Adult Day Care Business Overview

Adult day cares provide supervised daytime care and activities for older adults and individuals with disabilities. These facilities operate during standard business hours, typically 8 AM to 5 PM, Monday through Friday.

The facilities maintain staffed environments where adults can socialize, participate in activities, and receive assistance with daily tasks while their family caregivers work or take care of other responsibilities. Many centers also support adults with cognitive impairments, physical limitations, or chronic health conditions, offering varying levels of medical and personal care based on individual needs. Small centers might serve 15-20 clients daily, while larger facilities can accommodate 50 or more clients.

Three business models operate in this industry:

• Social Model: Programs focus on recreational activities, social interaction, and basic assistance with daily tasks. These centers organize group activities, serve meals, and provide transportation services.
• Medical Model: Centers employ medical professionals to deliver health monitoring, medication management, and therapeutic services. These facilities have medical equipment and licensed staff to handle more complex health needs.
• Combined Model: Facilities blend both social and medical services to serve adults with varying needs. These centers maintain medical staff while offering social activities and engagement programs.

Related: Checklist To Start A Business

How Do Adult Day Care Centers Make Money?

Adult day care centers generate income by providing professional care services to older adults and individuals with disabilities. These facilities bill on a per-day or hourly basis, depending on the level of care needed and services provided.

Industry Statistics

Adult day care centers provide supervised care and social activities for elderly and disabled adults during daytime hours. This industry falls under NAICS code 624120 – Services for the Elderly and Persons with Disabilities. Here are some highlights about the industry.

Adult Day Care Industry Size & Growth: The adult day care industry generated $7.5 billion in revenue last year. The industry has shown steady growth, with an average annual increase of 2.1% over the past five years. Growth is expected to continue at a similar rate as the Baby Boomer generation ages, with those over 65 making up about one-fifth of the population (IBISWorld).

Number of Adult Day Care Centers: There are 32,864 adult day care centers operating across the country. The industry remains highly fragmented, with no single provider controlling more than 1% of the market share. Over half of all providers are owner-operators managing single locations (IBISWorld).

Adult Day Care Profit Margin: Adult day care centers operate with a modest industry net profit margin of 6.12% due to high labor costs, which consume over half of revenue. Staff requirements and specialized training contribute to these costs, affecting overall profitability (National Institute of Health)

Costs To Start an Adult Day Care Center

Starting an adult day care center could range from $150,000 to $400,000. The cost varies based on facility size, location, and services offered. A small center serving 15-20 clients might fall at the lower end, while larger facilities or those providing medical care services might reach the higher end of this range.

Here are some of the main costs to consider when starting an adult day care center:

Facility Setup and Modifications: The initial facility costs include the first and last month’s rent, security deposit, and renovations. Building modifications often involve installing wheelchair ramps, accessible bathrooms, safety features, and activity spaces. A commercial space might need extensive renovations to meet state requirements and accessibility standards.

Equipment and Furnishings: Adult day care centers need specialized furniture like medical-grade recliners, adjustable tables, and activity chairs. The space requires medical equipment for basic health monitoring, emergency response systems, and safety devices throughout the facility.

Transportation Fleet: Many centers start with at least one wheelchair-accessible van for client transportation. The vehicle needs special modifications, proper licensing, and safety equipment to meet transportation regulations.

Insurance Coverage: Adult day care facilities require various insurance policies, including liability coverage, workers’ compensation, and vehicle insurance if transportation services are offered. Coverage amounts depend on state requirements and facility size.

These costs represent rough estimates and will vary by location and facility type.

Resources:
Aging Life Care Association
American Health Care Association
National Adult Day Services Association (NADSA)