Salaries for admins near $107k, DONs $93k

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Staff and charge nurses were among those enjoying healthy salary bumps.
Staff and charge nurses were among those enjoying healthy salary bumps.

By most indications, the U.S. economy is humming along, following years of recession and recovery. That robustness has had a lopsided effect on nursing homes, leading to increased competition for certain clinical positions, such as nurses and frontline staff, and reduced competition for administrators and directors of nursing. 

These are just a few conclusions that may be drawn from the 2017-2018 “Nursing Home Salary & Benefits Report,” the largest annual survey of long-term care professionals.

Initially, it is unclear how leadership positions trended over the last year. Among all facilities that participated in the survey, the average annual salary of administrators increased by 4.5%, to $106,594, while salaries of assistant administrators plummeted by more than 9%, to $61,648. Directors of nursing fared reasonably well with an increase of 3.1%, to $92,822.

The survey marked the 40th annual industry analysis from Hospital & Healthcare Compensation Service (HCS). Published in cooperation with LeadingAge and supported by the American Health Care Association, the report surveyed approximately 9,500 nursing homes across the United States. There were 1,970 responses to the survey, resulting in a response rate of 22%. 

The larger and arguably more accurate story about salaries can be read from a different set of statistics — those facilities that participated in both last year's survey and this year's survey (“same participating facilities”). Going by this standard, administrators' salaries rose by a more modest 2.98%, to $97,401, while salaries for directors of nursing increased by 2.64%, to $91,444. Because there was not a significant enough sample among assistant administrators, this position was not represented. Salary increases for executive directors and chief financial officers (CFOs) were also less than 3%.

Rosanne Zabka, director of reports for HCS, noted that this slight increase for leadership positions represents a departure from years past. 

“As far as trends go, the past few years we were seeing a growth in salary of the CFO (chief financial officer),” she said. “This year, we did not see the increase in the administrator and CFO being the largest, but more the RNs, LPNs, and RN supervisors and LPN supervisors.”

Salary cool down

The numbers pointing to modest year-to-year increases for administrators and DONs resonate with long-term care recruitment experts.

“Salaries for administrators, directors of nursing and executive directors have been holding the last year or two after jumping for several years,” said Anthony Perry, the president of Executive Search Solutions, whose clients represent about 15% of all nursing homes nationally. “For a few years, there was a lot of competition for the best professionals in certain markets, and the wages just kept creeping up. To be the best, there was a certain threshold you had to meet … There's not an aggressive move to buy someone out from their competitor that I've seen for a few years.” 

Sue Martin, senior vice president of interim leadership at senior-level recruitment firm B.E. Smith, pointed out the salary increases for these top-level positions is not as high as previous years for the several reasons.

Industry consolidation is resulting in a shift of roles and responsibilities. Organizations are waiting to see how healthcare reform changes the industry and regulations and reviewing salaries and compensation plans to align more closely with models of care. Plus, the industry is experiencing an exodus of experienced leaders, partially due to baby boomer retirements, largely creating opportunities for up-and-coming leaders. 

Meanwhile, industry veteran Paul Gavejian, managing director of Total Compensation Solutions, based in Armonk, NY, waxed philosophical about this year's smaller increases among administrators and directors of nursing.

“There are no home runs in this business,” he said. “It's all base hits and moving around the bases slowly. The baseball analogy is a good one here. There are not big increases or changes to note.”

Nurses in driver's seat

Some positions did score what might be considered home runs. Salaries rose by 3% or higher for staff nurses and charge staff nurses. The salary for the nursing supervisor (RN) increased by 2.99%, to $62,583.

Perry said such increases ring true from his point of view. 

“Gone are the days of 3% across the board,” he said. “Companies are being more thoughtful about how they are distributing the total increase, giving certain positions a higher increase than others, either based on demand or trying to relieve compression created through wage creep.”

More money is going to CNA and RN wages in his facilities than LVNs [licensed vocational nurses], dietary staff or similar positions.

“They are putting the funds where it's needed to attract the staff,” he said. “As the economy improves, the employment picture for long-term care gets harder. There is more competition and more types of jobs.” 

And as more Americans are living longer, demand for skilled nurses is growing fiercer across the acute and post-acute sectors, Martin pointed out. Higher wages for nurses “coincides with a growing demand for hospital services caused by aging baby boomers and an increase in patients flowing from hospitals to post-acute care facilities due to reimbursement and regulatory changes,” she said. 

