After freezing salaries during the recession, the Triangle's largest hospitals are reinstating pay raises to retain and attract employees.
The extra pay will increase incomes for more than 30,000 local workers and provide some boost for the region's economy, giving families more money to spend as the holidays approach.
It's another sign that the worst of the economic downturn, which prompted many employers to cut jobs, wages and benefits, is easing.
But the raises come as the federal health overhaul puts more pressure on the medical industry to reduce expenses, and could offer more ammunition to critics who blame health providers for soaring costs.
On Monday, the board of the UNC Health Care System approved bonuses and raises for its 8,000 workers in Chapel Hill. The amounts vary by position, but will total about $22.4 million. The raises will average about 3 percent.
"I believe it is a priority to reward our employees for continually providing the best care and service to our patients," said Bill Roper, CEO of the UNC Health system. "We must remain competitive with the market."
WakeMed, the Duke University Health System and Rex Healthcare also approved raises recently, increasing the competition for nurses and other employees.
WakeMed, which employs more than 7,000 people across Wake County, gave 3 percent raises to clinical staff in July. Managers and nonclinical staff will get similar increases next month.
Rex, the Raleigh hospital owned by UNC Health, also will give average raises of 3 percent to its 4,600 workers in January.
Duke doesn't discuss details of wages, spokesman Doug Stokke said. However, he said, the health system's 12,000 employees, including at Duke Raleigh Hospital, will receive "a market-based pay increase in October."
The raises reaffirm the relative health of the medical industry, a foundation of the Triangle's economy. The technology sector also is hiring and fighting to attract top talent.
But other local titans of the health-care industry are tightening their belts.
Blue Cross and Blue Shield of North Carolina, the state's largest health insurer, has said it plans to slash administrative costs as much as 20 percent by 2014, and is planning layoffs. GlaxoSmithKline, which employs about 5,000 people in the Triangle, has eliminated hundreds of local jobs to reduce costs.
State workers left out
UNC Health hasn't had raises since July 2008. Officials carefully considered reinstating them because of the state's financial crunch and the fact that many state workers aren't getting any, Roper said.
State lawmakers cut funding for UNC Health this year, to help offset budget woes. The system will receive about $36 million from the state this year, down from $44 million last year. That money helps cover the more than $280 million in charity care UNC Health provides each year.
The raises will come from UNC Health's operating income, Roper said. Last year, the system reported operating revenue of $995.9 million, up nearly 7 percent from a year earlier. Operating income rose to $56.1 million, a 30 percent improvement.
Roper recently met with about a dozen lawmakers to explain the pay raises, and was told to expect some backlash from other state workers, he said.
Roper also explained that he asked the UNC Health board not to give him a pay raise. He remains one of the health system's top-paid employees, with an annual salary of $717,600.
Duke health system CEO Victor Dzau also will not receive a raise this year, Stokke said.
Roper supplements his income by serving as a director at two publicly traded companies: Medco Health Solutions, the nation's largest pharmacy benefits manager, and DaVita, which runs more than 1,500 dialysis clinics. For that work, Roper earned nearly $640,000 last year in cash, fees and stock, according to filings with the Securities and Exchange Commission.
That type of work is "common practice" for university leaders, Roper said, adding that he learns a lot in those roles. He said that he would recuse himself from any discussions involving business between UNC Health and the companies.
Bonuses coming, too
UNC Health will give its employees bonuses for the fiscal year that ended June 30 because the organization met various goals related to patient satisfaction, financial results and other factors.
That will average 2.5 percent of annual salaries for most employees, but about 250 managers will receive 8.8percent. Workers will receive the payments next month.
UNC Health also approved average raises of 3 percent, although the amount will vary by position. The average annual salary for nurses at UNC Health is $59,084. The average for all hospital workers, excluding residents, is $54,384.
The increases still leave UNC Health at a disadvantage to rivals such as Duke and WakeMed, which are able to pay more as private nonprofit institutions, Roper said.
"We are trying to balance this with other needs," he added. "This is what I felt we could do."
All the local hospitals continue to hire as they expand and add new services. UNC Health expects to add about 365 employees during its current fiscal year.
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