U.S. Rehab Benchmark Report for 2021

U.S. Rehab Benchmarking Survey for 2021

A Division of VGM & Associates

About the Authors

Greg Packer

President, U.S. Rehab

Greg Packer is president of U.S. Rehab. Greg’s background, which includes sales management for Pride Mobility Products Corp. and BioCore Medical Technologies, Inc., provides him with an understanding of both the sales and product areas of rehabilitation technology. Greg served three terms in the Kansas House of Representatives and is familiar with the regulatory and governmental issues facing the rehab/HME industries. He currently serves on five industry boards and committees to help make the industry a better environment for the independent provider. Greg graduated from Iowa State University and received his master’s degree from Baker University.

Tyler Mahncke VP, U.S. Rehab

As vice president for U.S. Rehab, Tyler’s focus is on making sure members have the best tools to move their company forward— whether it’s VGM’s internal programs; our complex rehab manufacturers; or continuing education courses for ATPs, service technicians, and billing staff. Tyler is also VP of the executive board of the DMERT Group, an industry nonprofit organization that provides continuing education programs for service technicians in DME and CRT. Tyler is a graduate of the University of Northern Iowa.

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4 7% Standard Power Complex Rehab Power Other 16% 45% 22% Complex Rehab Manual 10% Standard Manual Revenue by Source Revenue by Product Line This graph is the average makeup of the revenue obtained by averaging the responses from each of the respondents. Expenses and Revenue 0% 10% 20% 30% 40% 50% 60% Other Expenses as a % of Revenue Pre-Tax Profit as a % of Revenue Cost of Sales Gross Profit (100% Minus Cost of Sales) Operating Expenses Operating Profit (Gross Profit Minus Operating Expenses) Pre-Tax Profit (Operating Profit Minus Other Income) Facility Expenses (Rent, Technology, Office Needs, etc.) Distribution Expenses Other Expenses (Sales, Marketing, and Other)

Revenue by Payer Type

Medicaid

Medicare Managed Care Medicare 25%

28%

This graph shows the average percentages of where revenue comes from, according to the respondents of the survey.

Pre-Tax Earnings

9% 10% Private InsuranceHMO 6% Private InsuranceFee for Service Revenue by Payer Type 4% Other 2% VA 2% Workers’ Comp

14% Private Pay

This graph shows the average percentage of pre-tax profit (operating profit minus other income) of all respondents, with the outliers shown in the stems of the graph.

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Pre-Tax Profit as a Percentage of Revenue 14 12 10 8 6 4 2 0

ATP Analysis

Employee Analysis

Revenue Per Employee Revenue Per ATP

$3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000

The average revenue by assistive technology professionals (ATP) for the respondents of the survey came in at $1,648,000 annually. This graph shows where a majority of the respondents fell. Outliers are shown by the stems on the graph.

$1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000

The average revenue per employee is $523,000. This was the total revenue divided by the total number of employees. Outliers are shown by stems of the graph.

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Life Cycle of an Order

39% of the respondents to the survey fell into the 30- to 60-day window, and another 39% of the respondents fell into the 70- to 95-day time period. The other 22% of the respondents landed in the 95+ time frame. The overall average life cycle of all respondents to the survey came out to be 81 days.

Days Sales Outstanding

This graph shows where the responds fell as a percentage of the total (i.e., what percentage have a days sales outstanding of “x time frame”).

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30-60 Days 41%

Days 14%

45%

Days Sales Outstanding

91-120

61-90 Days

95+ Days, 22% 70-95 Days, 39% 30-60 Days,

120% 100% 80% 60% 40% 20% 0% Days Outstanding

39%

Billing Department Analysis

Yes 30%

Outsource Billing

No 70%

There continues to be a growing number of providers moving to outsourcing their billing department, as 30% of the respondents are now outsourcing this service. With the hardships of staffing retention and recruiting, we expect this number to continue to grow.

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Billing

This graph shows what billing software is used as a percentage of the total responses.

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Software Billing Software Brightree 66% Noble House 5% Atlas 9% Qs1 5% POSiTrack 5% Own 5% Pacware 5%

Industry Challenges

Biggest Challenges in 2021

This graph shows the top four responses regarding the biggest challenges in 2021. To no surprise, supply chain, price increases, staffing, and COVID-19 were the biggest issues that providers dealt with. This is not a percentage expected to add up to 100%. This is the percentage of responses that included these issues, as most respondents listed more than one challenge. Other issues mentioned were reimbursement issues, obtaining grants, and PPP funding, as well as challenges in scaling their business.

Cost of Goods Sold

This graph shows the majority and average of the responses, as well as the outliers with the stems of the graph. The final average cost of goods as a percentage of revenue was 48%. With the rising cost of equipment in our industry, we expect this number to potentially climb again over the next year or two.

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70% 60% 50% 40% 30% 20% 10% 0

14 12 10 8 6 4 2 0 70% 60% 50% 40% 30% 20% 10% 0

Supply Chain Price Increases Staffing COVID