Embed Size (px)
Citation preview
2014 HME News / SRAFinancial Benchmarking
Survey
Presented by: Rick Rector, Publisher | Executive Vice PresidentHME News
GAMES Annual Meeting | August 16 - 18, 2015
Legacy Lodge at Lake Lanier
Objectives
• Review results of current industry survey.
• Identify trends and discuss assumptions derived
from data.
• Address areas of immediate concern.
• Use this information to go back and immediately
implement changes in your own company!
• Consolidation continues. Revenue growth starts to turn up for some, despite severe reimbursement pressures for many in 2013.
• Patient pay and sleep products lead 2013 growth areas.
• Employee efficiency and acquisition cost trends continue to improve.
• Profits remained relatively stable, but EBITDA as % of revenues slipped into single digits.
• Audits continue to negatively impact collections.
• Strategic plans favor growth vs. improved efficiency.
• Cash/retail remains primary growth focus, but complex rehab, expanded service areas and non-invasive vents also sources of strong interest.
Executive summary:
Business size - Respondent revenue comparison (fiscal years)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
< $5 million $5-10 million Over $10 million
2006
2007
2008
2009
2010
2011
2012
2013
Business size - # of employees comparison
0%10%20%30%40%50%60%70%80%
1-20 employees 21-30employees
31-50employees
>50 employees
2006
2007
2008
2009
2010
2011
2012
2013
0%
10%
20%
30%
40%
50%
60%
70%
1 loc. 2 loc. 3 loc. 4 loc 5 or more
2006
2007
2008
2009
2010
2011
2012
2013
Respondent comparison by number of locations
• Consolidation continues.
• Most have multiple locations and greater than 20
employees for the first time in our annual survey.
• Still, 37% have less than $2M revenue.
• We anticipate this trend will continue and increase as
competitive bidding rates roll out to the balance of the
country in 2016.
Business size (Summary)
Trends – Revenue growth
2013 2012 2011 2010 2009 2008
Declined 32.0% 29.4% 32.7% 27.4% 39.8% 19.7%
Stayed the same 8.7% 14.7% 14.0% 21.0% 11.0% 16.8%
Increased 1-10% 33.0% 30.8% 35.7% 31.2% 28.8% 30.1%
Increased 11-20% 18.5% 14.0% 11.1% 13.4% 8.9% 19.1%
Increased 20+% 7.8% 11.2% 6.4% 7.0% 11.5% 13.3%
0%
10%
20%
30%
40%
50%
60%
Negative toZero
1-10% 11-20 % > 20%
2006
2007
2008
2009
2010
2011
2012
2013
Revenue growth - Historic
Payer type increases (comparison)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Medicare Medicaid Mgd Care Other Insur. Patient Pay
2006
2007
2008
2009
2010
2011
2012
2013
0%5%
10%15%20%25%30%35%40%45%50%
2006
2007
2008
2009
2010
2011
2012
2013
Revenue by payer type – Historical percentage comparison
Revenue by employee type Independent HME Hospital owned HME
Intake/CSR $559,000 $717,000
Billing/collections $791,000 $1,177,000
RT’s $1,645,000 $1,907,000
Delivery techs $670,000 $1,039,000
Marketing $1,401,000 $1,986,000
Other $625,000 $618,000
All employees-2013 $151,000 $186,000
All employees-2012 $147,000 $136,000
All employees-2011 $138,000 $160,000
0%
10%
20%
30%
40%
50%
60%
2007
2008
2009
2010
2011
2012
2013
Revenue per employee
$400,000 $600,000 $800,000
$1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000
200820092010201120122013
Revenue by employee typeIndependent HME
Oxygen revenue as % of total
2013 2012 2011 2010 2009 2008 2007 2006 Don’t provide oxygen 24% 30% 20% 28% 25% 25% 26% 25%
0%5%
10%15%20%25%30%35%40%45%50%
1-19% 20-39% 40-59% 60-79% 80+%
2006
2007
2008
2009
2010
2011
2012
2013
.
