Who Makes What in HME

You may never get rich, but at least you still have a job. That’s a perennial theme in the health care industry, which has traditionally been known for nearly recession-proof employment and — outside of the physician ranks — modest pay.

The home medical equipment industry fits the pattern. For better or worse, its rewards are fairly predictable. HME workers and managers missed out on the New Economy boom of the ’90s. But they also were spared the bust that followed.

This unspectacular but steady side of HME compensation shows up in our 2003 Salary Survey. Looking back to 2002, we’ve found no radical changes in how HME employees are paid or their level of benefits. Based on the 399 responses received in this year’s survey, about the same percentage of workers — a bit more than 70 percent — got raises in both 2002 and 2003. The average raise was 6.4 percent. That puts HME on the generous side of national trends, at least in this lean year.

Several recent surveys of employers across a wide range of industries have put average raises at less than 4 percent. In a report released July 30, Mercer Human Resource Consulting polled 1,700 U.S. employers and found pay increases will average 3.6 percent in 2003. An earlier survey by the Conference Board, a private research group, said employers were planning to increase overall compensation by 3.5 percent this year.

As for the job-security side of the equation, unemployment figures for HME alone are not available. But the U.S. Bureau of Labor Statistics said joblessness in the broader Education and Health Services category stood at 4.4 percent in June. That was up from 3.9 percent a year earlier, but well below the total rate of 6.5 percent; or rates for workers in Durable Goods, 7.3 percent; Professional and Business Services, 8.5 percent; and Leisure and Hospitality, 8.6 percent.

The High, the Low, the In-Between

HME may have a few big players, but its pay scales still have a small-business feel. The gap between top management and the lowest-paid workers is narrow compared to that of large corporations in other industries. The average HME chief executive pay was $82,416; the highest pay reported in the President/CEO category was $250,000.

Top managers’ median pay, the point at which half the reported salaries were higher and half were lower, was $75,000. Within this group the pay ranged widely according to the size of the company these executives were running. The full report shows that average top pay at firms with $1 million or less in annual sales was $64,689. At HME businesses earning over the $3 million mark, CEO salaries averaged $107,022.

Delivery technicians were the lowest-paid in our survey, with an average salary of $23,560 and a median of $25,000, a third of the median CEO salary. Hourly employees in this category made an average of $11.36. This time, the size of the company didn’t have much effect on pay, with the average hourly rate at firms of all sizes almost identical.

Ranking just below CEOs in pay were pharmacists, who averaged $72,937 in annual salary. Their median pay was equal to that of the top executives at $75,000.

This is one case in which a group of HME employees appears to be paid very close to the national average. According to 2002 BLS figures, the latest available, pay for pharmacists averaged $1,367 a week, or $71,084 a year. Allowing for some increase since then due to raises, the 2003 figure would still be at or slightly below the average for HME.

This is another way of saying that, on the whole, HME businesses seem able to pay competitive salaries to pharmacists, though the picture may look much different on the local level, where some areas might have high costs of living and shortages of qualified job applicants.

Paying competitive salaries is still a tough challenge for much of the HME industry. According to Miriam Lieber, a Los Angeles-based consultant specializing in operations management for HME firms, “We, as an industry, do not pay enough to maintain a balance between what we should be able to expect for our staff and what we are willling to pay for that type of individual.” From her experience, she adds, customer service and delivery technician positions are particularly hard to fill.

According to the 2003 Salary Survey, pay in the “Customer Service/Inside Sales Rep” category ranges widely, from a reported high of $80,000 a year (for salaried reps) and $35 an hour to a low of $19,000 a year and $6.50 an hour. The average salary is $32,846, but the average rate for these employees who are paid by the hour is $11.74, just above that of delivery technicians.

Customer service managers make a bit more. Their average salary is $38,032; managers paid hourly make an average of $14.35. In what may be a sign that HME firms are focused at least as much on customer satisfaction as bill collection, the customer service managers’ pay slightly edges that of accounts-receivable managers, who average $36,204 (salaried) and $13.41 hourly.

Common Fringe Benefits

In the competition to attract and retain workers, fringe benefits are an important consideration. The most popular fringe benefits offered by the survey respondents are vacations and holidays, either entirely or partially paid by more than 80 percent of HME businesses. Medical insurance, sick leave and, in a sign of the times, cell phone use are other popular benefits.

The full survey report shows that large HME companies tend to have an advantage in their ability to provide benefits such as health insurance and retirement plans. The statistics bear this out for most benefits, but not all of them. Firms with more than $3 million in sales are more likely than smaller companies to pay for life insurance, medical insurance, sick leave and dental insurance.

Of firms over $3 million, 94.9 percent offered medical coverage, compared to 60.9 percent of companies below $1 million. Profit-sharing plans and 401(k) plans also are much more common at larger companies, with 76.3 percent of companies in the $3 million-plus range offering 401(k)s, compared to just 29.1 percent of the sub-$1 million firms.

But the results also show the smallest companies beat their larger competitors in offering flexible work schedules. Among the companies below $1 million, 58.3 percent offered this benefit, compared to 46.6 percent of those with revenue greater than $3 million. So it might indeed be true that small shops are more accommodating and less bureaucratic than large ones.

About the Respondents

In May, HomeCare mailed compensation questionnaires to 1,500 randomly selected subscribers asking about salaries, benefits, raises and more. Of the 399 companies who returned completed surveys, 300 (75 percent) identified themselves as HME/service providers, while most of the remaining participants said they worked in specialty home care, retail pharmacy/drugstore or hospital-based HME.

The respondents represent a wide range of regions and company sizes. More than 36 percent were based in the South and another 30 percent were in the Midwest, with smaller numbers based in the West and Northeast. Two hundred (50 percent) said they operate only one location, though the survey also includes 27 firms that operate 100 locations or more. Nearly 38 percent reported revenue of less than $1 million, while 13 percent had revenue of $10 million or more.

For a complete copy of the 2003 Salary Survey, visit our Web site at www.homecaremag.com and click on the button titled “Purchase Exclusive HomeCare Research.”

For the Record: Survey methodology conforms to all accepted research methods and practices, and the guidelines set forth by American Business Media – Research Committee, the American Marketing Association, the American Statistical Society and the Marketing Research Association. Percentages are based on responses from 399 companies. Not all respondents answered every question, and some totals may add to more than 100 percent due to multiple responses.

$50,038 is the average salary for this year’s survey respondents.