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Federal health care agencies must simplify pay system

Jul. 22, 2012 - 03:17PM   |  
By HOWARD RISHER   |   Comments

The Affordable Care Act will soon be an important concern for agencies providing medical care services. In extending medical care to an additional 32 million people, the law will exacerbate the shortages for qualified health care specialists. Projections show the country will need thousands of additional physicians, nurses and other certified specialists.

The shortages will force all medical care providers to increase pay levels to avoid losing staff. The problem will go on for years and trigger pay increases significantly larger than the norm for other occupations.

At the other end of the pay scale, the Veterans Affairs Department decided to downgrade low-level support jobs. Not surprisingly, the American Federation of Government Employees pushed back to protect its members. That prompted VA to suspend the initiative and form a working group to work with AFGE when reclassifying employees.

The facts that triggered the reclassification were not discussed in media reports. The closest was the statement that VA facilities took their own approach to classifying positions and that, over time, that resulted in inconsistencies. In reclassifying jobs, VA is trying to harmonize grades. Presumably, VA has market data confirming staff can be recruited at the lower salaries.

The two realities for health care specialists vs. support staff reflect what will be a “haves” and “have nots” situation in medical facilities. That was true before the recession, although not as pronounced. Before the recession, nursing salaries were increasing at roughly 6 percent a year, while support staff could expect 3 percent annual increases. To emphasize a key point, averaging those numbers — 4.5 percent — is not a viable answer. It’s not competitive for nurses and overpays support staff. Salary increases compound, so there will be a growing gap.

This will be a broad issue for federal agencies. VA employs 172,000 specialists in the 600 series — medical, hospital, dental and public health occupations. The Defense Department has 39,500 civilians in its Medical Career Group; the Health and Human Services Department employs roughly 35,000 medical specialists; and the Bureau of Prisons has 2,200 medical professionals. The total accounts for 12 percent of the federal workforce.

Federal health care facilities are directly comparable to those in other sectors. In many areas, several hospitals are within a few miles of a VA facility. In some cases they are across the street. They recruit from the same talent pools.

Several years ago, I managed a large hospital system’s pay program. It was certainly not as large a system as VA, but the focus of all pay programs in multifacility systems is on competing in local labor markets. Those systems generally have relatively simple pay programs and rely on local salary surveys.

In 1990, the Office of Personnel Management tentatively decided to create a separate health care salary system, based on the expectation that health care labor markets would continue to be highly competitive. But then HHS released a projection showing that the balance of supply and demand for talent was soon going to shift, reducing the pressure pushing up pay levels.

The idea for a separate system was shelved, but since then VA has been expanding the occupational coverage of Title 38.

Both market pay and performance pay are part of the salary system for VA physicians and dentists. But for unknown reasons, VA pieced together elements of Title 5 and Title 38 to govern pay for a number of “hybrid” jobs. The system is far more complex than necessary.

Even if the Affordable Care Act is repealed, government medical facilities will soon face an intensified war for talent. In contrast to the typical government office, hospitals are 24/7 operations where cutting services is unacceptable. There is no justification for relying on an overly complex system.

The alternative, staffing with contract patient care specialists, would be more expensive.

Better answers are across the street.


Howard Risher is a consultant and writer on federal pay and performance issues. He was the managing consultant for the studies leading to the 1990 Federal Employees Pay Comparability Act and is author of “Planning Wage and Salary Programs.”

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