July 27, 2005
Healthcare CFOs and mid-level financial managers saw their compensation increase to reflect rising levels of education, experience, and expertise, according to the 2005 HFMA Compensation Survey, released at HFMA's Annual National Institute, with highlights published in the July hfm.
Average (mean) cash compensation for CFOs rose to $172,000 in 2005, a 13.9 percent increase over 2003. The increase compares with an 18.9 percent increase from 2001 to 2003.
Hospital and Healthcare System CFO Compensation, 2003 vs. 2005 |
|
|
2003 |
2005 |
|
Average total compensation |
$151,000 |
$172,000 |
|
Average gross annual salary |
$134,600 |
$152,900 |
|
Percentage eligible for bonus/profit sharing |
64% |
65% |
|
Average annual bonus/profit sharing |
$25,500 |
$29,600 |
|
|
|
|
|
Low |
$35,000 |
$35,000 |
|
Median |
$120,000 |
$146,300 |
|
High |
$685,000 |
$793,000 |
For the first time ever, the average compensation for a middle manager broke into six figures, with directors/managers of managed care earning an average of $100,300, including bonus. This position and that of director/manager of reimbursement both gained more over the past two years than the CFO position did -- the first time any director-level position has done so. Directors/managers of PFS and controllers earned gains of more than 5 percent annually.
The Increasing Complexity of Financial Management
Throughout the healthcare finance profession, performance expectations are rising fast. CFOs are now expected to go beyond traditional finance functions to participate in strategic planning, physician relations, business development, case management, regulatory compliance, sales, and education.
However, critical, traditional finance functions, such as balance sheet management, physician-side billing, cost accounting systems, payment issues, capital planning projections, and bond financing, also continue to grow in size and complexity. The evolution of these positions is apparent throughout the middle-management positions as managers and directors adjust to the increasing complexity of the healthcare environment and also move to fill the gaps left as their senior finance leaders shift their focus more to strategic issues.
Some CFOs balance the demands for strategic leadership and financial skill sets by increasingly relying on a strong controller; others with strong financial backgrounds seek an MBA degree to balance their career demands. "To the degree that you can combine the two, that's ideal," observes Michael Nowicki, FHFMA, FACHE, EdD, professor of health administration at Texas State University-San Marcos. "But I would argue that there aren't that many people who can lead the organization from a financial perspective and who have the technical accounting skills, as well. Most organizations already have a CFO and a controller."
SOURCE:
HFMA's Biennial Career and Compensation Guide, Featuring Results of HFMA's Compensation Survey (Available to HFMA members only. Not a member? Join now!)
Additional Resources
- Good Documentation is Key to Establishing Reasonableness of Compensation Packages, June 1, 2005, HFMA Wants You to Know
- HFMA Identifies Critical Competencies for Professional Success, May 4, 2005, HFMA Wants You to Know
- New Year's Resolutions for Healthcare Finance Leaders, December 17, 2003, HFMA Wants You to Know
- HFMA's Talent Manager
If you have questions or comments about HFMA Wants You to Know, contact editor Laura Noble.
HFMA Wants You to Know ISSN: 1540-0697. Volume IV, Issue 14. Copyright 2005, Healthcare Financial Management Association. All rights reserved.