Admins' pay rises to $102K, DONs' up to $90K

Salary increases are to be expected, experts noted, but factors such as healthcare reform and reimbursement cuts will keep pay boosts in check.
Salary increases are to be expected, experts noted, but factors such as healthcare reform and reimbursement cuts will keep pay boosts in check.

The long-term care field is showing signs of robust health. For the first time since the recession hit eight years ago, it is offering strong pay increases across the board — from certified nursing assistants up through administrators and directors of nursing.

At first glance, the numbers in the largest annual survey of long-term care professionals tell a slightly different story. Among all facilities that participated in the survey, the average for administrators rose by a modest 2% — to $102,003 from $100,000 in 2015. Assistant administrators' salaries slipped 1.92%, to $67,890 from $69,222. 

The national average salary for directors of nursing, meanwhile, increased by a stronger 3.82%, to $90,003, in 2016.  

This is according to the 2016-17 Nursing Home Salary & Benefits Report from Hospital & Healthcare Compensation Service (HCS). The organization's 39th annual industry analysis, published in cooperation with LeadingAge and supported by the American Health Care Association, surveyed approximately 9,500 nursing homes across the United States. There were 2,076 participants, resulting in a response rate of 21.73%. 

While the information derived from the total number of facilities responding offers worthwhile data, a more telling portrait can be seen through facilities that participated both in last year's survey and this year's (“same participating facilities”). 

By this metric, administrators' salaries expanded by a more robust 3.78%, to $112,743 in 2016, from $108,635 a year earlier. Assistant administrators' pay grew by 1.8%, to $87,485. Directors of nursing experienced a 2.73% salary boost to $93,072 this year, up from $90,603 in 2015. 

“Across the board, increases represent a bigger average increase since 2008,” stated Matt Leach, senior consultant with Armonk, NY-based Total Compensation Solutions.

Several factors contributed to the rises in salary among administrators and other executives, Leach and other industry observers pointed out. For one, competition has risen to a feverish pitch in the sector. 

“Long-term care facilities used to be able to get away with paying lower wages and using smaller increases,” Leach said. “Now we're seeing a lot more competition from places like hospitals, which are paying many of these jobs at a higher level.”

Heated arena 

Colleen Chapp, senior vice president of Interim Leadership Services at senior-level recruitment firm B.E. Smith, agreed that seasoned executives are a hot commodity. 

“Experience is in high demand as a growing number of leaders exit the workforce or change their career path to interim leadership,” she said. “Care providers are increasing salaries as a recruitment tool as well as a retention strategy.” 

Bernie Reifkind, founder, president and CEO of Premier Search Inc., a nationwide executive recruitment firm, can attest to the bargaining power of a capable administrator in the regulation-heavy and census-driven long-term care industry.

“If there is an administrator who understands the regulations and has had strong survey results and is capable of increasing census, that person is commanding a high salary,” he observed.

Similarly, an administrator who can run an organization with a higher level of services is desired. 

“These long-term care facilities are running the gamut on services,” Leach commented. “One thing they are adding is a memory care unit, which adds a higher level of technical service to the operation. When an administrator can run a company with a memory care unit, we're seeing more pay for the administrator.” 

Besides administrators, chief financial officers experienced a particularly high salary increase from 2015 to 2016. Their average pay rose 3.37% to $124,568 in 2016, up from $120,506 last year. Industry observers understand all too well why this position generated such an increase and commands a salary second only to the executive director. 

“The CFO increases are outpacing every job within the organization, on average, except maybe the CEO,” Leach said. 

His colleague, Paul Gavejian, managing director of Total Compensation Solutions, said the CFO position has risen to a new level of prominence.

“It's almost like it's the right hand of the CEO,” Gavejian said. “[CFOs] work in tandem in order to run the company. We are seeing a lot of CFOs being appointed to boards of directors along with the CEO. That's a sign that boards of directors are relying on CFOs almost as much as CEOs.”

The generous salary improvement indicates that organizations recognize CFOs' value, he added. 

“There's a compliance issue associated with the finance of the organization, but there's also a governance issue with the organization,” Gavejian said. “Because they're more involved in those two facets in running a company — compliance and governance — that explains their rise in prominence.”

When a facility meets or exceeds expectations, the CFO benefits, Rosanne Zabka, director of reports with HCS, noted: “If a facility does well, you increase the salary of the CFO for a job well done.”

Year of the worker

While executives fared well from 2015 to 2016, another important story of the past year was the rise in rates among lower-level employees, such as registered nurses, licensed practical nurses and certified nurse aides. 

The rate for staff nurses (among same participating facilities) averaged $27.19 an hour, which represents a 2.86% increase from 2015. The increase marks continued rate growth for this position, whose rate rose by 2.27% in 2015 and 1.27% in 2014. Meanwhile, the hourly rate for practical nurses (LPNs) rose this year by 2.32%, to $21.40 an hour. Certified nurse aides' average pay grew in 2016 by 3.23% to $12.28 an hour.

Two benchmarks of success among all positions are planned and actual percentage increases. In terms of planned percent increases, including zero in the average computation, the average national increase for LPNs was 2.35%, while CNAs recorded an average planned increase of 2.4%. Such increases are significant, Zabka pointed out. 

