How does a constricted labor market affect long-term care? Try unprecedented demand for high- and low-level positions. In turn, conditions have pressured salaries higher.
“The labor market has never been as tight as it is today and organizations are having to get much more creative to attract and retain staff,” points out Anthony Perry, president of Executive Search Solutions, a recruitment firm for the senior living sector.
The longest bull market in United States history has turned up the pressure for employees up and down the long-term care chain — from CNAs to the C-suite — according to experts who commented on compensation data in the 2019–20 “Nursing Home Salary & Benefits Report,” the largest annual survey of long-term care professionals. It was published by LeadingAge and supported by the American Health Care Association.
The 42nd annual industry analysis from Hospital & Healthcare Compensation Service gathered input from 1,611 U.S. nursing homes, encompassing 166,000 employees.
At first glimpse, those at the top of the compensation pyramid had a less than stellar year. Administrators’ national average wage expanded by 1.67% to $111,842, while directors of nursing experienced a 1.81% salary increase to $96,720.
But a closer look conveys a slightly different picture. Among facilities that also participated in the survey last year, administrators’ salaries increased by a robust 4.35% to $127,967 in 2019. Directors of nursing saw a slightly more modest 3% salary increase to $103,343 using the same comparison method, which analysts typically use as a better method of comparison.
Other high-level positions saw strong wage growth. Salaries of executive directors jumped to $207,848 in 2019, a whopping 5.45% increase. Retirements, in part, are driving this demand, notes Matt Leach, senior consultant with Total Compensation Solutions based in Armonk, NY. A total of 60% of CEOs or executive directors are said to be retiring in the next few years, he says. This has resulted in increased turnover and the need for long-term care to pay bigger bucks for its CEOs.
Among his firm’s clients, for example, three have new CEOs. These three were: promoted from within, snatched from another area of healthcare, and lured from a continuing care retirement community across the country.
“They [facilities] have to pay key executives more money, or recruit and retain the ones they have,” Leach explains.
Thanks to a booming economy, positions at both ends of the spectrum fared well over the past year. Consider the following:
Wages for housekeepers expanded by 2.97%, while those for wait staff rose by 3.06%.
It’s a question of supply and demand, compensation experts point out. When supply cannot meet demand, it creates a labor shortage and wage pressures. The hospitality field, including hotels and restaurants, is among the industries competing with long-term care, Leach notes.
“I can’t remember a time when it [the labor market] was tighter,” Perry says. “Where last year it was tight, the ancillary or support positions, like housekeeping, maintenance, cooks, were still very easy to fill. This year, those positions are becoming harder and harder to fill.”
As a sure sign of the unique long-term care labor market, Perry offers this example: Cooks are now receiving sign-on bonuses.
“I had never seen that before in my three and a half decades in the business,” Perry notes about the $2,000 sign-on bonus recently paid to a cook in the Phoenix area. “Now I’ve seen it.”
Perhaps underscoring facilities’ labor challenges, some of the biggest salary increases took place among positions related to recruitment and retention. Examples: Compensation for the director of human resources rose by 4.01%, while pay for the director of staff development increased 3.21% and the salary of the scheduling coordinator expanded 3.56%.
Regarding the last position, Leach notes: “If you have a good scheduler, you’ll have a good organization. A good scheduler means everyone is happy and you retain talent. They [facilities] see a competitive advantage and they are willing to pay higher wages for a job like the scheduler.”
As in years past, the strong economy continues to drive demand in one key category: nurses.
“For CNA and nursing positions, supply is not meeting the demand and it will continue to become more competitive as we have growth in the industry,” says Mark Heston, president of Heston and Associates, a consulting firm that works in the areas of leadership development and coaching, compensation and strategic planning.
Turnover rates reflect that nurses — LPNs, CNAs and RNs — are still a hot commodity. The national average in turnover was 36% among RNs, 32% among LPNs and 46% among CNAs.
Moreover, there is an increasing number of retiring nurses in the acute-care sector, which affects openings in the long-term care space, Perry says.
The strong economy also may be creating resident demand.
“The two are not unrelated because there is a lot of retirement going on, and a lot of people moving into CCRCs,” says Paul Gavejian, managing director of Total Compensation Solutions.
But the economy is not the only factor affecting compensation. Staffing ratios, such as those in California, are compounding staffing challenges. There is also significant movement involving mergers and acquisitions of nursing home chains. Because of easy access to capital, for instance, many small chains have cropped up in the field.
“This has become more prevalent because of cheap money … which is creating the opportunity for people to start their own businesses,” Perry says.
Mission: Recruit and retain
In the current labor environment, facilities that are able to recruit and retain their employees will be the real winners, compensation experts point out.
“One of the biggest problems we have in the industry is wage pressure, and if you don’t give people a reason to stay, they’ll leave,” points out Heston, who earlier in his career served as chief of human resources for Life Care Resources, which manages rental senior living communities.
One way that facilities increasingly are luring employees is through robust incentive plans, according to Leach. Under these bonus plans, an employee’s pay will vary from year to year based on a facility hitting an organizationwide goal.
Bonus data provided in the survey suggests that facilities are succeeding financially. The percentage of bonus to salary was 16.3% for executive director, 15.4% for chief financial officer, 14.4% for director of human resources and 13.7% for nursing home administrator.
“At the end of the day, the top organizations are performing quite well and the pay reflects that,” Leach says.
Attracting and keeping qualified talent does not have to be complicated. It begins for The Clare, a continuing care retirement community in Chicago, at the interview process, explains Kyle Exline, its executive director.
Since the facility is near Northwestern Hospital, there is not a shortage of capable registered nurses and CNAs in the area. The challenge is finding the right employees for the environment, Exline notes.
“We do a really good job of taking the interview process seriously and vetting candidates appropriately and making the best decisions we can,” he comments. “Retaining them and keeping them motivated are then what we strive for.”
As opposed to trying to “fill holes,” the community focuses on finding the right candidate from the get-go, he explains. While a person’s experience and capability for the role are key, the facility prioritizes the candidate’s personality, including their mannerisms and how they interact, over their professional experience and training. The rationale? While it feels confident it can teach and train candidates in cases where technical skills are lacking, it cannot necessarily help someone fit into the culture of the organization.
“Those more ‘soft skills’ are what we are looking for,” Exline says, adding, “the soft skills are much harder to teach.”
Exline notes that the first 90 days are especially important for a new hire, and the organization does not hesitate to execute a termination if the employee is not passing muster.
In terms of retaining employees, the facility provides additional training to workers, offers tuition assistance to encourage staff to receive additional schooling, and promotes from within. It regularly recognizes successful staff members, including a “kudos program” in which residents and family members submit cards touting employees’ accomplishments.
Those little touches make “people feel like they are part of this community, part of this family … we are looking for ways to make them feel appreciated,” Exline says.
The facility’s efforts apparently have paid off: Turnover is less than 22% for the 10-year-old facility.