2010 HME Industry Salary & Benefits Survey: Ouch!

HomeCare survey shows reimbursement cuts hurt HME staffing and benefit plans.

By Gail Walker

According to the home medical equipment providers participating in HomeCare‘s 2010 Salary & Benefits Survey, there simply isn’t a Band-Aid big enough to fix the HME industry’s current boo-boos.

These are not surface wounds, either, they said, but go straight to the heart of their businesses, with a number of providers questioning the future of the HME industry and their part in it.

Competitive bidding tops the list of life-altering issues that are complicating providers’ plans. But compounding its Borg-like implementation is the growing tidal wave of audits, devastating to those who have been placed on 100 percent prepayment review (meaning that all of their claims must be reviewed before they are paid). In that case, Medicare cash flow dries up for as long as 90 days — or much longer.

Financing has virtually dried up as well, with even titan manufacturer Invacare recently warning it will extend credit only to HME companies that have viable strategies to survive. And there’s the blow that keeps on giving as providers continue to deal with effects of the 36-month oxygen cap while bracing for an impending elimination of the first-month purchase option for power wheelchairs.

Pile on a new set of supplier standards atop a heap of changing policies and regulations, and it’s easy to understand why providers said they were having difficulty figuring out exactly how to deal with it all.

“There’s just too much being thrown at DME,” commented one overwhelmed provider. “It makes it too hard to plan.”

Adding to the turmoil is uncertainty about how health care reform plays in. Only 4 percent of the survey respondents believe that, as employers, they’ll come out better under health reform, while 56 percent think they’ll come out worse. Nearly two out of three providers said they don’t understand at all or only “sort of” get how health care reform will affect their company’s health benefits program.

Over half (57 percent) are unsure if the new health reform law’s available tax credits would inhibit them from adding employees. (Small businesses with fewer than 25 full-time employees making less than $50,000 may be eligible for tax cre its to help cover the cost of insurance starting this year.) More than a quarter (26 percent) said they’re not sure whether they’re eligible for the tax credits or not.

One point that is clear: If things don’t go their way, HME companies will no longer shy away from right-sizing, or just plain downsizing. Providers said they won’t hesitate to cut back — on employees, on salaries, on benefits, on bonuses. Thirty-five percent of this year’s survey group said if industry conditions don’t improve — and soon — they will lay off staff; 37 percent will reduce or freeze salaries; 31 percent will reduce benefits; and 28 percent will reduce or eliminate bonuses.

Almost a quarter (23 percent) said they would begin these actions in the remainder of 2010, while 42 percent said they would act on these measures in 2011.

In spite of the strangling market squeeze, however, just under half of the 211 providers in the survey group said they are not anticipating a revenue decline next year, and the majority are expecting no staffing changes. That may be because they’ll be requiring more of their sales staff. Fifty-one percent said they would set sales thresholds/quotas higher in 2011, with the average increase at 20 percent.

Over the past 12 months, in fact, 52 percent of providers said they have added staff, with most of the new jobs in intake (39 percent), delivery (38 percent) and sales (37 percent). A quarter (27 percent) also said they have created new positions/job functions, the most frequently mentioned being personnel involved in CPAP resupply initiatives.

Raises are another story, however. While 52 percent of these HME companies handed them out in the past year at an average 5 percent bump, only 30 percent said they intend to keep up the practice in 2011.

The ongoing unease about providers’ worsening predicament is showing up in company benefits, too. Fewer providers said they are offering their employees paid vacations, down from 87 percent in 2009 to 81 percent, with a slight move toward more holidays and personal time. In a sign of the times, more companies are providing cell phones, up from 65 percent in 2009 to 72 percent, and Blackberries/PDAs, up from 22 to 29 percent.

When it comes to health benefits, providers said in addition to shopping for lower-priced insurance plans, next year they will ask their employees to pay a greater share of the cost through higher deductibles and co-pays.