“CNAs and LPNs had the largest planned percent increases for the second year in a row,” she said. “This is good. They are the ones doing all the work.

“This is the first year that we have seen good planned percent increases. You used to see 4% planned increases. This year, we saw some 4's and a 7 or an 8,” she added.

Employers explained that the higher increases to nurses and aides represented one-time, larger gains and they plan to return to more modest increases the following year. 

“It's phenomenal to see these numbers again,” Zabka said.

Actual percent increases were also high for RNs, LPNs and CNAs. 

“The important thing [to interpret from this] is it's not the management that got the top increase,” Zabka said. “Here you're seeing the worker level — the RN and LPN — getting the higher increase.”

Anthony Perry, the president of Executive Search Solutions, has taken note of this upward shift in pay among critical line staff, including CNAs, LPNs and RNs, over the last year. 

“We're seeing salaries move up there and companies using it to attract workers [along with other incentives such as tuition reimbursement and sign-on bonuses],” he said.

B.E. Smith's Chapp has observed a similar development. 

“Organizations are utilizing hikes as a way to retain staff, even if only in a part-time role, or to recruit new RNs,” she said.

Perry attributes the rise in nurse pay to a number of factors, including an improving economy as well as heightened demand for nurses, driven by more jobs in other clinical environments such as home health, hospice and acute care. Chapp suggested two other factors: high turnover at the RN level, which is expected to continue for some time, in large part due to retirements; and a projected nursing shortage of more than 300,000 in 2017. 

Specialization success 

Strong salaries and rates for certain specialized positions also were apparent. Pay for registered clinical dietitians, for example, rose by 3.39% to $31.64. Hourly wages for certified medication technicians, meanwhile, increased by 3.37% to $14 an hour in 2016, up from $13.55 in 2015. 

Positions involving knowledge of MDS billing, insurance and regulations continue to command better rates.

“Organizations are beefing up their regulatory and clinical services professionals and investing more in MDS staff,” Perry noted.

Zabka said that this year the survey added a number of positions. One was the RN assessment coordinator, who is charged with assessing patients according to MDS requirements so that that patient is correctly registered for Medicare and Medicaid. Another new survey position is chronic care clinical program manager, who coordinates private insurance, Medicare and Medicaid. Zabka noted that a position that will rise in importance is transition care coordinator, who assists with transitioning patients from the hospital. 

Facilities are rewarding positions that play a critical factor in providing patient care, as well, Chapp offered. 

“As reimbursement and clinical care become more closely integrated, the positions which directly impact those outcomes are elevated,” she said. “In this regard, the CNA not only greatly impacts patient care and experience, but also the organization's financial outcomes.”

Food service director salaries are also on the rise, perhaps because of baby boomers' discerning tastes, Reifkind offered.

“People going into nursing homes and assisted living facilities are demanding more,” he noted. “Why should they have institutionalized food? It's a selling point.”

‘A merit increase world'

Higher rate increases throughout the sector may point to a sea change in how nursing homes are approaching pay adjustments. “It's not just a COLA [cost of living adjustment] world; it's a merit increase world,” Gavejian said. 

Colleague Leach expanded on this point: “When you look at LPN and even CNA jobs, traditional long-term care facilities would put these jobs in a step increase system. They would start at a certain salary and get a certain increase each year. We have worked with a number of facilities that want to get away from that and pay and reward those individuals who provide the most to the organization. 

“We are seeing the ones that are hitting a high level of performance getting the increase rather than those being there the longest. We recommend that facilities go to a merit system. You are able to retain your top talent and reward your people, which leads to a higher level of engagement.” 

Judging from annual turnover rates, employees seem to be engaged. Rates are similar to last year, revealing that employees may be reasonably happy with their positions — and compensation. 

Nationally, top-level executives had an average turnover of 10.66%. Last year, turnover among department heads was 11.7%. Among RNs, turnover was 31.17%, compared to 29% the previous year. The national turnover average for CNAs was 36.55%, nearly the same as last year.

Other notable turnover rates (highest to lowest) included dining services employees (30.9%), LPNs (26.72%) and environmental services (23.96%).

“We're seeing less job hopping because the turnover is static,” Zabka said, adding that it's more cost-effective for facilities to keep employees. “It's better to keep them at the facility rather than retrain [new employees].”

Tamping growth?

While salaries are improving, reflecting increased demand and competition, there are forces at play that may affect industry growth in the near future. 

One is higher minimum wages, which are in effect in several states and cities across the country. While many low-level employees benefited from the increased wages this year, the laws may negatively affect long-term care organizations' profits.

Another development that could hurt companies is the Department of Labor's changes to the Fair Labor Standards Act, which are expected to make approximately 4.2 million currently exempt employees eligible for overtime pay later this year. (Employers have to comply with the changes to the overtime regulations by Dec. 1.) 

These and other changes may present changes to the long-term care field. 

“As the economy improves, salary increases are to be expected. However, there are several factors keeping compensation in check,” Chapp said. “Healthcare reform and reimbursement cuts mean post-acute facilities are experiencing tighter margins. Likewise, minimum wage laws are also impacting the bottom line.” 

Yet Chapp said there's reason to be optimistic about pay levels.

“Despite these factors,” she said, “salaries continue an upward trend, something that is likely to continue as demand for post-acute services increase with an aging population.”