This just can’t work.
The children are unlikely to be happy being sent somewhere unfamiliar, especially when ill. Much less so given that they will be quarantined for much of the time in a bedroom alone.
You cannot possibly prevent the spread of anything infectious because you will be moving between rooms yourself, and you and your child will therefore possibly carry those infectious conditions not only between the children present but from previous minded children to future children. Many conditions are airborne, or require rooms/bedding/toys to be sterilised which is hugely time consuming, some can pass through the food chain and could pose problems for environmental health if you propose proving any food/drink from a kitchen where there are sick children.
Ofsted won’t like it as you’ve a duty to prevent the spread of infection, so your registration would be short lived - at the very least you’re likely to be handed a poor grading which would put most parents off, and repeated poor gradings/flaunting rules = removal of registration which could affect your ability to work with children in the future.
Your public liability insurer will only cover you if you are following the requirements laid down by the statutory framework - which you won’t be. Pli cover is a requirement of ofsted registration. I doubt that realistically priced insurance exists for a medically unqualified childcare wanting to specialise in looking after children who are too sick or infectious to attend normal childcare settings.
It’s tough to gauge just how sick a child actually is. At what point would you refuse care yourself? When a child’s temperature reaches a certain level? When they are crying or distressed? How do you gauge when the child needs qualified medical care, and balance the needs of the parent and your business with the child’s?
Realistically, it’s not a huge money spinner either; in my setting children tend to miss, on average, 2/3 days per year due to sickness if attending full time, and probably only a small proportion of parents are so unable to cover sickness that they would consider using this sort of service - most would either juggle cover themselves, use family or use a babysitting/nanny service of some sort so that the child can remain at home in comfort.
Most importantly, what you’re proposing isn’t even remotely in the best interests of the child.