Admin pay averages $100K; DONs $86,690
The market for experienced leaders is heated, one expert observes.
The long-term care sector continues to show signs of steady growth, as modest rises in management salaries this year illustrate.
Among all facilities that participated in the biggest annual survey of long-term care professionals, salaries for administrators saw robust gains this year, rising 5% to $100,000 in 2015, up from $95,178 in 2014. Wages for directors of nursing increased 2% to $86,692 in 2015.
This is according to the 2015-2016 “Nursing Home Salary & Benefits Report” from Hospital & Healthcare Compensation Service (HCS).
Its 38th annual industry analysis, which is published in cooperation with LeadingAge and supported by the American Health Care Association, surveyed approximately 12,500 nursing homes across the United States. There were a total of 2,089 responses, a return rate of 16.7%.
A more accurate story
While the numbers across all facilities provide valuable information, a truer picture regarding salary changes can be gleaned among the facilities that participated both last year and this year. According to this same-facility metric, administrators' salaries rose 2.47%, to $119,197, up from $116,319 a year earlier. Similarly, assistant administrators also made strides, earning 1.68% more, for an average of $96,380 this year.
Staffing organization pros are not surprised by the salary upticks in management positions.
“Starting at the top, I think administrators' rising salaries are mirroring other industries, where the topline is growing faster than the frontline staff,” said Anthony Perry, president of Executive Search Solutions.
Industry observers took note that the position of chief financial officer once again received a higher salary boost than the administrator position this year. The CFO salary climbed 2.5% to $123,070. Such an increase points to the significance of the CFO position in the nursing home setting, believes Alyson Cutshall, MSW, vice president of Post-Acute Services for the senior-level recruitment firm, B.E. Smith Inc.
“As value-based reimbursement is becoming more prevalent across the healthcare continuum, the role of financial leaders is increasingly critical,” she pointed out. “Salaries for financial executives across the healthcare continuum are increasing as leaders are expected to strategically navigate healthcare's changing fee structures.”
Added Rosanne Zabka, director of reports with HCS: “This shows the importance of a financially sound facility, and the CFO role in the nursing home.”
The CFO position was actually the second-highest paid this year. Executive directors are at the top of the salary pyramid, making $171,008 on average this year, a 2.16% jump from last year. Administrators took third overall in the payment department. Rounding out the top five are controllers, with an average salary of $104,039, and directors of therapy/rehabilitation at $97,493.
Cutshall says that salaries of executive directors will continue to rise as a result of the competitive marketplace.
“While salaries for nursing center CEOs have risen, the average salary is still smaller compared to CEOs of other healthcare providers,” she noted. “CEO salaries will continue to rise as nursing centers compete for experienced leaders who can positively impact patient outcomes, drive initiatives to lower the cost of care, and as healthcare becomes a closer ‘community' with acute and post-acute organizations partnering across the continuum.”
As more baby boomers enter Medicare, the competition for strong nursing home leadership is intensifying, Cutshall added.
“The market for experienced leadership is extremely competitive as nursing centers seek executives with the skill sets to successfully lead through an increasing demand for care as well as increasing quality outcomes,” she explained.
There is more fluidity between the acute-care market and nursing home market, Perry agreed.
“As the industry has become more complicated with the acuity level rising, it's requiring a more sophisticated leader,” he noted. “These organizations have long ago realized that someone in the industry for 30 years may not be the most equipped to do [a certain position]. It would be better to go with someone in hospital administration, for example.”
And facilities are becoming choosier, Perry added.
“We're seeing more movement, more activity now than we have over the last two years,” he says. “We're seeing clients more focused and more selective than they have been in recent years in terms of who they are hiring. I see them being more selective; their screening is more intensive.”
Raises for DONs
Wages also have grown for nursing managers. Among same-participating facilities, salaries for DONs increased to $93,290 this year from $91,958 last year, a 1.45% uptick. Earnings for assistant DONs in this group experienced a 2.13% rise, to $69,003 over last year.
Zabka observed that the salary increase for DONs overall was less than previous years. Salaries among same-participating facilities for staff nurses increased by 2.27%. Typically, salary increases alternate between department heads and frontline staff, she said.
Actual vs. planned increases
One key sign of strength in the sector is the continued improvement in actual and planned salary percent increases. Actual percent increase is “optimistically still increasing,” Zabka explained.
The national actual percent increases for management was about 2.46% this year, while the national actual percent increase for CNAs was 2.66%. In terms of planned percent increases, the national average for management was 2.35%, while the national average for CNAs was 2.38%.
Last year, the actual increase for management was 2.31%, while the actual percent increase for CNAs was a more modest 2.15%. Alternately, management expected a planned percent increase of 2.27% last year, while CNAs looked forward to a planned percent increase of 2.3%.
