2010 HME Industry Salary & Benefits Survey: Ouch!

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.