Middle management pay shows steady increase: increased educational attainments are needed if nonmanagerial finance professionals and middle managers wish to advance both their careers and their compensation gains - health care industry executive compensation - Illustration

Healthcare Financial Management, July, 2003

Directors of Finance are the most highly compensated middle managers in healthcare organizations, with combined salary and variable compensation averaging $91,700, according HFMAs 2003 compensation survey. These results continue a four-year trend in which directors of finance have consistently been the most highly compensated middle managers. Other middle-management positions surveyed included Compliance Officer, Controller, and Director/Manager of various departments (Accounting, Managed Care, Reimbursement, and Patient Financial Services [PFS]).

Overview

The positions with the largest percentage gains in compensation were Director of Accounting and Compliance Officer (see Exhibit 1). Over the past four years, during which HFMA has collected data using similar methods, the PFS Director, Director of Accounting, and Compliance Officer positions have shown the largest annual increases in compensation among the middle-management positions.

Among professional, nonmanagerial positions, analysts have experienced the largest compensation increases over the past four years. Accountants have realized weaker growth in compensation--roughly equal to inflation. Average compensation for analysts increased 5 percent, from $51,900 in 2001 to $54,600 in 2003. This rate of increase is slower than was found between 1999 and 2001, when compensation increased 10 percent from $47,000 to $51,900. Accountants in hospitals and healthcare systems, with average annual compensation of $44,800, have not improved their pay position significantly from the averages of $42,000 in 1999 and $43,000 in 2001.

Healthcare experience. PFS directors are among the most experienced of all healthcare financial managers. Healthcare experience among finance professionals, however, tends to be deep across the board. Even Directors of Accounting, the relative newcomers to the field, have an average of i3 years of experience in health care.

Education. Directors of Managed Care are the most educated of the middle managers, with more than 50 percent of survey respondents holding at least a master's degree. Among middle managers, Compliance Officers and Directors of Finance are the second and third most likely to have a graduate degree, respectively. These three positions also receive the highest pay, with Directors of Finance making more than Directors of Managed Care.

Reporting. PES Directors have by far the largest number of employees reporting to them either directly or indirectly. This finding is not surprising considering that the departments PFS Directors oversee require large numbers of staff for billing and other business-office functions. Directors of Managed Care and Compliance Officers typically do not need large staffs to perform departmental duties; some respondents holding these titles do not have any reporting employees even though they hold a management title (see Exhibit 2).

Conclusion

Financial management is a key function in healthcare organizations from which high performance levels are expected and needed. Healthcare financial managers therefore can expect to continue to see compensation increases that reflect the importance of their responsibilities. Nonetheless, increased educational attainments are needed if nonmanagerial finance professionals and middle managers wish to advance their careers and increase their compensation.

EXHIBIT 1

COMPENSATION TRENDS FOR HEALTHCARE FINANCE PROFESSIONALS, 1999-2003

Middle Management Titles             1999      2001      2003


 Director/Manager Finance         $78,800   $83,900   $91,700
 Director/Manager Managed Care    $73,700   $80,000   $87,800
 Controller                       $72,600   $78,300   $85,600
 Compliance Officer               $70,400   $79,000   $89,300
 Director/Manager PFS             $60,800   $71,200   $77,000
 Director/Manager Accounting      $55,800   $62,500   $70,800
 Director/Manager Reimbursement       n/a   $78,100   $84,600
Other Titles
 Analyst                          $47,000   $51,900   $54,600
 Accountant                       $42,000   $43,000   $44,800
 CFO                             $110,000  $127,000  $151,000

Middle Management Titles         Increase from       Annual
                                  1999 to 2003  Growth Rate

 Director/Manager Finance                16.4%         3.9%
 Director/Manager Managed Care           19.1%         4.5%
 Controller                              17.9%         4.2%
 Compliance Officer                      26.8%         6.1%
 Director/Manager PFS                    26.6%         6.1%
 Director/Manager Accounting             26.9%         6.1%
 Director/Manager Reimbursement            n/a         4.1%
Other Titles
 Analyst                                 16.2%         3.8%
 Accountant                               6.7%         1.6%
 CFO                                     37.3%         8.2%

EXHIBIT 2

MEDIAN NUMBER OF REPORTINGEMPLOYEES, BY MANAGEMENT TITLE.

                                        Reporting
            Title                       Employees

Director of Patient Financial Services     37
Controller                                  9
Director of Finance                         7
Director of Accounting                      5
Director of Reimbursement                   3
Director of Managed Care                    2
Compliance Officer                          1