Nursing salary hikes remain modest despite labor shortages and looming demographic shifts
January 1, 2016
While the overall economy continued to improve during the past year, most ED administrator salaries remained relatively flat, according to results from the 2015 ED Management Salary Survey. The data show that 40% of respondents reported no change in their compensation levels, 30% reported hikes of 1% to 3%, and just 30% of respondents reported hikes in excess of 4%. However, 10% of respondents reported hikes of at least 21%.
The data present some contrast from last year when more than 66% of respondents reported salary increases of 1% to 3%, although 22% reported either no change in their salaries or decreases in compensation, and another 11% reported increases in the 4% to 6% range.
While salary increases remained modest this year, experts note that looming retirements among aging registered nurses (RN) could put upward pressure on compensation in the years to come.
A report by AMN Health’s Center for the Advancement of Healthcare Professions in San Diego notes that nearly two-thirds of RNs older than 54 years of age are currently deliberating retirement and two-thirds of this group plan to retire within the next three years. The staffing agency predicts a significant impact from this exodus as more than half of the country’s supply of RNs are older than 50 years of age.
While not all surveys predict such a surge in retirements, most agree that the recession prompted a large group of nurses to delay retirement, and with the improving economy, many of these nurses may now be contemplating a change.
India Owens, MSN, RN, CEN, NE-BC, FAEN, director of Emergency Services at Franciscan St. Francis Health in Indianapolis, notes that EDs are already experiencing a shortage of nursing staff.
“Every ED has a vacancy far over what we have seen in past years, and we are having trouble finding qualified staff,” she says.
While this shortage is creating opportunities for younger nurses in the managerial and director ranks, Owens, who has been a nursing leader for 18 of the 37 years she has been in the nursing profession, is not seeing much upward pressure on salaries.
“As people like me age out, we are being replaced by younger people who don’t have the years of experience to command a higher salary,” she says. “In the foreseeable future, as a generation of nurse leaders leaves, we are going to bring in a younger, less experienced leadership team whose salaries are going to be lower.”
Further, while hospitals may be willing to promote younger candidates into nurse manager roles, Owens notes that they are still looking for strong educational credentials, and young nurses who want to join the managerial ranks are heading back to school for added training — especially on the business side.
“I see nurses going down the path of a [higher] clinical [degree] because that is what is familiar to them,” she says. “But pretty soon they figure out that what they really need is that business degree, so they are either getting that as a secondary masters or making the decision to get it out of the gate.”
Younger candidates step up
There is no question that nurse managers are working long hours. In the 2015 Salary Survey, only 10% of respondents said they worked 31 to 40 hours per week; 30% reported working 46 to 50 hours per week; 20% reported working 51 to 55 hours per week; 30% reported working 56 to 60 hours per week; and 10% reported working 61 to 65 hours per week.
In past years, hospitals have reported difficulty finding nurse manager candidates willing to take on the work hours and stress that go along with nurse manager jobs, but with the move to a younger generation of candidates, Owens senses a change.
“There was a time when you would be looking at people in their 40s, and they would say that they didn’t want to do it,” Owens says. “These younger [candidates] haven’t been around long enough to see the impact [of such a demanding job]; they are anxious to make changes, and they have that energy.”
However, Owens notes that it is a stretch to secure a salary for these nurses that will serve them well.
“We don’t learn in nursing school how to negotiate salaries ... so I try to teach them a little bit about how to negotiate a salary and how that affects the rest of their career, because this is the time they are going to get the biggest bump unless they leave.”
In the 2015 Salary survey, 40% of respondents reported gross incomes in the $100,000 to $129,999 range, and 60% reported gross incomes of $130,000 or more. This represents an increase from last year when 44% of respondents reported incomes in the $100,000 to $129,999 and 33% reported incomes of $130,000 or more. Also in 2014, 11% reported earnings between $50,000 and $59,999, and 11% reported incomes in the $80,000 to $89,999 range.
With a shortage of both frontline and managerial nurse candidates already evident, Owens predicts that hospitals will soon begin offering sign-on bonuses for new recruits.
“We will get to that point as we try to incentivize these young people to come, and that immediate cash is really attractive to young people,” she says.
However, Owens cautions that sign-on bonuses are not always such a good deal.
“I want a good, strong base, because every year it is going to compound and my raises are going to be dependent on that,” she says. “But youth fail to see that, so organizations will move to offering them less base but going in for that one-time hit on the salary because they know [the nurse candidates] will buy.”
