Survey Results: Labor Rates, When Shops Get Paid for Supplies
Written by John Yoswick, Autobody News
Published March 6, 2017
Automaker repair procedures and position statements have a clear and positive effect for repairers looking to get reimbursed for “not-included” items.
That was among the findings of a recent “Who Pays for What?” survey, four questionnaires a year conducted by Collision Advice and CRASH Network. Each of the quarterly surveys focuses on a different aspect of collision repair, asking shops about which “not-included” procedures they bill for, and about how frequently each of the largest auto insurers pays for those procedures.
The latest of the 2017 “Who Pays” surveys, focused on body labor operations, is being conducted throughout the month of April; click here for more information or to take the survey.
The “Who Pays for What?” survey results released earlier this year found that more shops said “having OEM documentation” was most effective (among other choices presented) when negotiating to be compensated for “not-included” repair procedures and shop supplies used on a job.
“I think that’s a big message to the OEMs,” said Mike Anderson of Collision Advice. “The fact that OEM documentation was ranked most effective when negotiating with insurers means that the position statements and bulletins published by the OEMs really do help our industry.”
In fact, having OEM documentation out-ranked presenting an invoice, whether from a dealership or an invoicing system, and even edged out “the ability to select the item in the estimating database” in terms of the most effective negotiating tools.
More than 1,000 shops across the country responded to that particular “Who Pays” survey, which covered aluminum repair rates, OEM certification programs and vehicle scanning, along with how frequently repairers charge--and get paid for--specific shop supplies.
Comparing the 2016 findings to those of the same survey a year earlier found that shops are reporting increased success in getting reimbursed for every one of the 17 different “not-included” shop supplies asked. In some cases, the improvements in reimbursement frequency were not significant; quite a few items, however, showed marked improvement in the number of shops getting paid “always” or “most of the time” for these shop supplies when they were necessary for the repair.
In 2016, for example, more than half of all shops (56 percent) who bill for plastic repair materials are regularly reimbursed for them by the eight largest insurers; that was up 8.4 percentage points over the same survey in 2015.
Insurers are also reimbursing shops more frequently for items like double-sided tape; more than three-quarters of shops (78 percent) report regular reimbursement for this “not-included” item when it is required for the repair, up 6.8 percentage points from a year earlier.
“Once again, the survey results show that many shops are being paid for these items on a regular basis, even if your shop isn't billing for them at all,” Anderson said “You can't get reimbursed for something you don't bill for. And as more than 2,500 shops who have taken one or more ‘Who Pays’ surveys can now attest, just participating in the four different quarterly surveys is a great reminder of the items and procedures that you are using or performing every day, but may not be listing on estimates or invoices.”
Aluminum repair labor rates were another key part of the survey; those rates appear to have increased slightly from 2015 to 2016, though shops are generally charging those rates for a narrower range of repair operations. In 2015, the "Who Pays for What?" survey found that labor rates for non-structural aluminum repairs ranged widely, from $43 per hour to $118 per hour for repairs that were not part of an OEM certified repair program. A year later, the latest survey results show that the range, while just as wide, has increased slightly to $46 at the low end of the scale to $120 at the high end; 50 percent of respondents had a rate of $75 or higher.
Compared to a year earlier, however, fewer shops (down 5.1 percentage points) said they are charging those higher aluminum repair rates for operations such as R&I of components, or for refinish operations on aluminum (which fell 9.2 percentage points from last year).
The percentage of shops charging higher rates for structural repair or replacement on aluminum vehicles remained virtually unchanged from a year ago, slightly higher than 91 percent. Structural repair labor rates also saw the same slight increase over last year, from a range of $48 to $123 per hour in 2015 to a range of $50 to $130 per hour in 2016; 50 percent of respondents had a rate of $85 or higher.
A number of the “Who Pays for What?” surveys have asked shops about their vehicle scanning processes. In the results released earlier this year, when given a choice of eight different possible reasons for not performing a vehicle diagnostic scan, more than half of all shops (51 percent) said that sometimes the level of damage just doesn't warrant a scan. On the other hand, very few (3 to 4 percent) said they skip the scanning process because it takes too long and impacts cycle time.
Despite the growing number of car manufacturers stressing the importance of scanning every vehicle, the survey indicates that many shops might not be getting the message. American Honda, for example, recently explained that a diagnostic scan is the only way to detect most trouble codes, noting that “only a small fraction of those codes actually turn on a [dash light],” yet a whopping 44 percent of repairers cited the absence of a dash light as a reason they would skip a post-repair scan.
Some insurers may not be getting the message, either; the third most common reason shops gave is that insurers don't want to pay for a post-repair scan (and even fewer want to pay for a pre-repair scan).
Anderson said he’s even heard some insurers say that if no trouble codes are identified in a scan, the insurer shouldn’t have to pay for it at all. But as Anderson argued this past fall, “If your child got hurt at the playground, and you went to the hospital and they x-rayed your child’s leg and found it was okay, does the health insurance still cover the x-ray? The answer is yes, because it’s the only way to make sure nothing is wrong.”
The other three “Who Pays for What?” surveys conducted each year focus on body labor, refinish labor, and frame and mechanical labor.
Shops can take the current survey (or sign up to be notified about future surveys) here. The surveys each take about 15-20 minutes, and should be completed by the shop owner, manager or estimator who is most familiar with the shop's billing practices and the payment practices of the largest national insurers. Individual responses are not released in any way; only cumulative data is released.
At the website, shops also can download the results of previous surveys, reports that break the findings down by region, by insurer and by DRP vs. non-DRP. The reports also include analysis and resources to help shops better understand and use the information presented.
John Yoswick, a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network bulletin (www.CrashNetwork.com). He can be contacted by email at john@CrashNetwork.com.