Almost every conversation we have about opening a facility begins the same way. Somebody found a house. It has five bedrooms, a flat lot, and a motivated seller. The question is whether it will work. The honest answer is that the house is the last variable, not the first. California decides these projects on assessed need, on a program plan, and on staffing you have to fund every week for years.
01 · Who this suits The strongest candidates already run a home for these residents.
Two groups of California operators are unusually well placed to open a nursing facility for people with developmental disabilities. Both arrive at it the same way. Their residents changed, and the licence did not.
An operator whose habilitative home is ageing
A habilitative home is already a licensed health facility. By statute its residents have intermittent recurring needs for nursing services, and a physician has certified that they do not require continuous skilled nursing care available to them.1 Then people age. Swallowing changes. Seizure patterns change. Mobility drops and skin integrity becomes a daily concern. At some point the residents need skilled nursing care on a recurring basis, which is the nursing category's own description, and the licence on the wall describes somebody else.1
An operator running a Level 3 or Level 4 adult residential facility
Regional centers rate community care facilities on a four-level service scale. Level 3 covers residents with significant deficits in self-help skills, some limitation in physical coordination and mobility, or disruptive and self-injurious behaviour. Level 4 uses the word severe for those same three things. Staffing follows: one direct care staff person for up to three residents at Levels 3, 4A and 4B, tightening to one-to-one at the highest sub-levels.2
Look at what that scale measures. It escalates on behaviour and self-help. It has no rung for skilled nursing. An adult residential facility is a community care facility, and its staff are not licensed nurses. When a resident's need moves from supervision to nursing, no service level answers it. That person has moved out of the community care framework altogether and into the health facility framework.
The demographic pressure behind this is real and it is documented. Between the late 1990s and 2020 the number of Californians with developmental disabilities aged 62 and over grew from roughly 3,500 to nearly 14,000.3 Their share of the served population nearly doubled over the same period. The people your home was built around are getting older, and their medical needs are arriving faster than the licence category can absorb.
An operator in either group already knows the residents, already holds a working relationship with a regional center, and already runs a compliant household. That is most of the risk in a new project, retired before it starts. The gap left to close is nursing, documentation and capital, in that order.
02 · Order of operations Confirm the need with your regional center before you spend anything.
The sequence below is not a suggestion. Two of the steps are preconditions set by the state, and getting them out of order is the most expensive mistake available to you.
- Call the Regional Center Resource Developer. The state says plainly: to find out whether there is a need for the type of facility you want to open, contact the Resource Developer in your area.4 A regional center that does not need the beds will not refer residents to them. Do this before you write an offer on a property.
- Decide the category on paper. Write one page describing who you intend to serve and what nursing they need. That page drives the licence type, the staffing model, the rate band and the building. Everything downstream is a consequence of it.
- Build the facility program plan and send it to DDS. State regulation requires the plan to reach the Department of Developmental Services for review and approval before a licence is issued.4 The submission runs on a set of state forms, and a nurse consultant reviews the medication training, attendant training and any specialised procedures.5
- Apply to CDPH. The Department of Public Health licenses the facility through its Centralized Applications Branch. The application form is HS 200, and the department publishes an initial application packet listing the current documents and fee.6
- Pass the life and safety inspection. CDPH performs it. Fire clearance also governs whether the home may house non-ambulatory residents, so settle that question before you spend on interiors.
- Get certified for Medi-Cal. A licence is granted when the facility meets state requirements to open its doors. Certification is the separate review confirming the facility meets federal standards for participation in Medi-Cal.4 Those are two events, and only the second one produces revenue.
- Complete regional center vendorization. Vendorization verifies you meet the requirements and assigns a vendor number. Regional centers may not refer anybody to you until it is approved. You may submit proof of application for a licence you do not yet hold, so this step can run alongside step 4 rather than after it.7
Buying the property first and asking about need second. The regional center's assessment of need drives every step after it. A home in the wrong catchment area, with no assessed need behind it, is an expensive residence.
03 · Staffing Staffing is the number that decides whether the project works.
