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

Healthcare Financial Management, July, 2005

More CFOs in the HFMA survey are from areas with below-average wage indexes, perhaps because many hospitals are located in rural areas and small cities with lower wage indexes. The wage index accounts for an astonishing $100,000 swing from the bottom quartile to the top quartile. If the median is used, the gap between the bottom and top quartile expands to $119,000.

The Gender Gap

The compensation gap between men and women has stabilized at $54,500, compared with $56,700 in 2003, $36,800 in 2001, and $45,100 in 1999. After dropping to 17 percent in 2003, the percentage of women among survey respondents is back up to 23, about where it was in 1999 and 2001.

Much of the gap in compensation can be attributed to the typically higher levels of qualifications (e.g., having a CPA), responsibility (e.g., having a larger number of reporting employees), and experience in health care reported by the men. For example, the gap shrinks to $28,200 among the 71 CFOs with less than 16 years of experience, and to an insignificant $300 among CFOs with 16 to 22 years of experience.

Regression analysis shows that many factors have an influence over total compensation for CFOs, including:

* CPA designation

* A larger department

* More revenue

* Bonus eligibility

* Higher wage index

* Graduate degree

* Starting out at a large national accounting firm

* Working in a healthcare system headquarters

* Number of years as a member of HFMA

* Number of years in the CFO position

Men in this sample have an edge over women in all of these factors.

In past years, regression analysis singled out gender as a variable and assigned to it up to $15,000 of compensation, meaning that $15,000 of the gender gap was not explained by other variables in the model. This year the regression model did not include gender as a variable, indicating that all of the gender gap was assigned to other variables. It appears that women are not paid less for the same work in similar institutions. Why have men advanced to higher-paid positions in larger institutions? This survey, which collects static data, does not address this issue. However, the explanation may lie in large part with experience levels, with male respondents having an average of eight years more experience in health care than female respondents.

CFO versus Vice President Finance

As in all its compensation surveys since 1999, HFMA used only those respondents with "CFO" or its equivalent appearing somewhere in their title to create the CFO sample. The title "vice president" not used in conjunction with the title "CFO" was tabulated separately in the 2003 and 2005 surveys. The titles are similar, with these distinctions:

* Vice presidents earn more, and more of them are eligible for bonus or profit sharing.

* Vice presidents work in larger organizations as measured either by revenue or by beds (for hospitals).

* Vice presidents are more likely to work in a system headquarters than a CFO, but among those working at headquarters, CFOs virtually always (97 percent of the time) report to the top administrator of the organization, while vice presidents do so only about 69 percent of the time, a statistically significant difference.