A red-hot economy. More competition from the acute-care sector. Higher resident acuity.
All of these factors, along with a leveling-off of salaries for leadership positions, have contributed to a situation that has allowed nurses — from staff nurses to lead certified nursing assistants — to command higher salary increases. By these and other measures, signs point to 2018 as the Year of the Nurse, according to experts reflecting on the 2018-19 “Nursing Home Salary & Benefits Report,” the largest annual survey of long-term care professionals.
The survey represents the 41st annual industry analysis from Hospital & Healthcare Compensation Services (HCS). Published by LeadingAge and supported by the American Health Care Association, the report included feedback from about 9,000 nursing homes across the United States. Responses totaled 1,494, resulting in a response rate of 16.7%.
Leadership fared reasonably well over the past year. Among all facilities that participated in the survey, administrators’ salaries grew 3.19% to $110,000, while directors of nursing experienced a 2.34% rise in income to $95,000.
But experts advise an even more accurate picture is from looking at the same participating facilities year to year, not just the ones who responded in 2018. With that data, administrators made 2.8% more in 2018 compared to 2017, rising to $112,035. Salaries among same-participant DONs expanded by 2.03% over a year, hitting $93,092 in 2018.
Nurse power
While there was noticeable growth among certain positions — admissions coordinators received a healthy 3.77% increase in 2018 while directors of human resources received a 3.38% bump — the story of the past year is the salary numbers of nursing staff.
Salaries of staff nurses increased by 3.1% to $28.36 per hour, while salaries of lead certified nurse aides climbed 3.18% to $14.24 per hour.
It’s not surprising that nursing staff are doing well on the compensation front, says Anthony Perry, president of Executive Search Solutions, which focuses on recruitment in the senior living space. “You’re going to put the money where the pain points are to attract staff,” he says, noting that because California raised the staffing per patient day (PPD) standard overall, providers in that state are increasing wages and offering sign-on bonuses in many cases to attract CNAs.
“At the same time, you’re seeing an increase in managed care patients, higher-acuity residents, shorter lengths of stay,” he added. “Most centers are increasing nursing staff to address the higher acuity. All of these things create pain points for staffing for line staff.”
Don McDermott, president of D.G. McDermott Associates LLC, a compensation firm with some long-term care clients, adds that competition continues to be fierce for low-wage workers.
“In terms of [frontline] nurses, there are just not enough of them … There is upward pressure on the bottom of hierarchy,” he says.
At the same time, higher-level nurses are also in high demand because of their skill sets.
“Nurses who have gone on to receive their master’s in nursing, that gets them into a supervisory role,” McDermott says. “When [facilities] have them, they’ll bend over backward to keep them.”
Setting an example
Windsor Care Centers, a long-term care provider with 39 skilled nursing and assisted living buildings in California and Arizona, offers nurse recruitment and retention programs that underscore the need for nursing employees. Just a few years ago, after examining its wage structure, it determined that its mean 2.3% to 2.6% wage increase “didn’t keep up with the Joneses across the street,” says Tim Lehner, chief operating officer of Windsor Care Centers.
As a way to rectify this salary situation, it enacted a wage administration program so that employees can earn an additional wage increase each year based on the success of the facility. Specifically, they can earn extra as a result of their efforts and the facility’s achievement on preset goals in five main areas: customer service, overtime, survey, worker safety and survey. Success in each of these areas is worth a half-percentage point of their salary, and the employee can choose four of the five areas to pursue.
Employees calso an receive a quarterly bonus for coming to work on time with no unscheduled days off. To help make the program, known as the perfect attendance bonus, more attractive, the company is piloting it on a monthly basis in five facilities so that employees can be eligible for the equivalent of a day’s pay every month.
The company, which also has an aggressive education and scholarship program to help employees become LVNs, RNs, CNAs and other positions, says that the programs “have not stepped up our game; they’ve completely changed our game,” Lehner says.
The provider needed to go to such lengths because of an economy with nearly full employment and stiff competition in the market from places such as Jiffy Lube, which pays hiring bonuses.