In addition, Martin attributed the higher nurse wages to a shift in payment and care models, which means new career opportunities for these professionals; and a large number of senior nurses retiring, which puts pressure on facilities to find senior nurses to replace them. 

In short, it appears to be a great time to be an RN.

“The credential itself gives you more options and entitles you to a higher wage from the start,” said Perry, pointing out that opportunities abound in long-term care, including higher-acuity skilled nursing facilities, along with assisted living and home hospice, as well as school systems and private practice.

Top-to-bottom demand

The same might be said for certified nurse aides. Wages for lead CNAs rose by 3.09%, to $13.96 an hour, while take-home pay for non-certified nurse aides, also called resident assistants, increased by 3.5%, to $10.90 an hour. Perry has experienced first-hand the enormous demand for CNAs. His clients have been asking for his firm's services in the area of companywide recruitment, not just executive-level recruitment. 

“For a number of clients, we've assumed total responsibility from a candidate development standpoint,” he said. “They, in many cases, have abandoned their own advertising efforts and candidate development efforts, and given us that responsibility.

“At this moment, I'm looking for a CFO for a company with more than 70 facilities,” he added. “But I'm also looking for hundreds of CNAs for another client and everything in-between.” 

Other hourly positions seeing an uptick in pay included dietary aides and housekeeping (up 3.4%) and laundry aides (up 3.4%), according to the report. 

In certain regions of the country, competition is growing for food service positions, observed Matt Leach, senior consultant with Total Compensation Solutions. In Arizona and Florida, he said, continuing care
retirement communities are trying to enhance their game in the dining arena, in some cases employing bartenders. This forces them to compete for labor in the food sector. 

“So they have to pay more and compete at a different level than they traditionally have done,” Leach noted. 

The churn burn

Underscoring the fierce competition for certain positions are high national annual turnover rates across the board.

Turnover for RNs rose to 35.7%. That compares to 31.2% last year. Meanwhile, turnover rates for LPNs increased to 30.8% from 26.7% last year, and CNA turnover expanded to 38.8%, compared to 36.6% last year. Dining services also experienced a spike in turnover — to 35.1%, compared to 30.9% last year.

Turnover for top-level executives also jumped — to 17.6% this year from 10.7% last year. 

In many cases, facilities are contributing to the turnover problem by continuing to compensate positions, particularly RNs, LPNs, CNAs and dining staff, based on tenure and not performance, Leach said. 

“We've worked with a number of organizations to get them away from a tenure-based system to a more performance-based system, because it can help them keep the top talent — retain the ones they want and lose the ones they don't want to keep as much,” Leach said. 

Martin of B.E. Smith agreed that compensation is critical. A recent B.E. Smith survey found that compensation was the second most important factor in deciding whether to remain at an organization.

“For this reason, salary increase can have a significant impact on recruitment,” Martin explained, adding that flexibility and work-life balance was the top factor, and management came in third place. 

Besides compensation, another big contributor to the turnover issue is those with several years, if not decades, of experience leaving the sector. RN retirements, she said, are a big factor contributing to the estimated shortage of more than 300,000 nurses this year. And, as a byproduct of this exodus, up-and-coming staff are now considering new opportunities. The survey found that 57% of healthcare leaders were considering a change in 2017, career advancement being a major factor. 

More bankruptcies ahead?

While a successful economy may, in part, increase competition for labor, other factors are contributing to nursing homes' financial challenges. 

These include increases in wage and staffing level requirements. In California, for example, beginning July 1, 2018, a new staffing standard will require SNFs to staff at 3.5 direct caregiver service hours daily, up from the current 3.2 hours, Perry offered. As part of the 3.5 hours, only 2.4 of those hours may be performed by CNAs.

Another factor is the increase in the minimum wage to $15 in some major markets, Perry said.

“All these factors erode profits while reimbursement increases for providers lag rising costs,” he said. “Unless reimbursement is addressed, we could see another cycle of bankruptcies down the road.”

Martin is also worried about this, a highly competitive landscape in which consumer trends and demands present nursing homes with stiff competition. 

“To stay competitive, organizations are adding amenities and providing complex patient care services, while simultaneously trying to maintain autonomy,” she said. 

Alzheimer's care, for example, necessitates different care and facilities for varying stages. 

“This approach to specialized services requires appropriate staff and enhanced technology, adding operating costs,” she reminded. 

Recruitment experts have mixed views about the prognosis for long-term care.

“Overall, it's good, because there are more and more potential residents every year, but there are more challenges,” Leach said. “There is more competition, and rising salary costs. There are opportunities for nursing homes. What they do is on them.”