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% |