Oxygen census by modality
1/1/14 1/1/13 1/1/12 1/1/11 1/1/10 1/1/09
Concentrator & gaseous portable 40% 50% 41% 62% 55% 53%
Concentrator only 32% 30% 35% 10% 24% 21%
Home transfill system 14% 10% 10% 8% 10% 15%
Portable concentrator 6% 7% 5% 6% 4% 2%
Concentrator & liquid portable 4% 1% 2% 1% 2% 3%
Liquid stationary & liquid portable 3% 1% 5% 2% 4% 5%
Liquid stationary only 1% 1% 2% 0% 0% 1%
Oxygen census (non-capped) by payeras of 1/1/14
2013 2012 2011 2010 2009 2008
% of total
% of total
% of total
% of total
% of total
% of total
Medicare 41% 55% 57% 58% 56% 52%
Other insurance 19% 15% 8% 11% 17% 16%
Managed care 14% 18% 22% 13% 12% 13%
Medicaid 14% 8% 7% 10% 8% 10%
SNF/Hospice 7% 3% 4% 7% 6% 7%
Patient paid 5% 1% 2% 1% 1% 2%
0%
20%
40%
60%
80%
1-19% 20-39% 40-59% 60+%
2006
2007
2008
2009
2010
2011
2012
2013
Sleep revenue as % of total
2013 2012 2011 2010 2009 2008 2007 2006
Don’t provide sleep 33% 39% 26% 32% 24% 28% 30% 31%
Sleep revenue by type:
Equipment 59% (57% last year, 60% in ‘11, 67% in ‘10)
Supplies 41% (43% last year, 40% in ‘11, 33% in ‘10)
0%10%20%30%40%50%60%70%80%90%
1-19% 20-49% 50-69% 70+%
2006
2007
2008
2009
2010
2011
2012
2013
HME rental revenue as % of total
2013 2012 2011 2010 2009 2008 2007 2006
Don’t provide HME rentals 25% 21% 15% 23% 20% 17% 19% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1-19% 20-39% 40-59% 60+%
2006
2007
2008
2009
2010
2011
2012
2013
Power mobility revenue as % of total
2013 2012 2011 2010 2009 2008 2007 2006 Don’t provide 50% 55% 58% 51% 50% 50% 46% 46%
Revenues – Product lines that increased(as % of revenues)
0%
10%
20%
30%
40%
50%
60%
Oxygen Sleep HMErentals
PowerMobility
Supplies Retail
2006
2007
2008
2009
2010
2011
2012
2013
Revenues – Fastest growing product lines (as % of revenues)
0%
10%
20%
30%
40%
50%
Oxygen Sleep HMErent.
PowerMob.
Supplies Other
2006
2007
2008
2009
2010
2011
2012
2013
Other includes retail sales (15%) and non-invasive vents (12%)
0%
10%
20%
30%
40%
50%
60%
Supplies PowerMobility
Resp Meds Rehab Other
2006
2007
2008
2009
2010
2011
2012
2013
Discontinued product lines
2013 2012 2011 2010 2009 2008 2007 2006 Did not discontinue any lines: 72% 75% 60% 65% 64% 79% 46% 46%
Other includes O&P and beds & w/c (4% each) and sleep and retail (3% each).
0%10%20%30%40%50%60%70%80%90%
1-19% 20-39% 40-59% 60+%
2006
2007
2008
2009
2010
2011
2012
2013
Rehab revenues as % of total
2013 2012 2011 2010 2009 2008 2007 2006 Don’t provide rehab 74% 72% 73% 69% 71% 78% 70% 65%
Operating Metrics: 2013 2012 2011 2010 2009 2008
Average monthly revenues/RTS $43,300 $52,700 $49,000 $42,500 $61,500 $51,250
Monthly completed eval./RTS 20 21 22 17 21 18
Avg. % (of annual rev.) in WIP 14% 14% 12% 13% 14% 12%
Avg. days from eval. to delivery 54 days 55 days 58 days 53 days 53 days 52 days
Average commission paid per
new rehab patient$75 n/a n/a n/a n/a n/a
Rehab technology
Profitability trends – Profit dollars
0%
10%
20%
30%
40%
50%
60%
Increased Stayed theSame
Decreased
2006
2007
2008
2009
2010
2011
2012
2013
Profitability trends – Profit as % of revenues
0%
10%
20%
30%
40%
50%
60%
70%
Increased Stayed the Same Decreased
2006
2007
2008
2009
2010
2011
2012
2013
Gross profit, expenses & EBITDA
2013 2012 2011 2010 2009 2008
Revenues 100% 100% 100% 100% 100% 100%
Gross profit 66% 63% 65% 68% 64% 63%
Operating expenses 57% 53% 55% 52% 51% 49%
EBITDA 9% 10% 10% 16% 13% 14%
Acquisition cost trends
0%
10%
20%
30%
40%
50%
60%
Increased Decreased No Change
2008
2009
2010
2011
2012
2013
Acquisition cost trends
Increased Decreased No change
Oxygen 22% 37% 41%
Sleep 18% 51% 31%
Beds & wheelchairs 17% 35% 48%
Supplies 30% 24% 46%
Power mobility 29% 24% 47%
Complex rehab 28% 15% 57%
All equipment 24% 32% 44%
Expense benchmarks10th Percentile Average 90th Percentile
Employee related - 2013 45.4% 31.4% 14.0%
Employee related - 2012 50.3% 33.0% 16.7%
Employee related - 2011 60.1% 33.9% 11.8%
Employee related - 2010 45.8% 31.7% 18.2%
Employee related - 2009 47.8% 33.7% 19.6%
Employee related - 2008 44.2% 32.5% 19.1%
Occupancy related - 2013 11.8% 6.4% 1.9%
Occupancy related - 2012 22.2% 7.3% 2.0%
Occupancy related - 2011 18.8% 6.0% 1.1%
Occupancy related - 2010 17.6% 8.1% 3.0%
Occupancy related - 2009 10.9% 5.6% 1.8%
Occupancy related - 2008 9.6% 5.1% 1.7%
0%
10%
20%
30%
40%
50%
2010
2011
2012
2013
Downsizing – Where have you downsized as a result of revenue declines?
