Salaries for nursing home leaders continued their upward trajectory this year, with many facilities responding to staffing shortfalls by increasing pay more rapidly than in the past and sometimes tacking on significant hiring or retention bonuses.
But underscoring providers’ ongoing workforce struggles, doing more to recruit and retain at the upper levels hasn’t precluded them from having to make major investments on the front lines.
Nursing home administrator salaries averaged $127,763 in 2023, up 3.6% from $123,324 in 2022. Assistant administrators enjoyed a 5.69% average increase, up to $92,514 from $87,533. Meanwhile, directors of nursing saw their average pay climb 4.67%, up to $108.809 from $103,954 in 2022.
Those figures come from the 2023-2024 HCS Nursing Home Salary & Benefits Report published by Hospital & Healthcare Compensation Service (HCS) in cooperation with LeadingAge and supported by the American Health Care Association. The survey provides compensation data on more than 111,600 employees in 46 management and 54 nonmanagement positions in both nonprofit and for-profit settings.
“The executives … are starting to get a higher percentage after the staff getting the bulk of the increases for probably the last two to three years since COVID. It probably started last year, but it definitely is more pronounced this year,” said Matt Leach, senior consultant with Total Compensation Solutions LLC. “When I talk to the HR folks, when I talk to executives, they almost just throw their hands up and say they’re getting hit from both sides.”
That’s because raises for RNs, LPNs and CNAs remain nearly double the traditional increases of 3% to 5%, even if they are a bit more moderate than 2022 increases. RNs saw an increase of 7% (down from 11.1% in 2022); LPNs enjoyed an increase of 8.9% (down from 9.4% a year earlier); and CNAs saw an increase of 9.7% (down from 11.15% in 2022).
Need for increases persists
Those numbers were collected in March and published for the first time in late August. But already, providers are facing fresh whiplash, Leach warned.
“Six months ago, it seemed like it was leveling off somewhat, but in the last three months [since mid-summer] we’ve started to see again the need for increases, especially on the staff side,” he said in late September.
“I still think things are calmer than they were a year or two ago, when you couldn’t even get people for interviews,” he added. “But we’ve gotten a lot of calls in the last two months about organizations just not being able to retain talent.”
Workers are constantly asking for more money and expecting mid-year or annual raises of 4%, 5% or even 8% for CNAs, Leach said, adding that meeting such pressures is unsustainable over the long haul.
Staff demands have been compounded by inflationary effects. Many other businesses can keep upping the ante and pass increased staffing costs onto their customers. But in skilled nursing, increases in reimbursement have largely failed to keep up with higher costs in all kinds of categories, making it harder to keep pouring limited resources into salary budget lines.
That only adds to the ongoing workforce crisis, pushing cash-strapped operators closer to the brink. Consulting and accounting firm Clifton
LarsonAllen, using national data, found skilled nursing providers saw their cost of direct care nursing jump by about $4.4 billion, or 12.6%, in 2022, with hourly nursing wages up 10.6%.
“Financial viability and sustainability are a key concern as operators in many states are strategically increasing wages rates far in excess of revenue increases,” said Stephen Taylor, a principal in the firm’s healthcare group.
“For example, Colorado operators have increased wage rates approximately 27% in the three-year period between 2020 and 2022, while experiencing a median increase in patient revenues of approximately 8%.”
Salary resistance grows, as do bonuses
Leach said some clients are now “taking a harder stand” and trying to limit pay increases while reducing the use of high-cost agency nurses, too.
And that may be accelerating the use of bonuses, which are budgeted as one-time expenses. Leach noted that both higher salaries and bonuses could be due to having to attract new talent as a result of turnover.
Higher compensation in any form is needed to attract younger or recent nursing school graduates as job candidates, added Adam Chambers, founder of Nurse Recruitment Experts. About 30% of his clients are in skilled nursing, and he’s finding it harder than ever to recruit for that setting, in some cases doubling ad spending to net the right RN for a job.