“It’s a tough market,” points out Roy Bailey, director of talent acquisition for Windsor. “We can bring employees in, but we have to come up with programs that set ourselves apart from acute hospitals and other organizations that pay a lot more.”
Adds Linda Pacheco, Windsor’s vice president of talent management, “The best recruitment strategy is a retention strategy. We’re looking at what we are doing to continually develop our employees.”
Windsor also has started using recruiters. “That changes our recruiting game from reactive to proactive,” Bailey says. “These area recruiters will become marketers. They’ll be attending graduation ceremonies. They will be out in a community fostering relationships and promoting our scholarship program as well.”
Leadership strategies
The increase in demand for nurses has actually factored into the modest growth among salaries for leadership positions, such as administrators and DONs, Perry believes.
“The deterioration in margins that a lot of companies are experiencing due to increases in compensation for RNs and CNAs primarily, without the reimbursement to address it … [has] slowed administrator and DON increases,” he says. “That and the fact [administrator and DON salaries] have been on a faster clip the last couple of years, it’s only natural you’d see companies take a breather and put their money where it’s necessary and critical.”
But as with efforts for nurses, organizations also are going out of their way to retain and attract new leadership talent, says Matt Leach, senior consultant with Total Compensation Solutions.
“I think we’re seeing a lot of turnover due to retirements at the top of the houses,” he notes. “What that leads to is organizations need to make sure they are offering a competitive market range in order to retain their current talent and attract new talent.”
Many long-term care organizations for the first time are moving toward a formal incentive plan, he says. This helps them to compete with higher-paying acute care organizations and to work around the problem many facilities face of decreasing revenue and increasing salaries.
“If they create a short-term incentive plan with predetermined goals and set payout amounts, they can share with executives in the success of the organization,” Leach says.
Because of the competition from the acute-care sector, long-term care has to be creative with its compensation.
“They don’t have the kind of money where they can compete with hospitals or some other organizations in the external market and they have to be smarter with their money,” Leach says.
Improved turnover
Not surprisingly, turnover has reflected trends in the C-suite and at the nursing level. Turnover among top-level executives edged up to 18.64% from 17.62% last year. Among nurses, turnover has fallen for the first time in three years.
Staff turnover for registered nurses landed at about 33.94% this year, a 1.75 percentage-point dip from last year, but up from the 29% mark in 2015. The turnover rate for licensed practical nurses also ticked down to 28.83% in nursing homes, compared to 30.77% in 2017.
Other signs of wage strength are actual and planned increases. In this area, the picture was slightly dim. Planned increases for the upcoming year decreased across the board compared to the actual percent increases granted last year.
“One usually hopes to see a positive increase for the upcoming year,” notes Rosanne Zabka, director of reports for the Hospital & Healthcare Compensation Service. ”It’s not a drastic decrease, but it adds a few clouds to the otherwise sunny forecast.”
Certain trends weigh on the industry. Minimum wage laws, for example, have been tough on certain areas of the country, Leach notes. This has created a compression issue where increased wages among workers are putting pressure on supervisors’ pay. Minimum staffing requirements continue to drive recruitment for nursing staff.
Immigration reform and pay equity laws remain hot-buttom issues. The latter, legislation that protects employees on the basis of gender, ethnicity, race and national origin, is particularly fascinating, notes Paul Gavejian, managing director of Total Compensation Solutions.
“In terms of compensation of the rank and file, this is going to be an issue for quite sometime now,” he says. States that have passed this type of law include California, Massachusetts, Oregon, Puerto Rico and Delaware.
Despite some of the continuing uncertainty regarding compensation in the field, there are encouraging developments. Facilities’ move to implement compensation programs up and down the payroll is one of them.
“They are doing a better job than they have in the past,” Leach says. “They are implementing compensation policies that are able to save some money and bring many compensation features to the current century.
“They [previously] were able to get away with not having as much of a salary administration system in place. Now, with their growth, with the difficulty to fill some of these roles, they are in a better place from that aspect.”
From the November 2018 Issue of McKnight's Long-Term Care News
