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Striking the right balance in budgeting medical practice support staff salaries for 2023

MGMA Stat - August 17, 2022

Budgeting

Compensation & Benefits

Provider Compensation

Sally Jordan MBA, FACMPE


The Medical Group Management Association’s most recent MGMA Stat poll asked healthcare leaders, “What percent merit/cost-of-living increase is planned for support staff in 2023?” The majority (61%) said “3%-5%,” followed by “0%-2%” (28%), “6%-8%” (9%), and “9% or higher” (3%).
 
The poll was conducted Aug. 16, 2022, with 480 applicable responses. Medical practice leaders responding to the poll, when asked about which support staff positions had the highest turnover in the past year, said:
  1. Medical assistants (MAs) — 40%
  2. Front desk/receptionists — 26%
  3. Nurses — 11%
  4. Call center, customer service representatives and schedulers — 7%
  5. Miscellaneous clinical support staff — 6%
  6. Billers, finance and A/R staff — 4%
  7. Clinical lab staff and medical technicians — 3%
  8. Miscellaneous clerical/administrative staff — 3%.
 
These findings come after a December 2021 MGMA Stat poll revealed that the average cost-of-living increase budgeted last year for 2022 salaries and wages was 5%, while some of the most-sought-after clinical support positions saw increases of 15% to 25% in the most competitive markets/regions.

Benchmarking data from the 2022 MGMA DataDive Management and Staff Compensation survey report echo those findings, as median total compensation for licensed practical nurses (LPNs), registered nurses (RNs) and triage nurses saw 4.8% to 6.67% gains from 2020 to 2021.  
One of the biggest challenges related to workforce shortages is the increased expenses as salaries and wages rise for healthcare workers. With high demand and low availability, the staffing cost portion of practices’ budgets will continue to increase in the near future.
 
In addition to increasing salaries, many practices are implementing other benefits to recruit and retain staff. For example, HealthPoint Family Care has implemented a formal retention bonus policy. The policy applies to all employees, from hourly staff to physicians. Retention bonuses are initially paid after 12 months of employment and continue every two to three years, until year 10, when bonuses are paid every five years. The amount of the bonus increases as the employee’s years of service increase. Implementation of this policy has resulted in successful recruitment and retention at all levels. The policy was implemented Jan. 1, and as of July, the organization’s turnover rate was 21% compared to 29% in July 2021.
 
The improvement in hiring and keeping staff is especially helpful in a time when unemployment remains near historic lows and the competition for talent remains high: Nearly three out of four medical groups reported that staff turnover rates worsened or stayed about the same in a Feb. 1, 2022, MGMA Stat poll. That same poll revealed that the top drivers of turnover in medical groups have been better pay and benefits elsewhere.
 
The strain has been noticeable at HealthPoint Family Care: In 2019, salary costs were 65% of the organization’s operating expenses; in 2022 they will be 70%. Add in benefits and other costs associated with staffing and that jumps to 76%. HealthPoint has not experienced much of an increase in non-labor operating costs due to renegotiating supply and other contracts. However, it is expected there will be increases to these expenses in 2023.
 
The increase in salaries and other staffing costs, along with rising operating expenses, result in much lower operating margins. In a July 5, 2022, MGMA Stat poll, respondents reported non-labor operating costs have also increased in 2022, with drug supply (36%) and IT (24%) leading the way.
 
Lower operating margins make it difficult, if not impossible, for organizations to invest in growth, efficiencies, and improvement in patient experience, which is at the core of a successful organization. With less money to invest in technology, practices don’t have the ability to update processes, which affects efficiency. In turn, this requires them to maintain staffing levels, which is the reason for reduced margins in the first place. Nevertheless, annual merit/cost-of-living increases are key to maintaining a practice’s workforce.

JOIN MGMA STAT 

Our ability at MGMA to provide great resources, education and advocacy depends on a strong feedback loop with healthcare leaders. To be part of this effort, sign up for MGMA Stat and make your voice heard in our weekly polls. Sign up by texting “STAT” to 33550 or visit mgma.com/stat. Polls will be sent to your phone via text message. 
 
Do you have any best practices or success stories to share on this topic? Please let us know by emailing us at connection@mgma.com.  

Additional resources 

About the Author

Sally Jordan
Sally Jordan MBA, FACMPE
Chief Executive Officer HealthPoint Family Care

Sally Jordan, MBA, FACMPE, is chief executive officer at HealthPoint Family Care. She earned her MBA from Capital University in Columbus, Ohio, and has more than 20 years of healthcare leadership experience.

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