Applying Metrics to the Recovery Industry
ESCONDIDO, Calif. — There is no doubt the recovery industry like many industries has been hit hard from the current economic environment. While people may assume a down economy equals more repossessions, that isn't the case.
On top of one of the worst economic climates in history, low fees, contingent work and no compensation for investigations have left many of us questioning if our businesses can survive. Our clients are also feeling the crunch of the economy and, as a result, they are more squarely focused on price rather than quality. There's a name for this — it's called commoditization.
Commoditization happens when there is little distinguishable differentiation in product features and, thus, price becomes the major driver of the purchasing decision. Gasoline is a commodity. We need it. It's pretty much the same wherever you go, so try to get the best deal you can.
The medical industry became commoditized. When you were growing up, your doctor was independent and most likely owned his practice. In the 1980s and 1990s, insurance companies began to mandate rates for the industry. Large hospital networks like Kaiser contributed to this new cost structure.
Today there are very few independent physicians because most belong to a medical group. If you talk to a physician, their quality of life has suffered greatly. They work longer hours for less pay and they don't always agree with the standard of care that their patients receive.
In the 1990s, insurance companies focused on the dental industry in order to commoditize the fees for service. Having seen the negative effects that commoditization had on the medical industry, dentists were able to mobilize under the American Dental Association and develop and action plan.
Dentists shared transactional data to a third party and then pay for a report that shows standard rates in their area. This type of report is known as a Uniform and Customary Rate schedule (UCR). The industry uses it as the basis when negotiating fees with insurers and gives dentist the right to bill rates according to their market and establish pricing benchmarks within individual markets.
There is no better time to join forces and collectively analyze our business metrics and develop a standard scorecard for the recovery industry. If we come together and mobilize as one, the recovery industry could create an independent industry scorecard that could measure metrics like repossession rates, days to recovery, average fees, etc. This scorecard would provide an independent and verifiable industry benchmark by which all recovery professional could be measured against.
I have consistently heard our industry is becoming numbers-driven and client decisions are being made by the "bean counters." If we can approach these individuals with data and numbers they can relate to, I am confident we can improve the outlook for our industry and our businesses.
By collectively and objectively documenting our performance, we can move the discussion with clients away from price and focus more of our conversations on quality and service.
Mike Plue is president of Premier Recovery Service and a member of the American Recovery Association.