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Friday, 08 April 2016 22:30

Anderson shows NORTHEAST Shops How His “Who Pays for What?” Surveys Can Help

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About 37 percent of shop who bill for “masking the vehicle for priming” say they get paid by insurers for this operation “always” or “most of the time” – yet about an equal percentage of shops say they have never asked to be paid for this not-included operation.

That’s one of the survey findings that Mike Anderson told attendees at the NORTHEAST trade show in New Jersey in March that he was most surprised about as he continues to conduct a series of four different “Who Pays for What?” surveys nationally in conjunction with CRASH Network.

“Every time you prime, you have to mask, utilizing labor and materials,” Anderson told a packed seminar room at the trade show. “I was very surprised to see so many shops were not even charging for this. Almost 40 percent of shops said, ‘I’ve never even asked for it.’”

The seminar was one of the first times Anderson has focused an entire presentation on his “Who Pays for What?” seminars, which began last year. Each of the four surveys – one is conducted each quarter – ask shops for their billing practices in terms of about two dozen not-included operations. For each procedure, shops are asked to describe how often they are paid, by each of eight insurers, whether it is "always," "most of the time," "some of the time," or "never." 

The masking question was included on the refinish-related survey that took place in February this year, but the other surveys focus on body labor operations (that survey took place in April), frame and mechanical operations, and aluminum repair and shop supplies (the latter two surveys will next take place later this year).

Anderson’s seminar at the trade show highlighted some of the results of past surveys, which are available online. (Anyone who takes one of the surveys automatically receives that survey’s findings for free.) As with masking for priming, for example, Anderson said nearly 40 percent of shops reported being paid always or most of the time to match the original OEM texture of chip/gravel guard.

“The three estimating systems all clearly say that when you get paid to do gravel guard, that does not include the additional labor required to match the OEM texture,” Anderson said. “So if your painter has to go out and play with it, and get a spray pattern set-up, etc., that can take a long time, right? That’s not included.”

Anderson said this year’s refinish-related survey specifically asked shops that have never asked to be paid for this process why they haven’t. More than 82 percent said they either were not aware it was a “not-included” operation or just never thought to charge for it.

“Ladies and gentlemen, I’m not saying that insurance companies are always going to pay you for every single thing,” Anderson said. “But at the end of the day, if you want to get paid more, you have to first ask. It’s a Biblical principle: ‘You have not because you ask not.’”

The surveys compare the payment practices among the largest eight auto insurers nationally, and also show how responses vary by region. The survey have continued to draw responses from an average of more 700 shops each time, Anderson said.

“It’s one survey response per shop, so that’s 700-plus shops each time, not like some other surveys that might include responses from 10 people from one shop,” Anderson said.

He said the surveys ask shops to also report what direct repair program affiliations they have, and the findings have fairly consistently shown that direct repair shops are paid, overall, more frequently for "not-included" estimate items than are non-DRP shops.

“I’m not pro-DRP, I’m not anti-DRP,” Anderson said, noting that he’s faced some skepticism from those who are surprised that DRP shops appear more likely to be paid for not-included operations. “I’m all about doing a safe and proper repair. Whatever your business model is irrelevant to me. But what I can tell you is DRP shops clearly are getting paid for more procedures than non-DRP shops.”

He said the aluminum survey asked shops not only about their labor rates for aluminum work but also how much they invested in training, equipment and other costs to become OEM-certified for aluminum. He said some survey respondents said that adding up those numbers made them realize their labor rates were inadequate.

“What we realized is that when some people were setting their rates, they were just grabbing some number out of the air without ever having done a financial analysis on it,” Anderson said.

He said his overall goal with the surveys is to raise awareness of operations shops may be doing but aren’t charging for. He said he hopes over time have the surveys find that the percentage of shops billing and being paid for the procedures increase.

But he acknowledged that awareness is only part of the issue; the second-half of his presentation at the NORTHEAST show focused on how shops can successfully negotiate for whatever procedures from the surveys they are regularly doing.

“I mean this in love. I’m not here to make any enemies. I want you to be successful. But honestly, the majority of body shops use the insurance companies as an excuse for their ignorance and lack of knowledge,” Anderson said. ‘They say, ‘The insurance company won’t pay for it,’ when the reality is they didn’t even know they could charge for it.”

Anderson recommended that shops start with one or two of the items at a time, focusing on including them on estimates on jobs when the procedure is being done, and being prepared to support why they should be paid for it. He said shops should have documentation from the automakers or paint companies showing the procedure is needed; documentation from the estimating systems showing the procedure is not-included and whether there is a formula for calculating the labor time for it; and an understanding of what the procedure is worth.

“You have to figure out what your labor is going to be and any materials you’re going to use,” Anderson said. “I can’t tell you what to charge. But the time you charge should reflect how long it takes the average technician to gather up their tools, equipment and supplies and perform the task in a safe and proper manner, and then return their tools and equipment.”

He said shops rarely do the research to gather the documentation they need to confidently make their justification for the charge. Anderson said each of the survey reports includes suggested resources shops can use in this process.

"The only thing that matters if you want to get paid for something is what you can prove, substantiate and justify,” Anderson said. “That’s all that matters. Your opinion means absolutely nothing.”

Shops interested in being notified about upcoming surveys, or in getting results from previous surveys, can visit: https://www.collisionadvice.com/survey

As is generally the case, Anderson’s presentation at the NORTHEAST trade show won him new fans in the industry.

“I’ve been attending these seminars for over 50 years, and this is the single-most compelling session I’ve ever attended,” Mike Porcelli of Central Avenue Collision in Glendale, N.Y., told Anderson during the question-and-answer session.

John Yoswick, a freelance writer based in Portland, Ore., who has been writing about the automotive industry since 1988, is also the editor of the weekly CRASH Network (for a free 4-week trial subscription, visit www.CrashNetwork.com ). He can be contacted by email at jyoswick@SpiritOne.com.

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