After a two-year stretch in which nursing homes’ largest employee group made salary gains approaching 20%, relief for cash-strapped providers may be in sight, even if far on the horizon.

In 2022 alone, wages for certified nurse aides grew by 11.15%, with registered nurses just behind at 11.08% and licensed practical nurses netting about 9.38% more over the previous year.

Those findings headlined the 2022-2023 Hospital & Healthcare Compensation Services’ Nursing Home Salary & Benefits Report, which also found surging turnover among all three key employee groups.

The report is an annual bellwether of just how tough it can be for providers to hire and pay for consistent, quality frontline staff. But some indicators show pressures to increase rates may be easing just the slightest amount as the economy cools.

“I have never seen anything like that. It’s just unprecedented to see 20% in two years, there were so many factors that went into that increase that I would hope we’re not going to see 20% again in the future,” said Matt Leach, a compensation associate at Total Compensation Solutions who has been in the field for more than two decades. “It’s still hard to attract and retain, but there might be some signs of slack being created,” he added. “There’s a good chance the worst is over. We’re seeing some stabilization in the rates.”

Should that prove true over the next few months, it would be welcome news to providers.In 2022, as the pandemic raged on and unemployment dropped to near-historic lows, nursing homes were forced to dole out unheard-of raises simply to garner candidates.

The pay rate for CNAs jumped from $15.23 in 2021 to $16.87 in 2022, an 11.15% increase that followed a 7.13% bump in 2021. RNs saw their average pay hit $34.88 hourly, while LPN rates jumped to $26.30.

Those rates represent the 50th percentile of data in the annual nursing home salary report, now in its 45th year. The reference book is created annually in cooperation with LeadingAge and the American Health Care Association.

Top nursing home leaders saw smaller average pay jumps than caregivers between 2021 and 2022, with nursing directors gaining 5.4% to bring them to a mean of $108,799.

Meanwhile, nursing home administrator salaries rose an average of 4.9%, up to $124,297. In a companion report issued in February, HCS found long-term care executives at multi-site companies realized an average overall salary increase of 2.67% in 2021. The highest ranked among them did not receive increases, on average year.

“The biggest finding is that lower-level jobs increased at a much faster pace than higher-level jobs, and that goes against historical trends we’ve seen,” Leach said. “It really speaks to the market for talent and the limited supply of workers who can do jobs such as CNAs and resident assistants.”

DON salaries don’t move the needle

Director of nursing vacancies also remain among the toughest to fill, according to Julie Osborne, director of recruitment at LeaderStat, a national firm focused on executive recruiting and interim leadership solutions for healthcare providers.

“The landscape hasn’t changed a lot with the greatest need being for the director of nursing,” Osborne told McKnight’s Long-Term Care News. “It’s just a critical position. The stress level that those folks encounter on a daily basis has not changed, and it’s probably increasing because of the staffing issues.”

DONs account for about 80% of the permanent placements LeaderStat is hired to fill. Increasingly, job candidates refuse to be moved by high-dollar offers alone.

“If we just go in and say we have a DON opportunity at another facility, they get 10 of those a day and they a) aren’t going to return our calls and b) many times say they don’t want to make the change because they want to stick it out where they are from a commitment standpoint,” Osborne said.

“You have to change the narrative to what they’re interested in hearing about because they get so many calls a day for different opportunities, and typically, they know what’s in their market,” she added. “Do they see themselves retiring from that organization? Do they want a higher-level position or a regional opportunity? Or are they looking to relocate to a better climate, so looking at what we might have available in the warmer states?”

Providers who want an experienced DON will need to pony up plenty of cash and expect to wait a long time to fill the role. Osborne’s clients used to ask for DONs with five years of experience at one location, but that’s no longer a viable request because it limits searches too much, she said.

Many nurses in leadership roles have used the increasing pay and other incentives of the last two years to find jobs that fit more of their needs and wants.

Mixed reliance on bonuses

Bonuses remain a key way for many providers to attract talent, especially the workers needed for RN positions and higher-level roles.

Just over half (50.7%) of HCS respondents said they had used some type of sign-on bonus to recruit new staff. Facilities paid averages between $622 for housekeeping staff and $6,950 to entice DONs. RNs averaged $4,566, while the average for all positions was $1,083.

“It’s a way to offer more to new employees without having to redo your whole salary structure,” a tactic many providers already explored early in COVID, Leach noted. Just 13% of providers included in the survey said they had increased their merit pay or overall staffing budgets.

Leach also said nursing homes have been awarding bonuses at time of hire and after certain time thresholds to encourage longevity in the role.

Osborne said the ranges in the report reflected what she was seeing in the market this fall.

“It ranges anywhere from about $5 to $10 [thousand] for a sign-on bonus, but then the performance-based bonuses and the retention bonuses, they really have ratcheted that up,” she said. “What I have found is that they do a retention bonus, where, if you stay one year, you get this amount. But if you stay two, that’s doubled. It really speaks to high turnover for those particular positions.”

Although Osborne was surprised bonuses being awarded to RNs weren’t higher, she believes some providers are spending more to improve their experience on the job. She’s seen some operators reduce burdens for nurse managers by adding more frontline workers like med techs, which may then allow higher level nurses the time they need to focus on assessments and other duties.

Leach noted that some providers also have taken up targeted or building-wide spot bonuses “to try to get through these current times.” Those can often entice employees to stay longer, but the amount needs to be substantial enough to appeal to a broad range of workers.

“That can be a pretty nice chunk of change for some of these folks, and it doesn’t affect your fixed costs,” he said. “But the negative is, it doesn’t stop them from leaving (the day after) the spot bonus is given.”

Questionable future

One key observation is that the complete revamping of pay ladders and pay scales due to COVID may be over. But the new pressures keep piling on providers.

In addition to low unemployment, many areas have adopted new minimum wage laws or pay transparency and equity rules that will increase worker demands. Unmitigated inflation also has an outsized effect on low-income employees, forcing them to consider better paying jobs even if they might not want to leave otherwise.

“The hiring is tough because it’s like a snowball effect,” Leach said. “The CNAs, their salaries, their wages are at such a rate that they’re depending on that check to pay their increased costs in rent. If they can get $2 or $3 more an hour down the street, they’re almost forced to take it just because of what it means for their ability to pay all of their bills.”

The reality, though, is that most providers are unable to keep up with the competition from other employers because they can’t increase the rates they charge their customers.

“I think things are starting to level, so I think that the conversation has changed,” Osborne said. “The unfortunate side is that we see budgetary constraints. Every client we have brings that up. Reimbursement has not changed significantly.”

Facilities are projected to begin seeing additional baby boomer demand within the next two to five years. That may complicate the typical storyline, in which it gets easier and cheaper for nursing homes to hire in a recession.

But if demand remains elevated, the sheer lack of new caregivers willing and able to enter the workforce may continue to push wages higher, albeit at a slower pace.

“I don’t think all of these problems are going to be solved if we have a recession or a downturn,” Leach said. “That’s because within healthcare, with nursing homes, so much of this is demographics and just a shortage of workers.”