“We’re seeing greater competition because there are fewer qualified nurses compared to the demand, especially in skilled nursing,” Chambers said, noting increases in pay and nurse candidates’ willingness to ask for even more than advertised. “The demand is growing faster because of the aging population, but it tends to attract older nurses. As they retire, they aren’t being replaced quickly from the graduate nurses because they want to work in the hospital.”
While providers must try to offer competitive salaries, that alone isn’t enough to close the deal, Chambers added.
“If they want to earn money as a nurse, then they’ll do travel nursing and hospitals,” he said. “But we find that emphasizing that you’ll have the opportunity to rotate and work with more high-acuity patients [can work]. The best candidates want jobs that challenge the perception that it’s for older nurses and that there isn’t a lot of clinical skill required, which is false.”
Turnover, vacancies compound
Leach agreed that higher average pay and bonuses for RNs and higher positions in 2023 likely reflect losses in the leadership ranks. In many places, leaders in top positions stayed in the skilled nursing workforce throughout the early pandemic, even when pulling double duty as the lower ranks thinned.
But burnout caught up with the sector, leaving more mid- and upper-level management positions in skilled nursing facilities vacant, HCS found. The 2023-2024 report is the first to include vacancy rates by position. Providers reported a 14.5% annual vacancy rate for executives, and nearly 21% of all positions were vacant across job roles throughout the year.
Younger nurse leaders and administrators might be more interested in early career bonuses instead of waiting for a larger payout at retirements, Leach said.
HCS found 80% of those providers who offered signing bonuses did so in three or more positions or departments: 48% of participants reported offering sign-on bonuses for RNs, with an average bonus of $4,879; 46% offered bonuses for LPNs, at an average of $3,770; and 40% gave CNAs bonuses, averaging $2,157.
Some providers have taken the bonus strategy to great new heights in recent years, with a New York healthcare system recently offering RNs as much as $35,000 to sign on with its facilities, which include nursing homes and hospitals.
But among staff nurses, Chambers has seen those types of outliers might actually harm recruitment efforts. His recruitment firm conducted its own survey during the pandemic and found that 80% of nurses said they would be less likely to apply for a position offering a high sign-on bonus.
“It seems like common sense to throw money at it,” he said. “But it makes the employer look a little desperate. It’s a red flag on their staffing situation. … And existing staff don’t really like it if someone is getting $35,000 to come in the door and do the same job.”
Instead, he suggests providers try a trick often employed by hospitals to boost early retention efforts. Offer a bonus at signing, after the job has already been offered, to increase employee satisfaction and encourage positive feedback about the organization’s hiring process.
More changes ahead
Hiring and salary strategies will be even more important in coming years, as states and the federal government move toward mandated staffing levels. Leach said pay for some positions may start to bump up even ahead of the federal mandate’s enactment, especially if workers see their value.
Improving retention is a key long-term strategy, and could help save employers money. And the 2023 HCS survey shows that year-over-year turnover declined for the first time since 2020. It noted that turnover rates for RNs dropped to 39% in 2023, approaching the typical rate of 30% to 35% seen prior to 2020; LPN turnover, meanwhile, decreased to 38% in 2023, moving closer to the standard 30% rate seen pre-2020; and CNAs declined to just under 51%.
Reducing those figures to even lower rates will be critical if providers also will have to ramp up hiring for newly created positions needed to meet specific minimums.
“There could be significant implications on labor costs related to the proposed minimum staffing mandate,” said Taylor, whose firm has estimated the annual cost of the federal mandate at $6.8 billion nationally.
“Although there have been improvements in workforce availability in some areas of the country, SNFs in many parts of the nation are still challenged to find the appropriate workforce,” he explained.
“Ultimately, without conduits to building a sustainable supply of direct care nurses, as well as funding to support competitive wages for direct care nursing, the supply and demand could become imbalanced, creating very real [issues with] access to care.”