Looking to 2011 and beyond, more than 130 providers sent in individual comments about competitive bidding, most lamenting the destructive program and its hold on their future.

“My business is high-volume Medicare,” wrote one. “Where Medicare goes, goes all insurance, so it is probable that I will exit HME completely within 18-24 months.”

“No one can stay in business with these new bids,” emphasized another. “Even if they were able to double their volume, do they have the capital needed to support the growth? I certainly do not. If you’re lucky and make 5 percent before tax, what do you think is going to happen to your profit with an average 20 percent reduction in your margin? What school of economics did these guys go to?”

A third said competitive bidding “will force me to downsize my company by 40 percent to stay open.” That was one of the more optimistic comments.

“Things are looking pretty abysmal,” summed up one respondent. “We don’t have high hopes.”

View the 2010 Salary & Benefits Survey results on the next few pages.

Survey Fast Stats

Staffing, Salaries and Benefits

  • Twenty-six percent of respondents have laid off staff in the past year, and another 19 percent have reduced the number of hours worked by some employees.
  • Twenty-nine percent have frozen salaries in the past year, and another 10 percent have reduced salaries. Sixteen percent said they had previously frozen salaries, and the freeze remains in place.
  • Over the past year, more than half (52 percent) of surveyed companies gave raises to some staff. In companies that gave raises, an average 64 percent of employees got them.
  • The average raise given was 5 percent.
  • About one-third (30 percent) plan on giving raises in 2011, while another 30 percent will not. Thirty-seven percent have not yet decided their company’s raise status.
  • More than half (54 percent) pay bonuses. Of those, 57 percent plan to continue the practice.
  • Forty-six percent of respondents have hired to fill open positions, while 34 percent have left an open position vacant.
  • If industry conditions don’t improve, 37 percent plan to reduce or freeze salaries, 35 percent plan layoffs and 31 percent plan to reduce benefits.
  • For the HME industry on average, 24% of company revenue goes to salaries and wages, and 4% goes to employee benefits. (Source: Weeks Group)

Health Care Reform

  • Nearly two out of three respondents (63 percent) do not fully understand how health care reform will affect their company’s health benefits program.
  • A majority of providers (56 percent) think they will come out worse due to health care reform, and another 30 percent are not sure what the effect will be on their business.
  • Over half (57 percent) are unsure if their companies are eligible for the small business tax credit under health care reform or whether the employee limit might keep them from adding staff.

Sales Employees

  • On average, 87 percent of sales staff is employed full-time.
  • Forty-eight percent of respondents pay their sales staff straight salary, while 42 percent pay on a salary-plus-commission basis. Ninety percent of businesses paying commission base it on sales.
  • A majority of companies paying sales commission have no plans to alter their commission structure (79 percent).
  • About half (51 percent) of respondents will set sales thresholds/quotas higher in 2011 by an average 20 percent.

Health Care Reform

Do you understand how health care reform will affect your employee health benefits program?
Yes 35.1%
Sort of 38.9%
No 24.2%
No Answer 1.8%
As an employer, do you think you’ll come out better or worse under health care reform?
Better 4.3%
Worse 56.4%
No difference 7.1%
I’m not sure 30.3%
No Answer 1.9%
Would eligibility for the small business tax credit available under health care reform keep you from adding employees?
Yes 12.8%
No 28.0%
I’m not sure 30.8%
I’m not sure if I’m eligible for the tax credit 26.5%
No Answer 1.9%