Did not downsize: 36% (51% in 2012 and 45% in ‘11 and ‘10)
Compensation of marketing staff
2013 2012 2011 2010 2009 2008
Salary only 39% 34% 35% 35% 32% 35%
Salary + incentive based on set-ups 26% 27% 29% 32% 36% 40%
Salary+incentive based on collections 18% 24% 19% 22% 21% 20%
Salary+other incent. (or combo of above) 8% 4% 6% 6% 5% 0%
Incentive only 2% 3% 5% 2% 3% 4%
Other (hourly or no dedicated sales staff) 7% 2% 6% 3% 3% 1%
Compensation of marketing staff (Cont’d)
Equip. 2013 2012 2011 2010 2009 2008
Avg. comm./set-up O2 $68 $85 $77 $77 $88 $87
CPAP $45 $40 $49 $42 $49 $39
Vents $271 n/a n/a n/a n/a n/a
Power W/C $48 n/a n/a n/a n/a n/a
% of total marketing comp. that is incentive based 23% 25% 31% 21% 27% 23%
Avg. O2 set-ups/marketing rep. 20 18 15 13 15 12
Avg. CPAP set-ups/marketing rep. 31 29 21 n/a n/a n/a
Outsourcing – Current outsourcing2013 2012 2011 2010 2009 2008
None 48% 48% 51% 56% 56% 59%
Collections 27% 24% 32% 22% 24% 21%
Billing service 24% 20% 17% 10% 13% 17%
Deliveries 7% 8% 8% 9% 7% 8%
Regulatory/compliance 1% 4% 4% 9% 4% 5%
Other 4% 6% 6% 9% 7% 7%
Other includes accounting, HR/payroll and home mods.
Sleep supply outsourcing - % of respondents that outsource sleep supply services
2013 2012 2011 2010
Both fulfillment and compliance/reorder calls 15.8% 11.8% 14.0% 9.1%
Compliance/reorder calls only 5.9% 6.9% 4.5% 7.0%
Fulfillment 5.9% 5.6% 4.5% 5.4%
Total 27.6% 24.3% 23.0% 21.5%
- 46% reported that DSO increased/worsened in 2013
- Collections averaged 85% of allowable revenues, consistent with recent years.
- 69% say that CMS audits have increased their DSO with one-third reporting increases of greater than 10 days
0%5%
10%15%20%25%30%35%40%
<30days
30-45days
45-60days
60-75days
75-90days
>90days
2006
2007
2008
2009
2010
2011
2012
2013
DSO
2013 2012 2011 2010 2009 2008 2007 2006
Internal cash flow 62% 57% 59% 61% 61% 56% n/a n/a
Bank lines of credit 39% 34% 37% 36% 34% 48% 49% 54%
Equipment leases 36% 39% 31% 33% 36% 47% 42% 48%
Bank term notes 26% 20% 24% 16% 23% 30% 29% 20%
Shareholder loans 25% 17% 19% 17% 15% 21% 17% 21%
Private investors 3% 3% 5% 9% 7% 5% 9% 7%
Factoring A/R 0% 3% 4% 3% 3% 2% n/a n/a
Capitalization – What sources are we using?
