HFMA's biennial career and compensation guide: featuring results of HFP1A's 2005 Compensation Survey

Healthcare Financial Management, July, 2005

Career coach Vickie Austin of CHOICES Worldwide believes that having a breadth of contacts is critical for a variety of reasons. "For one thing, it brings you into contact with people who have different points of view. For another, it makes it less likely that you will be caught unawares when the market changes." Most important, says Austin, is the fact that "people like to hire people they know--or people who know people they know."

In his first year of graduate school, Albert already knows this. He expects that his academic preparation will serve him well, he says. "But there's only so much you can learn in a classroom. I've been spending time in different locations with different executives--finance people, operations people, frontline people--following them around, learning what they do.

"That's really the bottom line in healthcare," Albert says. "Networking. Getting to know people."

Spoken like a future CFO.

Part 2

Results of the 2005 HFMA Compensation Survey: Compensation Is Way Up!

Average (mean) cash compensation for healthcare CFOs hit $172,000 in the 2005 survey. This represents an increase of 13.9 percent over two years (6.7 percent annually), during which inflation as measured by the Consumer Price Index increased by only 2.4 percent annually. This compares with an increase of 18.9 percent in compensation over the previous two year period (2001-2003), which saw inflation increase annually by 1.9 percent. Median compensation rose even more sharply from 2003 to 2005, from $120,000 to $146,300, an increase of 21.9 percent (10.4 percent annually). Compensation in the middle was increasing faster than at the extremes for the past two years.

The increase is in both salary and variable compensation. Although salary increased by $18,300 (13.6 percent), variable compensation, adjusted for availability, increased by $2,900, or 17.9 percent. Only 28 (14 percent) of the 208 CFOs eligible for a bonus reported a $0 payout, up just slightly from 12 percent in the 2003 survey. This reflects a continued stable financial performance in the healthcare sector.

Over the long haul, CFO compensation has more than kept pace, rising 6.20 percent annually since 1980. Given an annual increase of 3.65 percent for the CPI, this means that CFOs have realized inflation-adjusted gains of 2-45 percent annually over the past quarter century.

CFO Description

Three hundred eighteen CFOs responded, out of 600 sampled from HFMA members (which did not include military CFOs). Who were these CFOs?

Ninety-three percent of them report directly to the top administrator of their organization.

They are educated.

Many hold a CPA license and may hold HFMA certification as well.

They are a very experienced group of professionals, having worked in healthcare for an average of 22 years. Typically, they entered the field at about age 26 and joined HFMA an average of six years later.

They are rewarded commensurate with time spent at the top--both mean and median compensation rise with number of years as CFO--and with total time spent in healthcare. The top quartile earns about 78 percent more, on average, than the bottom. As measured by the median, compensation increases about 92 percent from the bottom to the top quartile of experience, with gains spread throughout rather than just at the top.