based purchasing and being able to negotiate higher rates with third-party payers,” Sun said. “It behooves us to lean in and take risk. Not all franchisees, which is what the majority of our locations are, have the balance sheet or the risk tolerance to do variable rates with value-based purchasing contracts, but we believe that’s where the industry is headed.”
As an organization, BrightStar Care generates approximately $700 million in system-wide sales.
In terms of the financial ROI, BrightStar Care has seen comparable margins between its company-owned locations and franchise locations, according to Sun.
“We have our company-owned locations pay the same royalties, tech fees and marketing fees that our franchisees pay so benchmarking is streamlined,” she said. “We will be more focused on growing revenues and are willing and able to accept lower-margin business, such as Medicare Advantage. We evaluate businesses based upon the dollars rather than the percentages so while margins overall may come down as we expand our Medicare Advantage volume, the overall dollars will go up — both top line and bottom line.”
Moving forward, BrightStar Care has set its sights on buying back franchise locations, and acquiring additional locations, so that the organization can have a larger company-owned footprint. This is slated to take place over the next couple of quarters.
By mid-summer, BrightStar Care has plans to have 12 company-owned locations total, and roughly 20 by the end of 2023.
Learning the ‘hard way’
Senior Helpers has had corporate-owned locations under its belt for about five years.
Though the company uses these locations as testing sites, over time it became important to fine-tune what gets cooked up in those test kitchens, Mari L. Baxter, chief operating officer at Senior Helpers, told HHCN.
“When we first had our corporate stores, it was very easy to throw any new concept, vendor or program there and use them as our test kitchens,” she said. “When I took over management of those corporate stores, I could see that it can be disruptive, just like any location, if we didn’t do a little bit of pre-homework.”
Maryland-based Senior Helpers has a national network of more than 300 franchise locations. The company is owned by Advocate Aurora Enterprises, a subsidiary of Advocate Aurora Health. Currently, the organization has five corporate-owned locations.
For Senior Helpers, pre-homework meant beginning the process earlier and vetting any new project, program, technology or vendor at a high-level before it reached the corporate-owned location testing stage.
“Now, we’ve learned the hard way that we had to stop just putting anything out there,” Baxter said. “We had to make sure it was something that could be replicated and was desired across the system first.”
Over the years, Senior Helpers have tested everything from AI-driven technology to advertising mechanisms at its corporate-owned locations.
Of all of the different test kitchen experiments throughout the year, Senior Helpers deems its Center of Excellence — a four-room apartment that replicates a typical client’s home environment — as the company’s most successful.
“We created a kitchen, a family room, a bathroom, a bedroom and put in stairs — we created this whole environment, so our caregivers could be taught here instead of around a conference table or by watching video,” Baxter said.
These apartments are at the company’s corporate-owned locations and have since been launched nationwide.
The Centers of Excellence have also been a game-changer for retention and recruitment for Senior Helpers.
Overall, Senior Helpers has also found that the ROI between its corporate-owned and franchise locations are similar.
“The ROI should always be similar,” Baxter said. “If it isn’t replicable, then we don’t want to pass any program or concept on to the franchisees. Margins should always be within the same percentages and if they are not, then we would have a hard time selling and implementing the program at the franchise level. Replication is always on the forefront of any program we do — this includes ROI and GPM.”
For now, Senior Helpers has no plans to expand it current corporate-owned footprint.
“If there’s an opportunity that makes sense, we’re certainly not closing that door,” Baxter said. “We are content with what we have. There’s always that possibility, but not at the moment.”
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