Salaries Under Siege

Despite a host of impending challenges — not the least among them a 9.5 percent across-the-board cut on round one bid items and the 36-month cap on home oxygen rental, both set to take effect Jan. 1 — home medical equipment providers participating in HomeCare’s Salary & Benefits Survey say they are prepared for the future, or at least getting there.

That’s not to say they are happy about the industry’s circumstances. Far from it. And keep in mind the survey closed before Wall’s Street’s recent meltdown, so had they been anticipated, the prospects of tightening credit and other financial fallout might have influenced some respondents’ answers differently. That’s also not to say these providers haven’t taken some hits in readying their companies for what is to come: Almost one in four (23 percent) laid off employees in the past 12 months at an average 11 percent of staff.

credit and other financial fallout might have influenced some respondents’ answers differently. That’s also not to say these providers haven’t taken some hits in readying their companies for what is to come: Almost one in four (23 percent) laid off employees in the past 12 months at an average 11 percent of staff.

But of 289 HME providers ranging from small mom-and-pops to national companies, 68 percent added staff in the past year, and more than a third (36 percent) created new job functions, albeit mostly to deal with accreditation/compliance. Moving ahead, the majority indicate staffing will remain at current levels in 2009, although many respondents say they do expect increases in outside sales (40 percent); customer service reps and showroom help (29 percent); delivery personnel (29 percent); billing/collections employees (27 percent); and service/repair staff (17 percent).

It’s clear, however, the industry’s tumultuous conditions have taken a toll in some areas, salaries notable among them. With only a few exceptions, employees’ pay has fallen when compared to the results of HomeCare’s last survey in 2006. Salaries for billing employees, who averaged $30,465 in 2006, fell to $29,115 this year. CSRs who made $30,325 two years ago now take home $29,463. And outside sales reps, whose average salary in 2006 was $51,570, now average $49,606.

The difference in salaries for HME company management is more extreme. Salaries for titles at the CEO and president levels plummeted a whopping 38 percent for participating providers, from an average $134,621 in 2006 to $82,253 this year. Sales managers suffered another harsh blow, with average pay at $65,150 in 2008 compared to $80,841 in 2006, a drop of 19 percent.

On a more upbeat note about salaries, average pay for accounts receivable managers rose 7 percent, from $41, 260 in 2006 to $44,179 this year, possibly recognizing the value of employees’ knowledge in this specialized and critical position. Similarly, pay for warehouse/operations managers, who have been pressed to drive out costs and come up with changes to help keep their companies profitable, rose 7 percent from an average $45,690 in 2006 to $48,773 this year.

Employees paid hourly also fared better, with most positions seeing an increase over wages in 2006. But other measures fell.

In 2006, the average raise given to HME employees was 5.6 percent, but that average dropped to 5 percent this year. (Even so, that beats the 3.8 percent raise for most U.S. workers projected by human resource consulting firms Hewitt and Mercer.) In 2006, 66 percent of the providers the magazine surveyed paid bonuses to all staff, but this year, only 41 percent say they do so. Explains one provider, “Times are too bad currently for raises and bonuses.”

These figures and others throughout the survey reflect the pervasive industry uncertainty about reimbursements and competitive bidding that has hobbled plans over the past two years, but there are strong drivers shaping the health care market at large that continue to buoy providers’ outlook.

For one thing, according to the latest figures from the Bureau of Labor Statistics, wage and salary employment in the health care industry overall is projected to increase 22 percent through 2016, compared with 11 percent for all industries combined.

Projected rates of employment growth for the various segments of health care range from 13 percent in hospitals, the largest and slowest-growing segment, to 55 percent in the home health care arena. For example, over the 2006-16 period, BLS says, total employment of home health aides is projected to increase by 49 percent, reflecting a shift from in-patient care to less expensive care at home. And there’s the fact that the growing population of elderly simply need more continuing health care and they want it at home.

Theoretically, these trends mean a big bump in coming business for HME companies. Drilling down, however, growth could be tempered by restructuring to reduce administrative costs and streamline operations in preparation for the very big “ifs” that remain: While competitive bidding has been delayed, the industry still must come up with a workable alternative to prevent the loss of thousands of existing companies. It must also weather another congressional stab at health care/Medicare reform that is shaping up for 2009.

