HLTH 5663 Module 3 Compensation Analysis Example

$87.50 an Hour for a Traveler, $52.26 for Our Own Night Scientist: Pricing Base Pay, Shift Differentials and Agency Coverage in a Hospital Laboratory

Student Name

American College of Education

HLTH5663: Human Resources in Healthcare Organizations

Module 3 Assignment

Instructor Name

July 17, 2028

The Current Pay Position

The composite three-hospital system employs 58.5 full-time-equivalent medical laboratory scientists at an average base rate of $36.20 an hour. A salary survey of seven hospital laboratories within 60 miles, completed by the system's compensation department, places the market median at $38.50, so the system pays about 6 percent below median. Shift differentials are $2.50 an hour for evenings, $4.00 for nights and $2.00 for weekend hours, and most competing laboratories pay $5.00 or more for nights. Benefits add about 30 percent to base pay. There is one job title for all scientists, with no pay progression beyond annual increases.

The workforce plan in Module 1 projected a shortage of about 15 scientists within five years if nothing changes, and it treated lower turnover as one of the three levers needed to close it. Pay is the first thing departing scientists mention in exit interviews, although not the only thing. The wider market offers no relief. In the national count of unfilled laboratory jobs taken in 2022, every department surveyed reported more open positions than two years earlier (Garcia et al., 2024).

What Agency Coverage Really Costs

Nine positions are covered by traveling scientists placed through a staffing agency at a bill rate of $87.50 an hour, including the agency's fee, housing stipend and the traveler's pay. Most travelers work nights, the hardest shifts to fill. The comparable cost of an employed scientist on nights is the base rate of $36.20 plus the $4.00 differential, $40.20, plus 30 percent for benefits, or $52.26 an hour. The system therefore pays a premium of about $35.24 for every hour a traveler works, about $73,300 per position each year, or roughly $660,000 a year for the nine positions.

The premium is not the only cost. Travelers need orientation at the start of each 13-week contract, which takes time from staff scientists; they are less familiar with the laboratory's procedures and instruments; and they leave when the contract ends, often just as they become fully productive. Agency staff are not a cost of the shortage; they are the price of not fixing it.

Pricing the Proposed Package

The proposal has three parts, each priced separately using 2,080 hours per position and adding 20 percent for the benefits that rise with pay, such as retirement contributions and payroll taxes. First, a market adjustment of $2.30 an hour brings the base rate to the market median of $38.50. For 58.5 positions, it costs about $336,000 a year. Second, the night differential rises from $4.00 to $5.50, matching competitors. About a third of scientist hours are worked at night, so the increase costs about $73,000 a year.

Third, a three-level career ladder replaces the single job title. Scientists who complete a specialty competency program in one department, such as blood bank or microbiology, and serve as a trainer for new staff move to level II, with a $1.50 hourly increase. Those who hold a specialist certification and lead a quality or validation project move to level III, with a $3.00 increase. If 30 percent of scientists reach level II and 10 percent reach level III, the ladder costs about $110,000 a year. The total package costs about $518,000 a year.

The market adjustment is applied as a flat hourly amount rather than a percentage, and the choice is deliberate. The system's newest scientists start at $34.50, while those with fifteen or more years earn about $39.00, and exit interviews show that early-career scientists leave most often, usually within their first three years. A flat amount raises the lowest rates by the largest percentage, about 6.7 percent for a new graduate against 5.9 percent for a senior scientist, which puts more of the money where departures are concentrated. The career ladder then restores progression for experienced scientists through recognized skills rather than years alone, so that the adjustment does not flatten pay differences that reflect real expertise.

Offsets and the Net Cost

Two offsets reduce the net cost. The first and largest is converting travelers to employees. After the package, the loaded cost of an employed night scientist rises to about $57.20 an hour, so each converted position still saves about $30.30 an hour compared with a traveler, or $63,000 a year. If the package allows the system to convert six of its nine traveler positions within two years, the saving is about $378,000 a year. The second offset is lower turnover. The system estimates that each departing scientist costs about $60,000, including recruitment, 12 weeks of orientation and traveler coverage during the vacancy, a figure built with a method adapted from nurse turnover research that adjusts baseline costs for inflation (Jones, 2008). If turnover falls from 8 percent to 6 percent, about 1.2 fewer scientists leave each year, saving about $72,000.

Together, the offsets total about $450,000 a year, leaving a net cost of about $68,000. If all nine traveler positions were converted, the savings would exceed the cost of the package. The package is therefore close to self-funding, provided the conversions happen. The question for the budget committee is not whether the system can afford to pay scientists more, but whether it can afford to keep paying agencies instead.

Why Pay Alone Will Not Be Enough

Two findings argue against treating the package as the whole answer. Staiger et al. (2010), using a legislated change in Veterans Affairs nurse wages as a natural experiment, found that the supply of nurses to an individual hospital responded only weakly to that hospital's own wage in the short run, and that other hospitals responded to their competitor's increase by raising their own wages. If the same holds for laboratory scientists, a raise will not by itself draw many new scientists quickly, and neighboring laboratories may match it. The package's main effect is likely to be on retention and conversion of travelers, not on attracting large numbers of new hires.

The second finding is that pay is not the main driver of stress. When laboratory professionals across the country were asked about their work, most said they liked it, yet many described heavy stress and signs of burnout, and they pointed chiefly to too much work spread across too few people (Garcia et al., 2020). Pay that brings the system to market removes a reason to leave, but it does not remove the reasons scientists become exhausted. Those are addressed in the retention module.

Recommendation

The system should adopt the full package, effective with the first pay period of the coming budget year: the market adjustment to $38.50, the night differential of $5.50 and the three-level career ladder. The budget should show the gross cost of about $518,000 and the expected offsets separately, with a target of converting six traveler positions within two years. Human resources should report quarterly on conversions, turnover and the market median, and the compensation committee should review the base rate annually against the salary survey so that the system does not fall below the market again.

References

Garcia, E., Kundu, I., Kelly, M., & Soles, R. (2024). The American Society for Clinical Pathology 2022 vacancy survey of medical laboratories in the United States. American Journal of Clinical Pathology, 161(3), 289-304. https://doi.org/10.1093/ajcp/aqad149

Garcia, E., Kundu, I., Kelly, M., Soles, R., Mulder, L., & Talmon, G. A. (2020). The American Society for Clinical Pathology's job satisfaction, well-being, and burnout survey of laboratory professionals. American Journal of Clinical Pathology, 153(4), 470-486. https://doi.org/10.1093/ajcp/aqaa008

Jones, C. B. (2008). Revisiting nurse turnover costs: Adjusting for inflation. Journal of Nursing Administration, 38(1), 11-18. https://doi.org/10.1097/01.NNA.0000295636.03216.6f

Staiger, D. O., Spetz, J., & Phibbs, C. S. (2010). Is there monopsony in the labor market? Evidence from a natural experiment. Journal of Labor Economics, 28(2), 211-236. https://doi.org/10.1086/652734