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Healthcare Workers Dissatisfied with Stagnant Pay Raises

 |  By Chelsea Rice  
   June 24, 2013

A trifecta of financial pressures is forcing hospitals to trim salaries and benefits, but by cutting too close, hospitals may be losing their talent pools to more competitive markets.

David Spillers, CEO of Huntsville (AL) Hospital, notified his 8,000 employees last month that in response to the fiscal losses associated with the trifecta of public and private cuts to reimbursements, the Patient Protection and Affordable Care Act mandates, and the federal budget sequester, the hospital was implementing a system-wide pay freeze with no deadline.

In addition to the pay freeze, the hospital increased monthly health insurance premiums by $40 and reduced its annual contribution to employee pensions. The cuts to salary and benefits begin at the start of the hospital's fiscal year, July 1. 

"It is a very challenging time for the healthcare industry. People in our country want all the fabulous service and technology we can provide when a loved one is in need. The problem is no one wants to pay us fairly to provide those services," wrote Spillers in the internal memo.

Spillers isn't the only CEO worried about how the PPACA mandates, reimbursement reductions, and sequestration cuts are "crossing the streams."

In a HealthLeaders webcast last week, another hospital CEO said his organization was entering "the kill zone" of its bottom line. Cuts to reimbursements are coinciding with necessary investments to comply with federal mandates, said Allen Weiss, MD, president and CEO of NCH Healthcare System in Naples, FL.

Huntsville Hospital isn't alone in looking to labor to provide the wiggle room it needs to stay afloat. Just Google "hospital salary freezes" for the latest round-up of salary and benefits trimming.

Raises stay stagnant

The industry at large isn't in for much of a raise in 2014.

According to a survey on healthcare compensation released by Compdata Surveys last week, raises at critical access hospitals and physician clinics have decreased to 2.6%, compared to 2.8% in 2010. Hospitals have also reduced raises slightly from 2.4% in 2012 to 2.3% in 2013. Overall, the industry-wide forecast for compensation increases in 2012 is 2.4%.

More than 74% of healthcare employers budget pay increases to plan for raises to employee salaries, averaging 2.1%. Thirty-nine percent of healthcare employers will base the pay increases on market-based adjustments, while 18.4% plan to use promotion-based raises. Another 11% of employers will base pay increases on cost of living adjustments, with the average raise in that category at 2.2%.

The Compdata survey, which draws on more than 8,300 healthcare employers, predicts a slightly improving trend for the healthcare industry at-large in 2014, with 2.5% average increases in compensation.

Healthcare professionals are on the move



Monster.com Survey

A survey conducted in January and February 2013 by Monster, the online job search engine, highlighted compensation as an area of dissatisfaction for healthcare professionals. Only 20% of respondents believe their employers are willing to give raises this year over last year, and it's pushing them to seek promotions or salary increases by jumping to new positions.

On Monster.com, 190 healthcare jobs are viewed every minute by both job seekers and employers.

Job seekers are showing confidence. Thirty-four percent of survey respondents felt there were more job openings today than last year for their field, and 81% of healthcare professionals felt confident they could find a job in the next twelve months. Almost half (47%) said they were willing to relocate for the right opportunity.

The matches seem to also be improving. Fifty-seven percent felt that hiring managers understood their skills and abilities, so the chances of a good match between a job-hunting professional and an open position are also increasing.

With the willingness to relocate, the industry can anticipate a flood to job markets in New York, Los Angeles, Chicago, Dallas, and Houston, where healthcare workers are most likely to find work, according to Monster.

"This latest survey indicates stagnant compensation levels have left healthcare professionals dissatisfied," said Jeffrey Quinn, Vice President of Monster's Global Insights in a prepared statement, where he noted in summary, "Healthcare-related professionals have reason to be cautiously optimistic about their employment prospects."

It's not the work that's pushing healthcare employees out the door. Healthcare professionals are the third most satisfied employees with their jobs, following closely behind workers in engineering and finance. When healthcare professionals are in such high demand with such translatable skills, you can bet the cuts to pay and benefits will start to make their eyes wander.

Not surprisingly, Monster's survey found that registered nurses, physical therapists, and occupational therapists are the three occupations most in demand today, which they determined by the volume of available jobs.

As in the movie Ghostbusters, when the streams cross, very good or very bad things can happen, depending on which end of the portal you're sitting. Will financial pressures make the industry more cost-efficient? Or are they forcing struggling hospitals to lose their talent pool to more competitive markets?

Chelsea Rice is an associate editor for HealthLeaders Media.
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