Budgets allocated primarily for pay increases of existing employees rose 2.5 percent for 2012, according to Compdata Surveys, which collected data from more than 8,100 healthcare providers across the country.
The increases are roughly in line with the increases for 2010 (2.5 percent) and 2011 (2.4 percent) and budget increases for 2013 are expected to be the same as the prior three years.
“The 2012 national pay increase budget of 2.5 percent reported for healthcare is well below the average pay increase budget reported five years ago. Between 2007 and 2010, the average pay increase budget in healthcare fell from 3.6 percent to 2.5 percent,” said Michelle Willis, Compdata Surveys' spokesperson.
Pay increase budgets are used primarily to fund four different adjustments to existing employees’ compensation: cost of living adjustments, market adjustments, merit increases and promotional increases.
But with the onset of the recession in 2008, pay increase budgets in healthcare and in all industries have taken a hit -- and that drop has dampened the amount of the raises healthcare workers can expect to receive.
“As pay increases budgets fell, so did the rate at which these types of adjustments were made,” said Willis, adding that merit increases have traditionally been the largest type of pay increase while cost-of-living increases have been the lowest.
That said, healthcare companies also need to be wise with how they allocate these pay increase budgets, as they try to determine which jobs are needed to provide the continued financial health of the organization or are the hardest jobs to replace.
“Although pay increase budgets have stagnated in the healthcare industry, the demand for healthcare workers continues to rapidly increase,” said Amy Kaminski, director of marketing for Compdata Surveys, in a press release. “As a result, a larger portion of healthcare organizations' pay increase budgets may be geared toward retaining employees in jobs for which there is a critical need.”
It is not surprising then, that critical access hospitals reported the highest increases in their pay increase budget, averaging 2.8 percent. Physician clinics and rehabilitation facilities reported pay increase budgets of 2.5 percent and 2.4 percent, respectively. Behavioral health facilities reported the lowest pay increase budget in 2012, 2.3 percent.
Compdata Surveys collected information on nearly 250 industry-specific job titles and 400 benchmark titles ranging from entry-level to top executives for their 2012 survey results.
The results are intended to provide a summary of pay data, benefit information and pay practices with an effective date of Jan. 1, 2012.