As Economy Rebounds, Cost of Healthcare Workers Rises

John Commins, July 18, 2011

Rumor has it the economy is rebounding.

Riding with that recovery, says Ron Seifert of the Hay Group, is the expectation that healthcare organizations that want to keep quality staff should be prepared to pay more.

Seifert says a Hay Group survey shows planned median base salary increases of 3% this year for employees of large integrated health systems, up from a 2.4% increase in 2010.

“One of the things driving this is the conservatism of prior years,” Seifert tells HealthLeaders Media. “A little bit of angst gets built up in the system. There is a backlog of need for compensation adjustments. We are finding that healthcare organizations are recognizing that need and feeling the need to address it.”

Tellingly, independent community hospitals are reporting lower median base salary increases of 2.3% in 2011, Seifert says. That could make recruiting and retention efforts all the more difficult.

“This is a reflection of those organizations still operating in fairly challenging situations,” says Seifert, Hay Group’s healthcare sector vice president and executive compensation practice leader. “It’s not that integrated health systems are doing that much better, but they are a little further along in their journey and they have a stronger position in their negotiations and performance and success in creating a fully integrated care environment. Community hospitals don’t have that leverage. They will run the risk of not being able to recruit and retain the best and the brightest, at a time when they need to be offering a compelling value proposition to their employees.”

John Commins

John Commins is a senior editor at HealthLeaders Media.

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