Before you model anything else, model this. The state publishes the required direct care hours, and at the small end of the range they look like the table below.8 The habilitative column is there for comparison, because most people reading this are weighing one against the other.9
| Requirement | Nursing | Habilitative |
|---|---|---|
| Average direct care hours per day | 40 | 36 |
| Direct care hours per calendar week | 280 | 252 |
| Minimum licensed hours per day | 8 | not set in the same table |
| Minimum non-licensed hours per day | 22 | not set in the same table |
| Qualified professional, per client per week | 1.75 hrs | 1.75 hrs |
At six residents the qualified professional requirement works out to 10.5 hours a week, which many small homes meet under contract rather than with a full-time hire. Every direct care staff member also needs at least three hours of planned in-service education a month, which is 36 hours a year.8 On the habilitative side, a registered nurse must visit no less than one hour per week per client.9
So the practical distance between the two licences is 28 hours a week of direct care, plus a licensed presence every single day. Price that against your local wage before you look at a single property. It is the number that decides whether the project works, and no amount of good intent moves it.
One requirement you cannot settle from published sources
Be careful with physical plant. The regulation chapter written specifically for this facility type was repealed decades ago, and the chapter that is still live for these homes was written for the habilitative category.10 We could not establish from published sources which physical plant standards CDPH applies to a nursing home today, and we could not find published minimums for square footage per client, occupancy per room, or bathroom ratios. Ask your licensing analyst, in writing, before you design anything or commit to a building.
04 · The money A six-bed home sits at the bottom of its own rate band.
These facilities are paid through Medi-Cal fee-for-service by the Department of Health Care Services, not through regional center purchase of service. Rates are peer-grouped and cost-based, set at the 65th percentile of the peer group's projected costs, and published in a policy letter each year.11
View as table
| Peer group | CY 2024 | CY 2025 | CY 2026 |
|---|---|---|---|
| Nursing, 4 to 6 beds | $394.48 | $424.05 | $451.20 |
| Nursing, 7 to 15 beds | $445.65 | $477.62 | $485.42 |
| Habilitative, 4 to 6 beds | $363.12 | $403.44 | $424.66 |
| Habilitative, 7 to 15 beds | $378.14 | $392.18 | $430.91 |
| General ICF/DD, 1 to 59 beds | $369.73 | $383.31 | $433.48 |
A second stream sits beside the per diem, and it is easy to misread as margin. Licensed facilities must provide day treatment and transportation selected through each resident's program plan. Regional centers pay those providers on your behalf, you retain a 1.5 percent administrative fee, and you remit the balance back to the regional center within 30 days of receiving payment.12 Treat it as a pass-through with a small fee attached, and model your business on the per diem alone.
On the cost side, the published annual licence fee for this facility type in fiscal year 2025-26 is $2,066 per bed, with an additional $900 per bed in Los Angeles County.13 That figure is the annual fee. The initial application amount is not stated in the same table, so confirm it with CDPH rather than budgeting from the annual number.
05 · Questions What operators ask us before they commit.
How long does the whole process take?
No agency publishes a processing timeline, either from application to licence or from licence to Medi-Cal certification. We looked and could not find one. Anyone who quotes you a firm number is estimating, so budget carrying costs for a range rather than a date, and ask your licensing analyst what the current queue looks like when you apply.
Can I convert my habilitative home to a nursing home?
A change of licence category is a licensing action, not an amendment you file yourself. Start with the regional center to confirm need, then ask CDPH Licensing and Certification about the correct application path for your situation. Plan for a fresh program plan review, because the programme content for a nursing facility differs from the habilitative one.
Do I need to own the property?
No rule we found requires ownership, and a lease can work. What matters is that the building passes fire clearance and the life and safety inspection, and that your tenure is secure enough to survive a process with no published timeline. Get landlord cooperation on modifications in writing before you apply.
How many residents do I need to break even?
We will not guess at your numbers, and neither should anyone else. Build the model from three known figures: your local wage for 280 direct care hours a week including eight licensed hours a day, your fixed costs, and the published per diem for your peer group. Then test it at five occupied beds rather than six. Vacancy is the variable that ends small homes.