Benefits & Bonuses

Do you pay bonuses?
Yes 54.0%
Only when we’re flush 15.6%
No 28.4%
No Answer 2.0%
Do you pay bonuses to:*
All staff 52.6%
Sales personnel 31.6%
Managers 30.7%
Billing/Collections personnel 21.1%
Intake/CSR 14.0%
Delivery personnel 12.3%
Clinicians/Therapists 7.9%
*Companies that pay a bonus
Do you plan to continue bonuses:*
Yes 57.0%
If conditions don’t improve, we may drop bonuses 40.4%
No 1.8%
No Answer 0.8%
*Companies that pay a bonus
Do you provide the following common employee benefits?*
Holidays, including floater(s) 81.5%
Vacation 81.0%
Medical insurance 75.4%
Cell phone 71.6%
Sick leave 66.8%
Personal time 52.6%
401(k) plan 52.1%
Bonuses 47.4%
Life insurance 43.6%
Dental insurance 42.7%
Trade show/convention/seminar expenses 39.3%
Flexible work schedule 38.4%
Auto or auto allowance 37.4%
Blackberry/PDA 28.9%
Vision insurance 28.4%
Long-term disability plan 26.1%
Tuition reimbursement plan 25.6%
Short-term disability plan 19.9%
Association memberships 18.0%
Pension plan 12.8%
Profit-sharing plan 10.9%
*Either fully or partially paid by company

Raises & Reductions

Over the past 12 months, has your company:
Given raises to any employee(s) 52.1%
Frozen salaries 29.4%
Reduced the salary of any employee(s) 9.5%
We had previously frozen salaries and the freeze remains in place 16.1%

For companies giving raises:

  • 5% was the average raise.
  • On average, 64% of employees received raises.

For companies that reduced salaries:

  • 15% was the average reduction.
  • On average, 32% of employees received pay cuts.
Do you plan to give raises in 2011?
Yes 30.3%
Have not yet decided 36.5%
No 17.5%
No raises, and we may resort to a salary freeze/reduction 12.8%
No Answer 2.9%

Employees

Have you laid off staff in the past 12 months?
Yes 26.1%
No 52.1%
No, but we reduced the hours of some employees 19.4%
No Answer 2.4%
Have you added staff in the past 12 months?
Yes 51.7%
No 44.1%
No Answer 4.2%
How will your staffing change in 2011?
  INCREASE DECREASE NO CHANGE
Billings/Collections 19.4% 10.0% 66.4%
CSRs/Intake 18.5% 6.2% 65.4%
Delivery Personnel 19.0% 9.5% 65.4%
Outside Sales 26.5% 9.0% 55.0%
If you are anticipating a revenue decline in the coming year, will you:
Add sales/marketing staff 10.9%
Drop sales/marketing staff 16.1%
Make other changes to sales staff 16.6%
Do not anticipate a revenue decline 46.9%
Will you set sales thresholds/quotas higher in 2011?
Yes 50.7%
No 42.2%
No Answer 7.1%
Do you employ specialized retail sales staff?
Yes 31.8%
No 50.7%
Am not involved in retail HME 15.6%
No Answer 1.9%
If employees have left in the past year, have you:
Hired to fill the open position 45.5%
Left the position vacant 33.6%
No employees have left in the past year 19.0%
Have you created any new job functions/positions in the past year?*
Yes 26.5%
No 71.6%
No Answer 1.9%
*The new job function mentions most frequently was for CPAP resupply.
How will your staffing change in 2011?
ANNUAL REVENUE AVERAGE NO.
OF EMPLOYEES
Under $1 million 7
$1 million to $3.5 million 22
More than $3.5 million 56

