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Market and culture influence nursing salaries
Size of healthcare system a minor factor in actual pay rates for nurses
Karen Schmidt
Karen Schmidt is a freelance writer.
The bigger the healthcare system, the better the RN pay and benefits. Truth or myth? There’s hardly any difference between bigger and smaller, stated Harold “Pat” Patton, MSN, RN and CNO for University of California Irvine Health in southern California. “Smaller systems have to keep up with bigger ones because they have to get nurses, too,” he said. So, what does drive pay? The market, location and culture, said some insiders.
John Lavery, formerly a nurse recruiter with Temple Health based in Philadelphia who recently retired, said salaries and benefits vary more by location. “I think it’s more of a regional difference than by size,” he noted. “The Midwest and more remote locations will be different [in compensation] compared to the region from Boston to Washington, D.C.” The regional difference for nurse compensation is backed up by data from the U.S. Bureau of Labor Statistics for 2016, which reported RN salaries varied noticeably between states, as well as by data gathered by the's salary survey. Lavery, who has decades of recruitment expertise, said benefits and compensation for RNs is market driven. “In the Philadelphia area, there are two different markets — the inner city and the outlying hospitals and organizations,” he said. “They [the outlying sites] are still within the city zip code, but those are more neighborhood facilities.” Lavery explained inner-city health systems, as a market group, conduct market surveys, so they can better compete with other systems in the same market. He pointed out that inner-city hospitals, at least in Philadelphia, pay slightly higher than those not considered inner city. “Part of that [pay difference] is driven by how much it costs to work in the inner city,” he said. “For instance, at every hospital in inner-city Philadelphia, staff has to pay to park. That’s an added expense.” Nurses at city-based hospitals also may have to pay city wage taxes, another consideration in compensation comparison. Otherwise, Lavery sees that health and benefits packages and retirement plans are generally competitive from one system to the next in the same region.
“The trend is for hospitals that are spread out over a large area to become part of one system,” Lavery said. “Smaller community hospitals are joining a system and will gradually align their benefits.” Cultural issues also can come into play when talking about working within a health system versus a stand-alone hospital, Lavery said. Nurses can choose to work within a specialty, such as cancer care or acute care. Also, the more people employed in a large system, the more leverage employees have to negotiate benefits. Lavery suggested RNs look for healthcare plans that provide care within their own system, since it could be a better financial deal. Patton pointed out that healthcare systems are savvy to the reality that nurses will stay within a system if the organizational culture works for them. “Staff nurses often are attracted by salary first; the culture then either keeps them or drives them away,” he said. Clinical ladders are one element of organizational culture that afford both advancement and higher earnings. Lavery agreed that the culture matters. “At some hospitals, there is very little turnover,” he said. “It’s pretty much related to the way nurses can move within the facility and still advance.” He said health systems that encourage nurses to grow by moving to another job in the system might see turnover of less than 5%.
Market drives pay
Culture plays a role
From the perspective of organizational culture, Patton said a teaching hospital appeals to many RNs. The academic environment — whether because of the teaching or the research and cutting-edge practices — is a draw. Patton said nurses seemed to be attracted to academic health centers in both Kentucky and Colorado, where he previously worked. “Nurses said they chose to come to a teaching hospital because of the trauma experience or to get the ‘latest and the greatest’ in medicine at the time,” he said. To compete with the attraction of academic organizations, Patton said nonacademic health systems might offer a slightly higher salary. Lavery pointed out not-for-profit healthcare systems can usually pay more than for-profit systems because they don’t have stockholders to pay. The difference for nurses may be in the benefits package versus the salary scale. This is meant to say that while wages may be higher at a not-for-profit system, a for-profit system might offer better benefits such as retirement plans, vacation and sick time, and so on.
Nurse leaders in those hospitals also have advancement opportunities that can attract nurses who can move between facilities within one network.
Trend toward larger systems
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Scope out the full benefit package
Benefits such as tuition reimbursement and retirement packages matter in the long run. Patton observed many organizations are beginning to scale back retirement plans, sometimes in an effort to counter the increase in healthcare costs. Nurses should check into the matching amount the organization offers. A healthy retirement plan, he said, is an attraction that keeps nurses in the system. Besides hard cash, other benefits can enhance work satisfaction. For example, working at a Magnet hospital where staff buy-in is high and shared governance is the norm can be a plus. Loan repayment programs, payment for staff to attend work-related conferences, or bonuses for attaining specialty certification are perks that nurses find favorable, according to a June 15, 2016, article in the American Journal of Nursing. There are no bad places to work, Lavery concluded. It all depends on what you’re looking for.
In recent years sign-on bonuses have become less common, at least in California. Patton said. Typically, he explained, in that state bonuses are offered by rural hospitals or organizations desperate to find nurses it can’t otherwise attract. “I have never seen it as a long-term strategy that works, but it can get people in the door,” he said. Lavery also sees bonuses being offered less often, mostly for niche positions hard to fill, such as advanced-practice jobs. Sometimes these perks are called “relocation bonuses.” Some organizations are moving to referral bonuses, Lavery said. These reward current staff who help the institution to recruit new nurses. Lavery sees this as a better means for bringing in potential staff. He said the sign-on bonus paid by a facility could be seen by current employees as not respecting those already working there.
Here are some tips about sign-on bonuses from Lavery and Patton:
  • Hiring or sign-on bonuses may sound appealing up front. Know the length of employment expected in return.
  • Bonus funds are paid out incrementally over the period of expected employment, not as a lump sum.
  • If a nurse interviews with a potential manager, but doesn’t connect with that manager, the job might not be the right fit even with a sizeable bonus, advised Patton.
  • Look beyond the dollars to the quality and safety of the organization, Patton said. If there are strong scores for quality, safety and nurse satisfaction, it can be a good place to work.
  • Check out the benefits package, too, Lavery suggested. Will it meet your needs?
The evolution of sign-on bonuses
Staff nurses often are attracted by salary first; the culture then either keeps them or drives them away.”
- Harold Patton, RN
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