2008 Salary Survey Results
Salaries of ED managers stop climbing, as hospitals respond to financial pressures
It was too good to last. In the 2007 ED Management Salary Survey, we noted that hospital administrators were reacting to the realities of supply and demand and showing a willingness to be more generous with salary increases. As 2008 unfolded, however, and as our 2008 EDM Salary Survey illustrates, a shortage of available talent was not enough to keep those salaries rising significantly. Experts predict that as the economic downturn takes hold, even that shortage of talent may be short-lived.
Compared to the 2007 EDM Salary Survey results, there was not a dramatic increase in the number of managers in the highest income levels. For example, in 2007, 21.05% were in the $90,000-$99,999 range, compared with 18.03% in the current survey. Those between $100,000 and $129,000 increased slightly, from 25% to 27.87%. There was a more significant jump in those making $130,000 or more, from 17.11% to 21.31%. In terms of increases, the vast majority saw a 1%-3% increase (49.18% in 2008, 50.65% in 2007) or a 4%-6% increase (27.87% in 2008, 29.87% in 2007). There was a jump in the number of respondents who said they received a 7%-10% increase (6.56% in 2008 vs. 3.9% in 2007), but that is not statistically significant given the percentage and the sample size.
For the 2008 report, 880 surveys were disseminated. There were 61 responses, for a response rate of 7%.
Don't blame it all on the economy
The reason for a slowdown in the rate of salary increases is not as simple as "the economy," notes Diana S. Contino, RN, MBA, FAEN, senior manager, health care, with McLean, VA-based BearningPoint Management & Technology Consultants, which provides management and technology consulting services.
"I do think there will be continued downward pressures on [nurse manager] salaries due to reimbursement decreases from 'never events,' and revenue repayments from the recovery audit contractors [RAC]," she says.
Impact from less money
EDs have the same problems the rest of the world is having: There's less money available, says Michael D. Bishop, MD, president and CEO of Unity Physician Group, a Bloomington, IN, firm that staffs hospital EDs in Indiana and Kentucky and owns and operates urgent care centers in Indiana. He also is a spokesman for the American College of Emergency Physicians. "We are not necessarily seeing huge increases in volume, but we are seeing a decrease in collectibles," Bishop says.
When he talks to his physician managers, they tell Bishop that their income has dropped or stayed the same, although it varies depending on the busyness of the ED. "A lot of times hospitals will kick in some money for medical directors [from nonemployee physician groups], but my experience is they never kick in enough to cover all the costs," Bishop says. "They want to pay for five to 10 hours a week, and the guys end up working 20-30 hours a week in larger hospitals, going to meetings and so forth," he explains.
As for ED physician groups, salaries are fixed or going down "because there's not as much money in the system," he says. "Reimbursements are going down, and it's getting to be a real tough business."
There clearly is a difference in what drives compensation for ED managers who are physician employees, compared with those who are not, adds Mike Williams, president of The Abaris Group, a Walnut Creek, CA-based health care consulting firm specializing in emergency services. He notes that about 30% of EDs are staffed by employees, while 70% are contractors or partners in a medical group. "They are typically compensated differently; for example, I expect a modest increase in salaries for contract ED physicians," Williams says.
As for employees, that compensation is driven by how the hospital is doing, he says. "Hospitals are not in a position to offer larger salaries to anybody."
Other factors involved
The economy alone does not explain what's happening with ED manager salaries, Williams says.
"We see some compression of salaries, but the market is booming with open positions, so that tells us what's driving this market may not be entirely compensation but it may be the lack of inventory [of managers]," he says. Williams says he asked one of his nurse leaders to explain the situation, and says she thought that as older nurse managers move on, they are replaced with younger ones who don't command salaries quite as high.
However, Contino says, "The competition for some open management positions may increase slightly, mainly due to layoffs in other industries, and potentially nurses returning to work." In general, she adds, "I don't see salaries increasing much in the next few years."
Contino adds that no one yet knows what the reduction in reimbursement due to "never events" will be, "but hospitals won't continue to get reimbursed for errors and mistakes, so there is significant pressure to improve processes and care delivery accuracy," she says.
In addition, Contino says, salaries alone do not tell the whole story. "It's true that any time the economy is depressed, nurses go back to work, work more hours, or take a higher position such as management because it pays a higher base salary," she says. "However, there are still hospitals and/or departments where managers will not make as much as staff who do a lot of overtime."
This difference is linked to a trend Contino says is common among a lot of nurse managers. "One of the questions we ask when we see high turnover of managers is whether they are getting support, both organizationally and structurally," she says. "What are their job responsibilities, and how are they aligned to their pay?" Prospective managers, Contino advises, should always inquire about pay rates and alignment with roles, responsibilities, and support systems.