One other staffing trend that has been gaining traction in the larger nursing community is a push by some nursing groups to limit hospitals to specific nurse-patient ratios on hospital floors. However, Owens notes that such provisions can backfire on emergency nurses, because while inpatient floors can stop accepting patients when the nurse-patient ratios are at the maximum, that does not stop those patients from seeking care in the ED.
“The federal government requires that we see those patients. We cannot turn them away,” she says. “Traditionally and historically, the ED has continued to expand capacity despite what is happening elsewhere in the hospital.”
Physician salaries continue steady rise
On the physician side, there continues to be upward pressure on compensation for emergency providers, both on the frontlines and in leadership roles.
“The value and importance of ED physicians to hospitals has steadily increased, and that has been the main driver of increased compensation,” says Dan Culhane, MD, FACEP, vice president at Emeryville, CA-based CEP America, a provider of acute care staffing and management solutions. “In general, physician leadership compensation parallels overall compensation for the specialty. However, how closely it parallels depends on the organization. For our organization, when compensation for professional services increases, our methodology ensures that compensation for leadership goes up as well.”
Justin Chamblee, MAcc, CPA, vice president at Coker Group, an Alpharetta, GA-based healthcare consulting firm, notes that his firm has seen steady, year-over-year increases of 3% to 5% in the compensation levels of emergency physicians.
“Overall, it continues to be a very competitive market, and pay is increasing for physicians in the field,” he says.
Chamblee adds that consolidation of emergency medicine groups may be contributing to this trend.
“With strength in numbers, payer contracting is better, so we see a good bit of that.”
Chamblee notes that both health systems and emergency medicine groups are trying to find the right balance between time-based compensation and incentive pay.
“Emergency medicine physicians, just like hospitalists, are seen as gatekeepers into the hospital, so there is a lot of focus [on] their performance in relation to overall value-based reimbursement,” he says.
However, Chamblee doesn’t see the push for performance-based pay going much further.
“The majority of compensation will continue to be time-based, but we will continue to see perhaps 5%, 10%, and maybe even 15% of pay put at risk relative to those incentive metrics,” he says.
Incentives abound to attract, retain physicians
Other trends affecting emergency physician pay are patient volumes and very high demand for emergency physicians.
“Our outlook is that ED volume will continue to increase, but perhaps not at the same rate as the past few years,” Culhane says. “To the extent that volume continues to increase, we will likely continue to have upward pressure on ED salaries.”
The scarcity of emergency medicine physicians is pushing up pay as well, Culhane adds.
“Many practices are busier than they anticipated and are actively seeking to bring on new providers. Residency training is also in very high demand — the highest I have seen in the past decade,” he says. “Organizations are trying to provide incentives, including compensation, to attract physicians to their practices.”
Culhane notes that CEP hires several hundred emergency physicians every year, so the organization sees the shortage first-hand.
“Physicians coming out of school are accepting positions earlier in their training — some up to a year or more before they finish,” he says. “To attract these graduates, the number of practices providing incentives … is increasing substantially.”
The mission for health systems is not just recruiting new physicians, but retaining the ones they already have, Chamblee says.
“The health system down the street may be paying $5 or $10 more per hour, and the key challenge with emergency medicine compared to other specialties is it is not as sticky,” he says, referring to the fact that, unlike primary care physicians, for example, emergency medicine physicians do not depend so much on referrals; they can easily pick up and move without losing their customer base.
To manage retention, some hospitals are paying retention bonuses at the start of new contract years and some are paying sign-on bonuses that vest over a period of time so that the physicians will be less inclined to leave for another health system, according to Chamblee.
ED leaders face increasing demands
Even with the shortage of emergency medicine physicians, Chamblee says hospitals are becoming increasingly particular about what they want to see in an emergency physician leader/director, and this is directly attributable to more demands on the position.
“Instead of just making sure that the schedule is filled out and that you’ve got staffing and appropriate protocols in place, they really want someone who can help effect change relative to the delivery of medicine,” he says. “They really want someone who can be a bit more innovative — someone who can corral the physicians, but also work alongside health system administration to [seize on] areas that can be improved.”
Culhane agrees with these sentiments, noting that hospitals expect physician leadership in the ED to align their goals with the organization’s aspirations and priorities.
“Hospitals are looking for physician leaders to not just run their EDs, but the hospitals as well,” he says. “That means ED physician leaders who understand the hospitals’ nuances and priorities, who recognize the importance of collaboration, and who can work to optimize the operation outside of the ED as well.”
Along these same lines, Culhane says all the different specialties of medicine are becoming more integrated.
“There is value in blurring the walls between different components of the medical staff,” he says. “The goal is to develop a team of physicians highly incentivized and motivated to work as a team rather than in isolation.”
Strong demand for emergency physicians continues to push compensation levels higher.
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