Home Modification Growing Pains

The home modification industry is about to be hit with a wave of new business as baby boomers look to age in place, but the promise of plenty is not without risk. Scalability, hiring, maintaining a workforce and diversifying revenue streams are issues providers should focus on bolstering in their business now so they aren’t sinking in a few years.

Jim Greatorex, vice president of VGM Live at Home, and Cindi Petito, VGM’s director of clinical networks, recently presented results from Live at Home’s 2024 industry survey and discussed what the home access industry should focus on as it moves forward.

“One thing we learned is that a lot of our membership that answered the survey, they’re not diversified,” Greatorex said. “They get all their business from one sector of the market.”

This diversification is something Greatorex and VGM Live at Home want to focus on changing in the new year.

“I think it’s risky to not be diversified,” he said. “No matter what revenue stream you have, we do think diversity is important. And when we see folks who have a lot of eggs in one basket, it’s not that you’re not stable … But certainly, the risk is a little higher.”

Some of these risks include state waivers changing their payment source in the state—which can impact business—or losing a business relationship that sent referrals their way.

“We do want you to also be protected from an unforeseen incident that you may not have done anything wrong (in) or anything else, (but) you could be shut out of a revenue stream,” he said.

Greatorex also repeated a word of advice from Mike Mallaro, the previous CEO of VGM.

“He would always tell our membership, no matter what community you were in, that you should look to diversify your revenue and bring in 5% to 10% of different revenue every year,” Greatorex said. “Whether it’s a different product category or a different payer screen or something along that line, I think that is a really good practice.”

The Importance of Scale

Another goal VGM Live at Home intends to focus on this year is scalability, especially with the rising age of the population. In 2025, the oldest baby boomer will turn 80, and by 2030, the entire generation will be 65 or older. Greatorex emphasized this demographic will soon be the customer, if it isn’t already, and could bring a lot of needs that will have to be met on a level many aren’t prepared for.

Greatorex theorized that, as the aging population grows and the medical community recognizes the accessible home modification industry, the industry might find its business model could expand to include business-to-referral work. That is, the medical community will look to the industry to help reduce service demands needed in hospitals by taking preventative measures in the home.

“We need to prepare as an industry as to how we’re going to scale our businesses so that we can handle the expected needs, especially in the senior market,” Greatorex said. “That’s where we go. If you look at the revenue streams, we can tell you that’s the one that’s going to grow the most is going to be the private pay (sector).”

Staff Development & More

Part of scalability is having the workforce to complete the influx of modification projects, which Greatorex said is one of the biggest challenges the industry will face. VGM Live at Home is looking to bolster the workforce through its upcoming apprenticeship program for field technicians. The program will provide education for workers and aid in retention for home modification companies.

The program is two and a half years long and has a list of “classroom” work that companies can offer to the apprentices in order to provide the necessary skills and knowledge to complete carpentry work required for the home modification space. The program also offers an administration component, so the work apprentices are doing can be tracked, as well as further mentored.

“These are the guys who execute the work, and right now, we don’t really have good career paths for them,” Greatorex said. “It’s a comprehensive program, and when you’re looking to recruit and retain this type of a worker, it should give you an upper hand. People are definitely attracted to people who want to train them, and they also tend to stay with their company that trained them for average of five years.”

The accessible home modifications and independent living solutions markets are relatively new in comparison to other homecare sectors. As a result, Greatorex said growing pains are expected and not something to be afraid of.

“We’re in this real evolution phase of the industry where we need, as business leaders in this industry, to maybe step up a little bit,” he said.

VGM Live at Home 2024 Industry Survey Result

VGM Live at Home surveyed members in 2024 and received 45 responses. Below are highlights.

Project Types

27,000 projects 

• Stairlifts: 11%
• Grab bars: 57%
• Ramps: 14%
• Bathroom remodels: 6%
• Overhead lifts: 3%
• Prefer not the answer: 9%

Project Goals

Percentage of respondents who said they would like to have more of their projects fall into these categories:

• 23% said they would like to have a higher percentage of their projects be stairlifts
• 7% said more elevator projects
• 25% said more ramp projects
• 23% said more bathroom remodel projects
• 11% said overhead lift projects
• 8% more grab bar projects
• 3% Preferred not to answer 

Within Payer Mix

Percentage of respondents who said more than 75% of their payer mix comes from the following categories:

• 23% of respondents have greater than 75% of payer mix coming from “Private Pay”
• 18% of respondents have greater than 75% of payer mix coming from “State Waiver”
• 2% of respondents have greater than 75% of payer mix coming from “Veterans Affairs”
• 2% of respondents have greater than 75% of payer mix coming from “Other”
• Illustrates payer mix categories that companies are heavily reliant on

Payer Mix

• Private Pay: 33%
• State Waiver: 36%
• Workers’ Compensation: 3%
• Veterans Affairs: 22%
• Other: 6%

Marketing

“What percentage of your business-to-consumer marketing dollars do you spend on the following channels?” 

• Web: 37%
• Referral: 28%
• Trade Shows: 6%
• Print Media: 7%
• TV/Radio: 11%
• Other: 11%

Showrooms

Out of the 45 respondents, 23 had showrooms and 22 didn’t.  

The companies with a showroom worked on larger projects and spent more on direct to direct-to-consumer marketing. 
17 out of the 22 (77%) who didn’t have a showroom said they would like to add one in the next three years.

Revenue

Revenue per project across the top 10 earners ranged from $1,400-$30,000+ and averaged $9,200. For the entire scope of the project survey for all members responding, revenue per project was $4,600.

• 69% of respondents would like to add in-house installation technicians.
• Companies with in-house installation technicians had at least $40,000 more revenue per employee on average than those without them ($176,000/employee vs. $135,000).
• 62% of respondents would like to add one or more sales representatives to their organization.