News analysis: Admin, DON salaries reach new heights
Median annual salaries for nursing home administrators, directors of nursing and many other top management positions didn't just crawl past last year's record highs. In numerous instances, they leaped past by impressive margins.
The administrators' pay rate jumped 5.08% to $76,454, while directors of nursing shot up by 7.07% to $66,917. Their second-in-commands also did well. Assistant administrators improved 7.43% to $58,633 and assistant DONs rose 5.02% to $54,815.
The median is the point where half of all respondents are above and half are below.
Bonuses also continued to rise while a shift to more merit-based compensation plans also gained momentum, according to the recently released 2005-2006 Nursing Home Salary and Benefits Report.
Bonuses, for example, rose 15.4% for administrators and 16.1% for DONs after rises of 13.6% and 13.2%, respectively, the year before.
"It was a good year," said Rosanne Cioffe, director of reports for Hospital and Healthcare Compensation Service, Oakland, NJ. Her firm conducted the survey and produced the report in conjunction with the American Association of Homes and Services for the Aging. More than 2,300 facilities took part. A little more than 65% of them held for-profit status.
After last year's salary increases rang in at a more moderate level, Cioffe predicted they wouldn't go over 4% this year. Happily, she was wrong.
"It was nice to see things pretty consistently going up," she said. "Not just in nursing homes, but globally in studies we're seeing increases of 4% and above a lot of times in departments. Bonuses also increased, so all-in-all it was a good year."
Cioffe theorized that in recent years there wasn't as much funding available and "everyone was working three jobs and odd hours. Now, they have the money to pay a little more and reward those who were getting by for so long without anything."
That could include head nurses and supervisors, who are more likely to stick in a position after working for so long to achieve their status, she explained.
The report also showed traditional geographic compensation trends continued. The Pacific and Northeast regions still sported the highest compensation levels, while the region covering the Dakotas down through Missouri continued to trail all others.
Higher Medicare reimbursement rates and staffing shortages appear to be having their predicted positive effects, salary analysts say.
It was the first time salary increases had been rise so noticeably above 5% in a long time, noted Paul Dorf, managing director of Compensation Resources, Upper Saddle River, NJ.
"I think it's partly the times. We have an aging population, and it seems to have a little bit more money. I went through this about 11 years ago with my mother," he said. "It's not a comfortable idea to put your parents in a nursing home. If you're going to do it, you want to go with the best you can possibly afford."
Perhaps more important for the majority of facilities that rely on government reimbursement, facility managers have simply become better at stretching a dollar, Dorf says.
"They're learning to run them more as a business, more effectively than in the past," he said. "We have clients in all the different disciplines – continuing care retirement communities, assisted living, full nursing homes and community health centers – and they all seem to be doing a little better because they've become very effective running them as a business. I think they weren't quite sure about things before: They might not have branded themselves as businesses.
"Now, they're much more cost conscious," he said. "I don't think they're cheap, but they're pushing a penny as far as they can go, getting discounts, buying things in mass, having cooperative arrangements means more buying power. They're also trying to get away with smaller amounts of staff where appropriate and not mandated. If you can have an LPN doing something instead of an RN, you take a little savings."
Dorf feels nonprofits' boards also are becoming much more cognizant of their duties. This includes looking closer at compensation levels so they're not simply passing along wage increases based on relationships.
"I think everyone realizes that in order t