Predicting the future:Comp & Benefits in the New England THOMAS CUMMINS | 6-8-2015
unemployment is 5.5%.
But, 99% of statistics only tell 49% of the
story.
January Feb March April May
201,000
266,000
119,000
221,000
280,000
Job Creation
# of Jobs (000)
-100
0
100
200
300
400
500
-94
20 22
143168
216
288
354393
GovernmentManufacturingEducationSupportConstructionProfessionalHealthcareFood SrvsRetail
2013 Job Growth
# of Jobs (000)
-100
0
100
200
300
400
500
80
228
51
346308 316
342373
293 GovernmentManufacturingEducationSupportConstructionProfessionalHealthcareFood SrvsRetail
2014 Job Growth
2006 2007 2008 2009 2010 2011 2012 2013 2014 20150.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
4.5%4.4%
4.9%
7.6%
8.5%
7.9% 7.2% 7.1%
6.2%
5.2%
New England Unemployment Rate
Connecticu
tMain
e
Massac
husetts
New Hampsh
ire
Rhode Islan
d
Vermont
9.1% 8.2% 8.7%
6.1%
11.1%
6.2%
Unemployment (March 2010)
Connecticu
tMain
e
Massac
husetts
New Hampsh
ire
Rhode Islan
d
Vermont
6.4%4.8% 4.8%
3.9%
6.3%
3.8%
Unemployment (March 2015)
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%7.5%
5.5%
US Unemployment
Full Employment
The only point of economic
forecasting is to make fortune tellers look
respectable.
April 2015Jobs Gap
3.9 Million
January Feb March April May
201,000
266,000
119,000
221,000280,000276,000
196,000151,000
279,000
406,000
Job Creation 2015 vs. 1999
December 2007 April 2015 Net Gain
Total Employment(FT & PT) 146.2 148.5 2.3
Part Time Employment 24 26.7 2.7
The good news is inflation is
very low.
The bad news is so is your
salary increase.
2007 2008 2009 2010 2011 2012 2013 2014 2015
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5% 4.0%
-0.1%
2.8%
1.4%
3.2%
1.8% 1.8%
0.8%
-0.2%
Annual Rate of Inflation (CPI)
Beef
Prescriptions
Hotels
Coffee
College tuition
Hospital care
Movies
Electricity
New Cars
Beer
Milk
Computers
Televisions
Gasoline
13.1%5.7%
5.0%
4.5%
3.4%
3.4%2.5%
0.9%
0.3%
-0.1%
-4.5%
-10.3%
-15.2%-31.8%
Inflation-31.8%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%5.4%
4.7%
3.8% 3.9% 4.2%4.2% 4.3%
3.6%
2.5%2.4%
2.1% 2.1% 2.0%
1.8%
Salary Growth for NE Healthcare Em-ployees
2009 2010 2011 2012 2013 2014
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
-0.3%
1.0%
-1.1%
0.3%
0.2%
1.0%
Real Increases for NE Employees
2009 2010 2011 2012 2013 2014
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
-0.3%
0.7%
-0.4%
-0.1%
0.1%
1.1%Cumulative Real Increases for RI Staff
10 Years 6 Years
8.7%
1.1%
Real Salary GrowthNew England Hospitals
Expecting a big salary increase in exchange for all of your hard
work?
Don't Count on it.
Non-Exempt Exempt Management Executive
2.0% 2.0% 2.0% 2.0%
Salary Increases Granted in 2014
Non-Exempt Exempt Management Executive
2.0% 2.0% 2.0% 2.0%
Structure Adjustment Implemented in 2014
2015 New England Matched Sample
Position Avg MS Position Avg MS
Registered Nurse - ALL 1.3% Nuclear Medicine Tech 1.4%
Occupational Therapist 1.8% APRN/Nurse Practitioner - All 2.8%
Houseworker 1.3% Surgical Tech 0.9%
Radiologic Technologist 1.5% Clinical Dietitian 0.8%
Physical Therapist 1.3% Dietary Assistant/Cafeteria Assistant 1.5%
Pharmacist 1.1% Telephone Operator 1.7%
Unit Clerk 1.3% Executive Secretary 2.0%
Electrician 2.3% HVAC Mechanic 3.1%
Pharmacy Technician 1.9% Phlebotomist 2.2%
Nurse Manager - All 1.9% Secretary 1.7%
Medical Technologist (MT) 2.3% Computerized Tomography Tech 1.3%
Case Manager 0.6% Pharmacy Director 2.2%
Ultrasound Tech 1.2% Mammography Technologist 1.2%
Respiratory Therapist, Reg. 0.8% Physical Therapy Asst. 2.1%
Licensed Practical Nurse 1.5% Staff Accountant 2.4%
National
New England
Pennsylva
nia
Rhode Islan
d
Connecticu
t
1.8% 1.8% 1.9% 2.0% 2.0%
Matched Sample Increase
2007 2008 2009 2010 2011 2012 2013 20140.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
4.3%
3.6%
2.5% 2.4%
2.1%
2.1% 2.0%
1.8%
3.4%3.1%
1.8% 1.9%
2.2%
1.7% 1.9%
2.0%
NE National
Wage Growth
I see changes in the Coding
market.
V97.33XD: Sucked into a jet engine, subsequent
encounter.
NEW ICD-1O CODES
Benefits Strategy & Benchmarking Survey
2014
NEW ICD-1O CODES
W56.21XA: Bitten by orca, initial encounter
W22.02XD: Walked into lamp post.
NEW ICD-1O CODES
Z63.1: Problems in relationship with in-laws.
