Why do Referral Sources matter to Home Care Agencies?

The simple answer to the question is: Financial Success for my agency. Referral sources are a critical part of building and maintaining a healthy home care business because that’s where new clients will come from.

According to the annual Private Duty Benchmarking Study (jointly sponsored by Home Care Pulse and the Home Care Association of America), the top strategic priority for Home Care agencies was ‘Increasing the number of clients’. To grow your business, you must continually bring on new clients to offset the effects of attrition, legislation, competition and economic downturns. Here are a few great tips!

It’s about Relationships

Two people shaking hands before a meeting

In the same study, the top 5 Referral Sources* for Private Duty Home Care Agencies were:

  1. Clients/Families (Existing & Former)
  2. Hospital discharge planners
  3. Other referral sources
  4. Medicare Certified Agencies
  5. Hospices

The top 5 Consumer Marketing Sources* were:

  1. Search Engines
  2. Corporate Web Leads (i.e., franchisors website)
  3. Newspaper ads
  4. Consumer events – speaking at churches, senior centers, etc.
  5. Senior directories ads

* In the study, the top 10 are given, along with a long list of additional sources. I just picked the top 5 for illustration purposes.

All of these top referral sources are about relationships (yes, even the Search Engines!).

Where advertising is an outgoing activity, referrals are inbound, and only happen when there’s something (usually someone) external directing clients your way. Even for the Search Engine source, as many as half of the searches may come from people who have been referred by actual people: they were just using the search engine to find your information on line.

Reputation Capital

The most important component is Trust. People won’t refer potential clients to you unless they can trust that you will take good care of them. I refer to this as ‘Reputation Capital’. Every time you recommend someone, you are spending some Reputation Capital. If you refer someone and it doesn’t work out, the value of your own reputation goes down a bit. If they come through, the value of both parties’ reputation capital goes up. The people you want as referral sources have a sense of this, even if it’s unconscious. If they recommend you and you don’t come through, their own reputation will be damaged, and you’ll never get a referral from them again. For them to stick their necks out, they have to trust you.


You must establish trust with people in your community that you will provide great care. One great way to build and enhance this trust is through volunteering opportunities. Host a blood drive, collect clothes for the needy, volunteer at a soup kitchen: whatever you are called to do that gets you visibly out in the community and interacting in a caring, compassionate way. In my experience, the agency owners who really become active in their communities are the most successful.

Exceptional Care

Of course, the main ingredient is actually providing exceptional care to your clients and caregivers. We know the old adage that ‘the customer is always right’ which means that you have to do all sorts of things that add to and preserve the strength of your reputation. If the mission of your agency has the above as it basis you will find the that referrals will flow in on a regular basis. Then it is just a matter of taking the next set of steps and tools to build your referral sources. As long as it doesn’t break your back, bending over backwards is great for your flexibility!

If you’re interested in knowing more about the benchmarking study referenced in this article, click the button below.

I hope you found this article interesting & useful. I’d love to hear your thoughts about it, so feel free to leave comments.

Next time, I’ll talk about some of the operations aspects of managing your referral sources.


Home Care Pulse provides a powerful way to measure, improve and leverage Client and Caregiver satisfaction. They perform regular interviews with Clients’ family members and Caregivers to give you a candid, clear view of how your agency is doing in different areas. This allows you to continually improve your services and market yourself as an agency that really cares about the quality of care. The connection with Rosemark means you don’t have to manage two separate databases.