The numbers in this survey mirror those concerns, and with a steady drumbeat of poor economic news added to the mix, HME employers must take a hard look at their options. Regarding employees, says Chris Myers, president and CEO of Credit Alternatives, Columbia, Md., “you’ve got to be realistic with your demands, and you also have to reevaluate your priorities.”

Myers advises company owners to remember that money isn’t everything when it comes to filling a position. “People don’t leave jobs because of pay,” he says. “It’s because of the work environment. Most people care more about those intangible personal things.”

ABOUT THIS SURVEY

Data for HomeCare‘s Salary & Benefits Survey were collected Aug. 25 through Sept. 24, 2008. Of 289 qualified responses, 86 percent are from home medical equipment providers and 14 percent are from pharmacies/chain drug stores with HME, home health agencies with HME or other specialty segments. Just over half of the respondents (53 percent) operate one location, while 37 percent operate between two and nine locations and 10 percent have 10 or more locations. Forty-one percent of the companies participating in this year’s survey operate primarily in DME MAC Jurisdiction C, with 19 percent operating in Jurisdiction B, 17 percent in Jurisdiction D and 14 percent in Jurisdiction A. Seven percent of participating companies report nationwide operations. While 28 percent of respondents indicate annual revenues under $1 million, 15 percent have revenues of $10 million or more. 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.

Survey Fast Stats

About Salaries and Bonuses

• The average salary increase given by responding companies was 5 percent.
• Of surveyed companies, 84 percent said at least some employees received a raise in the past 12 months.
• Salary increases are most frequently linked to merit/performance (81 percent).
• Forty-eight percent of respondents pay their sales staff on a salary + commission basis, while 45 percent pay straight salary.
• Two-thirds of respondents indicate their companies pay higher salaries to licensed/credentialed personnel (66 percent), and 64 percent pay for continuing education for these employees.
• Less than half of responding companies (41 percent) pay bonuses to all employees.

About Benefits

n Eighty-six percent of respondents offer vacation time, while 79 percent offer medical insurance and 71 percent offer sick leave. Sixty percent offer personal time, and 45 percent offer a flexible work schedule. Sixty-five percent offer cell phones, while 37 percent offer an auto/auto allowance.

About Staffing

• Sixty-eight percent of respondents added staff in the past year, and more than one-third of respondents (36 percent) created new job functions in the past year.
• Nearly one in four respondents (23 percent) had layoffs in the past 12 months at an average 11 percent of staff.
• The majority of companies report staffing will not change in 2009, but a significant number do plan increases in: outside sales, 40 percent; showroom/CSRs, 29 percent; delivery personnel, 29 percent; billing/collection employees, 27 percent; and service/repair staff, 17 percent.
• Of the licensed/credentialed positions asked about, only respiratory therapist positions are employed by a majority of respondents (59 percent). About one-fourth of respondents employ a nurse (28 percent) and/or a rehab specialist (25 percent).
• On a 5-point scale, with 1 being “very easy” and 5 being “very difficult,” 60 percent of respondents rate the difficulty level of recruiting qualified personnel as a 4 or 5, and 24 percent rate retaining qualified personnel as a 4 or 5.

SALARIES & BONUSES

How do you pay your sales staff?

If you pay salary plus commission for your sales staff, what is the average guaranteed base salary on a percentage basis?

What determines employee bonuses?

Do you pay bonuses to:

Do you link salary increases to:

BENEFITS

Common Employee Benefits

If you have added staff, in what positions?

How much does it cost to train a new employee?

How many employees do you have?

Which of these positions do you employ?

Which of these positions do you employ?

Besides for a better salary, what is the main reason your employees leave?

If you have laid off staff, in what positions?

ANNUAL AND HOURLY SALARIES

AVERAGE ANNUAL SALARIES BY JOB TITLE*

AVERAGE HOURLY WAGE BY JOB TITLE*

ABOUT 2009

How will your staffing change in 2009?