Salaries increase for DONs, administrators

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Salaries increase for DONs, administrators
Salaries increase for DONs, administrators

Good nursing leaders are a hot commodity – at least if the most recently compiled salary findings are to be believed.

The national median salary for directors of nursing (DONs) at nursing homes soared 5.2% this year. Their assistants enjoyed a similar rise (4.9%). That translates to $72,515 for DONS and $60,022 for assistant DONs.

Pay for administrators, meanwhile, rose at a more moderate clip. A 3.0% increase brought the national median salary for administrators to $82,400. Assistant administrators' median pay climbed to $59,357.

The figures are contained in the newly released 2007-2008 AAHSA Nursing Home Salary & Benefits Report. More than 2,500 facilities took part in the 30th annual survey, which is published by Oakland, NJ-based Hospital & Healthcare Compensation Service.

With demand high for qualified nursing home employees, from geriatricians down to nurse aides, it's no wonder that nurse leaders are seeing significant pay raises, said Phillip B. Wilson, vice present-general counsel of LRI Management Services Inc., Broken Arrow, OK.

"If you have one that's good, they're going to be looked at by others, so you'll have to pay them to keep them," Wilson said.

Nurse managers' labors bear fruit

The long-term care industry has experienced a period of relative stability and managers' salaries are reflecting that reality this year, a new survey suggests.

While the national median salary for administrators rose a respectable 3.0% in 2007, nurse leaders enjoyed an even higher increase. Directors of nursing saw their national median salary jump 5.2%, while their assistants' salaries expanded by 4.9%.

In hard numbers, that means an administrator's national median salary was $82,400. It was the smallest median raise for the position in five years. Assistant administrators hit their highest mark yet at $59,357, thanks to a 10.8% increase. (That rise followed a dramatic drop the year before, suggesting this was a correction to a statistical sampling quirk.)

This year, DONs rallied to a national median salary of $72,515. Assistant DONs rose to $60,022 annually.

The median is the point where half of all respondents are above and half below.

Nearly 2,600 facilities took part in the 30th annual Nursing Home Salary and Benefits Report published by Hospital & Healthcare Compensation Service of Oakland, NJ, with assistance from the two major U.S. nursing home associations.

(Although the number of participating facilities rose for this year's survey, there weren't enough responses for some titles in some regions to provide statistically significant analysis. Those few instances are marked by "NA" in our accompanying charts.)

Nearly 83% of respondents were for-profit providers this year, up from 67% the previous edition.
Not only was nonprofits' participation rate down, national median salary levels for administrators and DONs in nonprofit facilities actually retreated. Nonprofits with fewer than 100 beds registered sharply lower figures, while those with 100 or more beds inched up slightly.

"If you single out that data, it looks like they've stepped backward a bit," said Paul Dorf, managing director of Compensation Resources, Upper Saddle River, NJ. "Certainly employers aren't taking money away from them, but I think they're having an influx of new people into those positions, so they're probably being paid less than their counterparts were previously because they're new."

Leveraging up

Nurses overall have benefited from healthy salary increases, Dorf noted.

"Clearly, the rates for nurses are going up. Occasionally there's a time period where there are some places where there's no shortage. But for the most part, I think they're a universal issue. And as compensation for nurses goes up, so must the management team's. There's a leveraging effect because we have to move the bottom."

In addition to higher base pay rates, registered nurses have many opportunities to work extra hours, which means plenty of overtime if they wish, Dorf pointed out.

And that can inflate the numbers even higher, said Phillip B. Wilson, vice president-general counsel, LRI Management Services Inc., Broken Arrow, OK.

"For skilled nursing, you can go many places, and if you're willing go to work extra hours and weekends, you can make a lot more than $72,000," Wilson said. "A nurse can demand pretty good pay, even in long-term care, which is not typically your highest paying sector in healthcare.

"The fact that other positions are maybe more in the 2% to 3% raise range really is not surprising," he added. "That's pretty much true across sectors. Those are sort of cost-of-living increases, if you want to call them that."

According to the Bureau of Labor Statistics, salary increases in healthcare positions overall hovered around 3.4% for exempt employees and 3.2% for non-exempts.

"Generally, 4% is the average salary increase from year to year. You see a lot of that," added Karen Callahan, senior editor for compensation for Business and Legal Reports of Old Saybrook, CT.

Giving more

Extra pay doesn't necessarily have to come through base salary, Wilson noted.

"If you get facilities with a high census, typically making a bit more money in a year, one thing they may use that may not show in salary figures is pay bonuses," he said. "To some extent, I think it's a fair way to look at it. They don't know what's going to happen with reimbursements next year so they don't put it in the base salary.

"The biggest thing with my clients is the bonuses – signing bonuses or bonuses based on facility performance, and things like that," Wilson added.

Dorf said the abundance of work for nurse managers has created situations that are a bit troubling.

"We did some focus groups with lead nurses and what was happening is we were seeing women promoted to supervisory positions, lead positions, and then they went back to their old positions because they found the extra money wasn't worth it for the responsibilities they had," Dorf said.

"In some cases, they were making less than before, only with greater responsibilities, so they said, 'Why put ourselves through this?'"

Slowdown ahead?

There is one sign, however, that good times may not be permanent. Respondents indicated that salary increases for nursing home managers and nurses next year are expected to rise at a slower pace.

This year, administrators' pay raise lagged that of other positions, but that is no cause for alarm, Dorf assured.

"People are getting the same type of dollar increases, but as base salaries continue to rise, the percentages come down," he noted.

Pressure over providers' uncertain Medicare and Medicaid reimbursements will always overshadow skilled-nursing pay rates – at least under the current system, he added. But the laws of supply and demand, particularly in a need-based industry such as skilled nursing, will continue to keep pay rates growing, he said.

How tight is demand? Pretty tight, although over the past year, it became a little bit easier, on average, to fill registered nurse and certified nursing aid vacancies. RN and CNA positions remained open 44 and 24 days, respectively, or about 31⁄2 days and
21⁄2 days less than a year earlier.

Therapy positions retained their status as "most difficult" to fill, actually broadening the gap between No. 1 and No. 2 (RNs). The average time it took to fill a therapy position soared to 72 days, up from 51 days a year earlier, according to the HCS report.

"The shortages are not going to get better. There will be more needs," Dorf said. "The bottom line of all this is that compensation is not going to come down."

He told of one recent case where a home health operator tried to freeze pay rates for two years and then cut them by 1% across the board.

"They saved about $76,000 but what they actually lost was 10 times that much because of turnover and dissatisfaction," Dorf recounted. "Workers just slowed down. Instead of making four visits a day, they might make three."

There was no real slowdown in the pay hikes at the top end of this year's survey scale. Once again, CFOs registered the highest national median salary, the only title higher than administrator. CFOs' $97,912 national median marked a 7% rise over a year ago.

How to pay

When it came to criteria for granting raises, some facilities reported using both merit and cost-of-living (COLA). Across the board, more employers said they were using merit as a measure of pay worthiness - usually at the expense of COLA and step raises.

Dorf said that nursing has seen the rise of "magnet-type" programs, which are specifically geared toward rewarding an employee's experience, work contribution and skill sets.

"It's sort of a skill-based pay type of program that seems to be taking hold. You show you've taken courses, know the latest technologies and have the skills," he said.

Editor's note: For more information, please see the print edition of McKnight's Long-Term Care News September 2007.