We hear a lot about how tough it is for body shops out there and let's face it, it really is. The "thinning of the herd" is taking place these days. When there is not enough food, the weakest die, and the same holds true for the economy. When there is not enough work to go around, the weakest are going to go out of business. As body shop owners, we do a lot of complaining about the unfairness of insurer intrusion into our businesses and the unfair competitive edge they give some shops over others. You cannot paint the entire industry with the same brush, and after all it was body shops that gave rise to the appearance of direct repair programs. That being said, they would have appeared eventually because of the widespread use of insurer networks in the healthcare industry. Years ago, I saw a CIC presentation that showed how the decline in the collision repair industry was directly related to sharp increases in healthcare costs. Insurers had to save money somewhere and why not suppress labor rates and lower margins for collision repairers. After all, the industry is fragmented and so weakened by that fragmentation, there is little chance of any serious fight being mounted against the aggressors.
So what do you do about it, and is it all bad? Let's talk about key performance indicators or KPI's. The insurance companies look at these numbers in order to control costs. The bad part is insurer intrusion into the repair process, micromanagement of every facet of it, and in some cases, unachievable goals based on some bean counter's perception of what numbers will generate the lowest costs, not what is the best repair of the vehicle and ultimately best for the customer. The good part is this has forced repairers to study their numbers, improve their processes, lower their costs and maintain or even increase their productivity without compromising quality. Some more open minded insurers are beginning to see the wisdom of taking a vehicle in, disassembling it, writing a complete repair plan, ordering parts and repairing the vehicle. Fix the car, send the bill, take care of the customer and schedule repairs evenly not just all on Monday. But you say, they micromanage and audit our sheets. Not necessarily a bad thing either. How many of you audit your sheets to see what you missed? I have yet to see an insurer contact us to say we left some procedure or part off of our sheet. Does not mean again that every insurer is doing it right? No, and some are downright ridiculous in their demands, but it is ok to push back. You just have to be well enough trained and informed to do it. That's all for this blog for now, but remember your customer is the owner of the vehicle and the liability is yours no matter who is paying the bill. Your ultimate responsibility is to your customer and to your own business first, and it is ok to just say no.