Annual & Hourly Salaries

Average Annual Salaries by Job Title*
JOB TITLE 2010 2009
MEDIAN ($) MEAN ($) MEDIAN ($) MEAN ($)
Accounts receivable manager 45,000 46,893 45,000 47,907
Billing clerk 32,800 32,785 30,000 30,158
Bookkeeper/Asst. controller** 44,000 42,196 35,000 45,788
CEO/President 87,500 113,072 120,000 129,482
Clerical/Administrative support 30,000 33,774 25,000 26,437
Compliance officer 45,500 48,955 50,000 56,233
Controller/VP finance 73,500 83,700 80,000 98,742
Customer service rep 30,000 30,550 30,000 28,208
Customer Svc. Mgr./Supervisor 41,000 44,158 42,000 41,160
Delivery technician 28,000 27,255 30,000 29,368
Information technology** 40,000 46,125 54,000 53,000
Nurse (RN/LPN)** 60,000 56,115 52,500 51,073
Operations manager 50,000 53,082 40,000 47,275
Outside sales/Marketing rep 44,650 48,046 50,000 50,121
Rehab technician** 48,000 47,333 50,000 54,183
Respiratory therapist** 49,000 50,757 45,000 47,284
Sales manager/VP sales 70,000 73,512 70,000 76,226
Service/Repair personnel** 35,000 33,714 30,000 32,626
Store/Branch manager 50,000 56,722 49,000 51,548
Warehouse manager 35,000 38,125 41,000 41,359
*The mean, or average, figures presented refer to the statistical mean, which is defined as “the value obtained by adding all the numeric answers given for a particular question and then dividing by the total number of respondents answering the question.” The median is defined as the value that is exactly in the middle of all answers, or the point where half of the responses lie above and half of the responses lie below the value.

**Use these figures with caution, as fewer than 30 companies reported.
Average Hourly Wage by Job Title*
JOB TITLE 2010 2009
MEDIAN ($) MEAN ($) MEDIAN ($) MEAN ($)
Accounts receivable manager 17.00 17.45 16.50 17.18
Billing clerk 13.00 13.77 14.00 14.01
Bookkeeper/Asst. controller 15.00 18.09 16.00 17.83
Clerical/Administrative support 12.00 13.65 12.00 13.25
Customer service rep 13.00 13.03 12.60 13.24
Customer Svc. Mgr./Supervisor 16.50 17.39 17.00 16.18
Delivery technician 14.00 13.84 13.00 13.22
Dispatcher** 15.00 14.85 13.00 13.84
Nurse (RN/LPN)** 22.00 23.94 20.50 25.53
Operations manager 17.00 17.24 16.00 16.39
Respiratory therapist 23.50 24.55 22.00 23.16
Service/Repair personnel 15.00 15.33 14.00 13.54
Store/Branch manager** 20.00 22.78 18.00 19.08
Warehouse manager 15.00 15.82 16.00 15.74
*The mean, or average, figures presented refer to the statistical mean, which is defined as “the value obtained by adding all the numeric answers given for a particular question and then dividing by the total number of respondents answering the question.” The median is defined as the value that is exactly in the middle of all answers, or the point where half of the responses lie above and half of the responses lie below the value.

**Use these figures with caution, as fewer than 30 companies reported.

The Future

If industry conditions don’t improve, do you plan to:
Reduce or freeze salaries 36.5%
Lay off staff 35.1%
Reduce benefits 31.3%
Reduce or eliminate bonuses 28.4%
Reduce or elimininate commissions 14.7%
Exit the HME business 10.9%
Reduce the number of locations 10.0%
Exit power mobility 8.1%
Exit oxygen 7.1%
Take other action regarding employees 4.3%
Unsure 28.9%
When will you take these actions?
In 2011 42.1%
Before Round 2 of competitive bidding is implemented 33.1%
If/when CMS extends the competitive bid rates to other areas 31.0%
In the remainder of 2010 22.8%

About This Survey

Data for HomeCare’s Salary & Benefits Survey were collected July 22 through Aug. 11, 2010. Of 211 qualified responses, 89 percent are from home medical equipment providers with other responses from pharmacies/chain drug stores with HME and specialty segments such as infusion or pediatrics.

Fifty-five percent of respondents operate one location, while 33 percent operate two to four locations and 12 percent have five or more locations.

Twenty-seven percent reported annual revenue under $1 million, 37 percent have revenue between $1 million and $3.5 million and 36 percent have revenue of more than $3.5 million. Six percent reported annual revenue of more than $25 million.

Figures presented are national means and medians across companies of all sizes. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses. Survey methodology conforms to accepted marketing research methods, practices and procedures.

Author

OUR DIGITAL PARTNERS

RELATED ARTICLES