Ironically, improving the nurse manager's ability to be successful in a management job has in some cases exerted downward pressure on salaries, says Contino. Positions with fewer direct reports may have a slightly lower pay scale. "There were quite a few vacancies in areas where one manager [director] supervises multiple departments. As a strategy to fill these open positions, chief nurse executives have made job realignments, and some managers who were managing two departments may now be overseeing just one," she says.
That doesn't mean that their jobs have actually become easier, Contino contends. "The job is becoming more complex because of recruitment and retention challenges, dealing with electronic medical records and other new technology, and with patient populations that are often more complex; you have a myriad of issues." Still, she concedes, this consolidation "makes it tougher to push for that higher salary."
An important consideration
Of course for many individuals, financial compensation is not the be-all and end-all of job satisfaction, and that's an important consideration when it comes to retention, says Williams. "The literature has shown that ineffective bosses can have a huge impact on a nurse's decision to quit, and that can impact nurse managers," he says. "In the younger age group, they are more about lifestyle, wanting to go to a sane place, where their skills are reinforced and their excellent service is compensated well, but where they also get nondollar compensation in the form of recognition."
Like all human beings, at some point we want our positive behavior to be reinforced, he says. "The hottest thing in hospitals is rounding, where you round with your staff," Williams shares.
"The manager carries 3x5 cards, asks people how things are going, and as soon as they say something, their manager writes it down to show important the comment is to them." This type of reinforcement is important to retention, which, he notes, "becomes increasingly important as you want to dip down into your staff to get managers — and as those openings increase."
Other forms of compensation drop
In recent years, ED managers could look forward to supplementing their salaries by earning performance bonuses. While that opportunity will continue, say the experts, they might not be quite as lucrative.
"Performance bonuses and other nonsalaried compensation for hospital EDs may be declining," says Williams. "The only exception may be those hospitals that are unionized or where unions are gaining strength."
However, he says, performance incentives will continue. "More and more contract groups are working on incentives, and there may be more dollars to be made," notes Williams. As for the metrics most commonly used, "door-to-doc time is huge," he says. "Total turnaround is also common, and some groups measure errors." Many groups are putting providers at the door, which can improve door-to-doc times dramatically, he adds. "I've seen the left-without-being-seen number drop to 0.5%, and customer service ratings go sky high," Williams says.
Some sites pay nurse managers performance bonuses, but there definitely will be a decrease, Contino predicts. That's because most facilities only give out bonuses if the organization is meeting a certain profit margin, "and profits will likely be declining," she adds.
As for metrics, Contino continues, "Some hospitals base it on a balanced scorecard, looking at hospitalwide performance and goals." In those cases, she explains, the manager may have a percentage of their bonus tied to employee satisfaction, another to patient satisfaction, another to financial performance and productivity, and still another to their operational metrics. Those metrics might include documentation standards or projects they are implementing on time and on budget. In other sites, she says, bonuses might be based just on productivity and financial performance; if you are on budget, you will get your bonus. "Some bonuses are as small as a few thousand dollars, while some can be as much as $20,000 to $30,000," she says. They also can be affected favorably if you are a director over multiple departments, Contino adds.
Getting docs to assume more risk
There are more payment plans or payment systems that are involving RVUs (relative value units) or productivity and patient satisfaction, says Bishop, "and all of that is now being figured into any kind of bonus structures."
What's more, he adds, "even if the hospital doesn't subsidize the ED, it may require those kinds of things for people to maintain their contracts."
Almost all the hospitals that Bishop is familiar with are employing patient satisfaction and quality measure incentives, especially those that the Centers for Medicare & Medicaid Services (CMS) is promoting through the Physician Quality Reporting Initiative (PQRI), Bishop says. "But it's not because the hospitals are anxious to part with more money, he explains. "They're becoming much more common because the hospitals want doctors or groups to have some risk."
This is all related to the economy, he explains. "As the economy worsens, the hospitals want to put everyone else at risk as well," Bishop says. "While this does not involve huge sums of money — maybe $5,000 a quarter or something in that range — there could be a potential for compensation to actually go down, depending on how the deal is set."
So, for example, consider a situation in which there is a total of $100,000 at risk ($25,000 per quarter), a set amount for patient satisfaction, a set amount for core measures, and so forth. The group sets up their pay for doctors based on the assumption they will get the entire bonus, "and all of a sudden, their patient satisfaction scores are not appropriate, then basically they not going to get it all," says Bishop.
Some managers would look at that as a pay cut. "We try to look at the bonus as 'found money,'" says Bishop, "And if everybody does a good job, we get a bonus."
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