What’s Next ? Primary strategy for next 12 monthsActivity 2013 2012 2011 2010 2009 2008 2007
Grow cash/retail sales 17% 22% 15% 15% 15% 13% 25%
Grow revenues-other or non specific 16% 11% 17% 18% 18% 28% 15%
Efficiency/productivity, reduce costs 13% 11% 18% 13% 30% 30% 30%
Increase respiratory revenues 11% 14% 4% 5% 17% 11% 16%
Improve collections 10% - 2% 1% 9% 8% 2%
Expand service area/locations 7% 5% 4% 4% 4% 5% 4%
Survive 6% 12% 10% 10% 8% 14% 10%
Reduce dependence on Medicare 6% 6% 4% 3% 22% 6% 7%
Disease management/outcomes 5% n/a n/a n/a n/a n/a n/a
New payer contracts 4% 7% 5% 2% 2% 8% 5%
Diversify product mix 4% 15% 6% 9% 7% 13% 10%
Audit/compliance 2% 1% 1% 5% 3% 5% 5%
Strategic partnerships 1% 2% - - - - -
Activity 2013 2012 2011 2010 2009 2008 2007
Cash/retail sales 30% 35% 25% 31% 21% 13% 25%
Complex rehab/mobility 11% 5% 9% 1% 3% 1% 3%
Increase service area/new locations 11% 7% 10% 5% 6% 5% 4%
Clinical respiratory NIV vents 8% 6% - - - - -
Sleep 8% 9% 5% 4% 14% 6% 11%
Oxygen 8% 6% 5% 6% 9% 5% 5%
Home modifications /accessibility 5% - - - - - -
Supplies 5% 2% - 4% - - -
Insurance/managed care contracts 3% 6% 11% 4% 3% 9% 7%
Commercial contracts 3% 4% 2% 3% 3% - -
Maintain/improve service 3% 1% 2% 4% 3% 1% 5%
Diversify product lines 2% 7% 13% 19% 9% 13% 10%
Strategic partnerships 2% 3% - - - - -
Orthotics 1% 4% 2% 2% 3% - -
Competitive bidding - 2% 9% 7% 7% - 3%
Increase marketing/advertising - 1% - 2% 6% - 5%
Internet - - 4% 3% - - -
What’s Next ? We need to grow but how?
• Eight-year-old business focused on respiratory (85%) was faced with large 2013 reimbursement cuts in Round 1 rebid and Round 2 (95% of business in Rounds 1 & 2). Historical growth was 25%-30% per year. MCR is 60%.
• Company responded with a relentless focus on improving both efficiency and accelerated growth; made substantial investments in their goals.
• Revenues flat in 2013 vs. 2012, at $7M, reflecting increased unit growth in the face of substantial Round 1 rebid and Round 2 cuts.
• The payoff came in 2014 with nine locations, and revenues running YTD at a $12.5M pace and 30% EBITDA.
• How they did it:– Efficiency consultant to review all processes, now hired full time.– Technology investments
• Upgraded IT and billing systems• Tablets for drivers and marketing
– Non-delivery focus• Alternative O2 systems• PAP supplies and web-based transactions
– Selective diversification into clinical respiratory NIV– Aggressive expansion of marketing reps and locations– Only outsourced business function is PAP supply fulfillment
Top performer case study:
Top performer metrics:Financial results: TPI AVE
Revenues 100% 100%
Gross profit 77% 66%
Operating expenses 47% 57%
EBITDA 30% 9%
Revenue per employee:
Billing/collection $1,388K $791K
RT $3,125K $1,645K
Delivery tech $782K $670K
Marketing $833K $1,401K
Total $156K $151K
Product mix:
Concentrator only 50% 32%
Alternative/traditional delivery mode % 50%/50% 30%/70%
Equipment/supplies PAP % 50%/50% 59%/41%
Top performer metrics:TPI AVE
Marketing:
-% marketing comp based on incentive 31% 23%
-Commission on setups:
O2 $90 $68
PAP $45 $45
Vent $1,000 $271
-Set-ups per rep per month
O2 20 20
Pap 25 31
Payer mix:
Medicare 60% 29%
Medicaid 1% 15%
Managed care/insurance 33% 32%
Patient paid 6% 18%
Hospice/other - 6%
Final discussions -
• Reimbursement pressures continue. Remaining
providers need to continue growth and build profitable
scale by increasing unit rentals and sales as others exit.
• Success requires continued investment in both
marketing and improved operational efficiencies.
• The future still looks bright as baby boomers age, but
only for those that can adapt and change fast enough.
