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

Healthcare Financial Management, July, 2005

As would be expected, years in HFMA correlate with years spent in healthcare.

Divided by quartiles, the group with the longest period of membership earns 72 percent more than the group with the shortest period of membership. The median shows an even more substantial upward trend, with the median earner in the top quartile earning more than double what the median earner in the bottom quartile earns.

Although CFOs usually enter the field of healthcare finance in a healthcare provider or payer organization, those who started in a large national accounting firm earn the most.

Most of the respondents started in healthcare as accountants or auditors, and the market has rewarded them for doing so; CFOs who entered at a management or executive level actually are earning less today, although the 10 percent who started as financial analysts or consultants now earn the most.

Respondents who started out at the large accounting firms are now CFOs in larger organizations with average gross revenues of approximately $550 million and an average of 280 beds, compared with $300 million and 180 beds for the entire sample. Almost a third are now CFOs of systems, versus just 16 percent overall.

Start Big, Stay Big

Again as expected, CFOs in larger organizations make substantially more money than those in smaller organizations. Those in system headquarters make 80 percent more than the average hospital CFO, but the organizations in which they work take in more than three times more revenue than the average hospital.

In addition to making more money, system CFOs differ from hospital CFOs in being somewhat more experienced and in having fewer women in their ranks; about 10 percent of system CFOs and 25 percent of hospital CFOs are women. In other ways, the two groups are similar: System and hospital CFOs report starting in health care at about 27 and 26 years of age, respectively, and joining HFMA at 34 and 33 years old, respectively. It appears that healthcare CFOs in general have spent most of their careers in health care.

Location, Location, Location

Location makes a big difference in wage levels. The Northeastern states lead the pack with the highest compensation, as they did in 2001 and 2003. Such high-cost states as New York, New Jersey, and Massachusetts pull the average up.

The Western states return to being the second highest-paying region of the country after dropping to last place in 2003. Only 33 responses were received from those states in 2003, so the results that year may have been less reliable than desired, although in all three years (2001, 2003, 2005), about 30 percent of responses in the West have been received from high-cost California.

A more telling indicator of compensation is the Medicare wage index, which attempts to represent the variance in labor costs from region to region. Each metropolitan statistical area has a wage index, as do the rural (non-metro) areas of each state. An area with exactly average wage costs in health care would have a wage index of 1.0000. An area with wage costs 2 percent above the national average would have a wage index of 1.0200, and so forth.