NEW ICD-1O CODES
V98.2XXA: Accident to, on, or involving ice yacht
NEW ICD-1O CODES
W61.01XA: Bitten by parrot, initial encounter
NEW ICD-1O CODES
New England Pennsylvania Connecticut Rhode Island
2.0%2.4%
2.1%2.5%
Coder Matched Sample Increase
Coder - All Incumbents
# of Orgs # of Incs 25th 50th Average 75th
2014 31 534 $23.32 $24.68 $25.22 $27.22
2015 29 676 $23.80 $25.30 $25.91 $28.35
% Change 2.5% 2.7%
ICD-10/Coding Compensation and Policy SurveyNortheast Healthcare Organizations – Spring 2015
ICD-10/Coding Compensation and Policy SurveyNortheast Healthcare Organizations – Spring 2015
Bonus/Incentives 2015 2014Complete training 24.1% 16.7%Productivity 3.4% 13.3%Retention 17.2% 29.0%Sign On 3.4% 9.7%Other Incentives 13.8% 16.0%
ICD-10/Coding Compensation and Policy SurveyNortheast Healthcare Organizations – Spring 2015
23%77%
Yes No
Are Coders Unionized?
68%
32%
Yes No
Certification Required?
39%
58%
3%
No Some All
Do Coders Work at Home?
ICD-10/Coding Compensation and Policy SurveyNortheast Healthcare Organizations – Spring 2015
20%
80%
Yes No
32%
68%
Yes No
Out of cycle increase in past 12 months?
Out of cycle increase in next 12 months?
I see Nurses unhappy with
their pay.
In other words, business as
usual.
2008 2009 2010 2011 2012 2013 2014 20150.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0% 4.7%
3.5%
2.5%2.1% 2.1%
1.2% 1.3% 1.3%
New England RN Matched Sample
New England Pennsylvania Connecticut Rhode Island
1.3% 1.4%1.2% 1.0%
RN Matched Sample Increase
California Texas New York Florida Pennsylvania
252,940
190,090169,820 162,530
124,750
States with the most RNs
New York
Boston
Los A
ngeles
Philadelphia
Houston
Chicago
Dallas
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50 $45.15 $44.76 $44.26$38.77 $36.56 $34.46 $33.65
RN Salaries in the 7 largest markets
San Fr
ancis
co
San Jo
se
Oaklan
d
New York
Boston
Los A
ngeles
Philadelphia
$0
$10
$20
$30
$40
$50
$60
$70 $61.38 $59.23 $58.19
$45.15 $44.76 $44.26$38.77
RN Salaries in the large markets
2015 Benefits Strategy &Benchmarking Survey
ARTHUR J. GALLAGHER & CO. | BUSINESS WITHOUT BARRIERS™© 2015 GALLAGHER BENEFIT SERVICES, INC.
Participation 3,038 Participating Organizations
The LARGEST private domestic employee benefits survey
66
Willis Aon Hewitt Mercer AJG0
500
1000
1500
2000
2500
3000
3500
10331234
2569
3046
70
30
Total Comp Mix
WagesBenefits
Total Wages Benefits0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2.0% 1.9%2.2%2.2% 2.1%
2.6%
2013 2014
Annual Growth
Total Compensation
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5% 4.2%
4.0%3.9%
4.0%
3.3%3.0%
2.1% 2.1%
1.5%1.6%
1.8%
1.5%
Growth in Hospital Total Compensation
Controlling employee benefit cost
Attracting/retaining a competitive workforce
Overall Operating Costs
Government regulation
Revenue/Sales growth
Maintaining profit margins
Maintaining/Growing market share
Increasing innovation
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
62.3%
54.6%
48.0%
37.6%
35.0%
26.8%
21.7%
14.0%
Top Business Challenges
Controlling healthcare expensesRecruiting qualified employees
Keeping up with healthcare reformRetaining employees
Increasing employee job satisfactionKeeping up to date on HR regulationsReducing HR administrative workload
Compensation expensesIncreasing employee productivity
Effectively communicatingImproving employee health
Work-life balanceAn effective wellness program
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
60.5%32.7%
24.6%22.1%
19.0%17.5%
14.9%14.8%13.8%
11.7%10.5%
8.6%5.8%
Top HR Challenges
97%
3%
Yes No
23%
77%
Yes No
Considering moving to defined contribution for healthcare within
the next 5 years
15%
85%
Yes No
Do your medical plans include a spousal
surcharge?
Will offer healthcare benefits in the future.
I see a happy CFO, unhappy employees and
you getting blamed for
anemic Salary increases.
In other words, salaries will grow very
slowly over the next few years.
March
AprilMay June
JulyAug
Sep Oct
NovDec
JanFe
bMarc
hApril
May JuneJuly Aug
Sep Oct
NovDec Jan
FebMarch April
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%US Unemployment
Full Employment
5.4%
Dec Jan Feb March0.0
0.5
1.0
1.5
2.0
2.5
3.0
1.9 2.0 1.9 2.0
Job leavers
Dec 2007 April 20150
5,000
10,000
15,000
20,000
25,000
30,000
4,665 6,580
19,52620,056
PT for Economic Reasons Other Part-Time
Part-Time Workers
Unemployment U6 Rate0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
5.0%
8.8%
5.4%
10.8%
2007 2015
Slack in the Labor Market
40.0%
45.0%
50.0%
55.0%
60.0%
51.0%
42.8%
Wages as a % of GDP
Hospital Revenue
Hospital Expenses
Hospital Margins
Corporate Profits
$0
$0
$0
4.2% 4.6%2.2%
13.2%
2014 Financial Results
December 2006
December 2007
December 2014
Jan 2015
Feb 2015
March 2015
April 2015
3,242
3,609
4,325 4,242 4,180 4,189 4,136
Job Losers
Healthcare Consolidation
While Hard Work pays off in
the future, A cocktail by the pool Pays off
now.