Is the regional center my payer?
Not for the bed. The per diem is Medi-Cal fee-for-service through the Department of Health Care Services, subject to prior authorisation. The regional center matters for two other things: assessed need and referrals, and the day programme and transportation services purchased on your behalf. You need vendorization for those, and you cannot receive referrals without it.
What is the biggest single mistake you see?
Treating the program plan as paperwork to finish at the end. It is reviewed and approved before a licence is issued, so a weak plan does not delay one step, it delays every step after it. The program plan is also the document your operation will run on for years, which means the effort spent on it is never wasted.
Thinking about a new license, or a change of category?
DirectCare helps California providers work through initial licensing: the regional center conversation, the DDS program plan, policies and procedures, and readiness for the first survey. The first conversation is free and includes an honest answer about whether the project makes sense.
Notes and sources
- Statutory definitions of the ICF/DD categories, including the habilitative standard of residents certified as not requiring availability of continuous skilled nursing care, and the nursing standard of medically fragile residents with intermittent recurring needs for skilled nursing care. California Health and Safety Code section 1250. public.law ↩
- Regional center facility service levels and the consumer characteristics that define them, together with the direct care staffing ratios attached to each level. California Code of Regulations, Title 17, sections 56004 and 56013. Cornell LII ↩
- Consumers served by age group, comparing the second edition of the DDS Consumer Fact Book (December 1998 data) with the eighteenth edition (January 2020 data). Current figures are published as an open dataset by the California Health and Human Services Agency. PDF ↩
- The Department of Developmental Services on determining need through the Regional Center Resource Developer, on program plan approval before the Department of Public Health issues a licence, and on the difference between a licence and Medi-Cal certification. dds.ca.gov ↩
- DDS forms and checklists for facility program plans, including the health facilities program application, the attendant training program form, the specialized procedures cover sheet, and the separate program plan and medication training checklists reviewed by a DDS nurse consultant. dds.ca.gov ↩
- The Department of Public Health Licensing and Certification Program handles the licence through its Centralized Applications Branch. The application form is HS 200, and the department publishes an initial application packet for this facility type. cdph.ca.gov ↩
- Vendorization: the process that verifies an applicant meets the requirements and assigns a vendor number, the documents an applicant must supply, the allowance to submit proof of application for a licence not yet issued, and the bar on regional center referrals before approval. California Code of Regulations, Title 17, sections 54302 and 54310. Cornell LII ↩
- Required direct care staff hours for nursing facilities of this type, the split between licensed and non-licensed hours, the qualified professional requirement of 1.75 hours per client per week, and the monthly in-service education requirement. PDF ↩
- The habilitative comparison figures, including weekly direct care hours and the requirement for a registered nurse to visit no less than one hour per week per client. California Code of Regulations, Title 22, sections 76800 to 76962. PDF ↩
- Title 22, Division 5, Chapter 4.5, the chapter written for the nursing category at sections 73800 to 73956, is marked repealed by operation of Government Code section 11346.1(g). The live chapter at sections 76800 to 76962 is written for the habilitative category. Confirm with CDPH Licensing and Certification which standards apply today. Cornell LII ↩
- Medi-Cal per diem rates by peer group for calendar years 2024 to 2026, and the rate policy letter setting rates at the 65th percentile of the peer group's projected costs. dhcs.ca.gov ↩
- Day treatment and transportation selected through the resident's program plan, paid by regional centers on the facility's behalf, with the facility retaining a 1.5 percent administrative fee and remitting to the regional center within 30 days. California Welfare and Institutions Code section 14132.925, and the DDS frequently asked questions on the state plan amendment. public.law ↩
- Annual licence fee table for fiscal year 2025-26, listing the per-bed fee for this facility type and the Los Angeles County supplemental fee. The table states annual fees; confirm the initial application amount with CDPH. PDF ↩
Figures and rules were current when this article was published. Fees, rates and application requirements change, and one item below is genuinely unsettled. Confirm every number with CDPH Licensing and Certification, DDS and your regional center before you commit money to a project.