Increases of 3% to 5% were common in the past, Zabka noted. “With economic changes, there haven't been the increases there were 10 years ago,” she observed.
The actual and planned percent increases are an indication that salary budgets are higher than they have been in the past, inferred Paul Gavejian, managing director of Total Compensation Solutions based in Armonk, NY.
“What this is telling us is [nursing homes] are trying to maintain their employees, No. 1, and No. 2, they are trying to stop people from jumping ship,” he said. “If you keep people in-house, you don't have to retrain, you don't have to start people from scratch. You know what you've got in terms of performance.”
While management salaries dwarf lower-level positions, in terms of actual and planned percent wage increases, CNAs outperformed their bosses this year. This again supports the fluctuation that happens year-to-year between management increases and frontline increases, Zabka said.
“We generally do see a fluctuation. One year, the support will get a bigger increase. Generally, not everyone gets it all at once, but it is flip-flopping,” she said.
Added work duties play a part too.
“Recent salary increases for nursing center leaders, as well as for director caregivers, in the nursing center environment are reflective of the evolving roles and the increasing responsibilities place on these leaders and care providers,” explained B.E. Smith's Cutshall.
One position that continues to see larger growth year-to-year is CNA. The average hourly rate of CNAs increased by 1.96% in 2015, to $11.82. That increase compares to 1.05% last year and 0.34% in 2013. Industry experts agree that nursing homes are rewarding a position that they recognize is vital to the success of their organizations.
“It is becoming a much more critical position,” Gavejian said.
“[CNAs] are so much about what happens at the nursing homes,” Zabka added. “They are really with the patient so much. It's such a low-paying job. I think this [larger increase] is the nursing home industry trying to elevate the wage of the position that is so important to them.”
Cutshall agreed that appreciation is becoming more universal.
“An increasing number of healthcare leaders are recognizing the value CNAs provide both to patient care and the overall culture of healthcare systems,” she stated. “Many studies have shown that residents' and families' opinions of care are largely determined by the care, support and relationships developed with their personal caregivers. The financial increase is reflective of providers understanding the crucial role these team members play in delivering quality patient care.”
Upward wage momentum
While there is competitive pressure from inside the nursing home sector to increase CNAs' wages, there may be external pressures being placed upon the industry, as well.
A fast food workers' campaign, Fast Food Forward, which is backed by the Service Employees International Union, has pushed successfully for an increase in the minimum wage in municipalities throughout the United States. Over the last two years, during which several nationwide strikes took place, several cities and the state of New York have moved to enact or are in the process of enacting a $15 minimum wage for various workers. These cities include New York, Seattle, Los Angeles and Washington.
And fast food is not the only industry that is forcing change to pay at the frontline level in nursing facilities. This year, major retail chains Walmart, Target and T.J.Maxx disclosed that they are raising their minimum starting wage to $9 an hour. A year earlier, Gap and Ikea made similar wage-hike announcements. In June, Ikea said that based on the success of its earlier pay raise, it plans to implement another wage increase next year, increasing the average store's starting pay to $12 per hour.
Good marks for turnover
A major indicator of an organization's success is turnover. This year, low turnover (11.7%) was a hallmark nationally among department heads. That compares to the national average of 16% a year earlier. Meanwhile, the national average for turnover among CNAs rose to 36.51% this year, up from 30.15% last year.
“Turnover is declining slightly in most areas of nursing homes,” Zabka said. “Wages are more satisfactory, so employees are not leaving. It's comforting to see an increase in salaries and a decrease in turnover.
Still, on a regional level, certain areas of the country are hurting. Among department heads, turnover was 25% in the East South Central region of the country. Among RNs in the same region, turnover ballooned to 43.4%. [East South Central encompasses Alabama, Kentucky, Mississippi and Tennessee.] Turnover for CNAs, meanwhile, totaled 57.39% in the West South Central region, an area that comprises Arkansas, Louisiana, Oklahoma and Texas.
“These folks think they can improve pay if they cut across town,” Gavejian comments. “We are looking at facilities in cross proximity to each other. We are seeing turnover increase because they want to get higher pay. This reinforces the theory that it pays more to jump ship.”
And nursing homes, when it comes to workers' needs, take note: Employees are becoming more savvy. Just as nursing homes have to reward employees with larger compensation to keep them, employees are realizing they have to do their part in their current positions to succeed, Perry pointed out.
“They know that their longevity in their next position is going to be based on their success [in their current position],” he said. “That's a switch from the ‘greener pastures' [mentality] of years ago. What they're starting to look for is a different opportunity to be successful, and they are asking more and better questions of future employers than they have in the past.”