Lower reimbursement rates for Medicare, Medicaid and other payors have made it critical for a hospital or health system CFO to keep the organization's revenue as tight and clean as possible. Eric Dickerson, managing director of the healthcare practice at Kaye/Bassman, says the hospital CFO of today is so critical because literally every dollar counts and affects the organization's solvency. "Being a CFO of a hospital is uniquely different from being a CFO of a manufacturing company or any other type of business," he says. "A hospital is clearly a 365-day, 24/7 job."
Because of these intense circumstances, Mr. Dickerson says there have been several emerging trends as hospitals hire and compensate CFOs while also trying to retain that top talent. Here are four of those major compensation trends.
1. Average hospital CFO salaries range from $95,000 to the mid-$300,000 level. CFO salaries are very dependent on the size of the hospital, Mr. Dickerson says. Critical access hospitals are the smallest with a maximum of 25 acute-care inpatient beds, and salaries for those CFOs could range from $80,000 to $100,000. Hospitals that have 75 to 200 beds typically involve larger financial obligations, and CFOs could earn a salary in the mid-$100,000 range, Mr. Dickerson says.
The next level — larger community hospitals with 200 to 300 beds and may also be tied to a teaching hospital or academic medical center — will put CFO salaries in the $200,000 territory.
Larger, integrated health system CFOs will see even larger compensation packages, but Mr. Dickerson says those are outliers. A majority of the hospital CFO salary figures are based on the hospital-level only. "When you get into larger non-profit hospital systems, those [salaries] will be in the $300,000 to $500,000 range," he says. "Those are the salaries that make headlines, but those are at the largest of systems."
2. Productivity incentive packages are on the rise. Productivity incentives are commonplace with some hospital CEO compensation packages, and Mr. Dickerson says that trend is rising for hospital CFOs as well. If hospital CFOs are able to hit certain benchmarks, such as profitability rates or departmental financial success, incentives could total between $10,000 and $30,000, depending on the size of the hospital and the productivity goals.
3. Sign-on bonuses, retention bonuses and relocation stipends are also popular incentives. Although Mr. Dickerson is not seeing these perquisites in all hospital CFO hires, some hospitals are offering sign-on bonuses, first-year retention bonuses and full "pack-ship-and-move" relocation stipends. A first-year retention bonus is similar to a productivity incentive, but instead of being compensated for an achieved benchmark, a hospital CFO could be eligible for a bonus for staying with the hospital for the first year. Figures for these bonuses and stipends can go as high as 35 percent of the CFO's base compensation.
4. Hospital CFO responsibilities are increasing, but compensation does not always follow. Other trends within the healthcare industry are affecting the scope of a CFO's responsibility, but that may not always mean extra figures in the paycheck, Mr. Dickerson says. For example, hospitals are aligning more with physician practices, installing electronic health records and gearing up for ICD-10 and other governmental initiatives. The added workload of managing the finances for several new projects and perhaps several new entities is expected of hospital CFOs now.
Other areas where hospitals are adding more responsibilities to a CFO's plate without added compensation are home health agencies, long-term acute-care facilities and psychiatric facilities. "You've got your job, and you're running a financially strong organization," Mr. Dickerson says. "Hospitals are trying to be as lean and mean as they can, just like several other sectors."
Because of these intense circumstances, Mr. Dickerson says there have been several emerging trends as hospitals hire and compensate CFOs while also trying to retain that top talent. Here are four of those major compensation trends.
1. Average hospital CFO salaries range from $95,000 to the mid-$300,000 level. CFO salaries are very dependent on the size of the hospital, Mr. Dickerson says. Critical access hospitals are the smallest with a maximum of 25 acute-care inpatient beds, and salaries for those CFOs could range from $80,000 to $100,000. Hospitals that have 75 to 200 beds typically involve larger financial obligations, and CFOs could earn a salary in the mid-$100,000 range, Mr. Dickerson says.
The next level — larger community hospitals with 200 to 300 beds and may also be tied to a teaching hospital or academic medical center — will put CFO salaries in the $200,000 territory.
Larger, integrated health system CFOs will see even larger compensation packages, but Mr. Dickerson says those are outliers. A majority of the hospital CFO salary figures are based on the hospital-level only. "When you get into larger non-profit hospital systems, those [salaries] will be in the $300,000 to $500,000 range," he says. "Those are the salaries that make headlines, but those are at the largest of systems."
2. Productivity incentive packages are on the rise. Productivity incentives are commonplace with some hospital CEO compensation packages, and Mr. Dickerson says that trend is rising for hospital CFOs as well. If hospital CFOs are able to hit certain benchmarks, such as profitability rates or departmental financial success, incentives could total between $10,000 and $30,000, depending on the size of the hospital and the productivity goals.
3. Sign-on bonuses, retention bonuses and relocation stipends are also popular incentives. Although Mr. Dickerson is not seeing these perquisites in all hospital CFO hires, some hospitals are offering sign-on bonuses, first-year retention bonuses and full "pack-ship-and-move" relocation stipends. A first-year retention bonus is similar to a productivity incentive, but instead of being compensated for an achieved benchmark, a hospital CFO could be eligible for a bonus for staying with the hospital for the first year. Figures for these bonuses and stipends can go as high as 35 percent of the CFO's base compensation.
4. Hospital CFO responsibilities are increasing, but compensation does not always follow. Other trends within the healthcare industry are affecting the scope of a CFO's responsibility, but that may not always mean extra figures in the paycheck, Mr. Dickerson says. For example, hospitals are aligning more with physician practices, installing electronic health records and gearing up for ICD-10 and other governmental initiatives. The added workload of managing the finances for several new projects and perhaps several new entities is expected of hospital CFOs now.
Other areas where hospitals are adding more responsibilities to a CFO's plate without added compensation are home health agencies, long-term acute-care facilities and psychiatric facilities. "You've got your job, and you're running a financially strong organization," Mr. Dickerson says. "Hospitals are trying to be as lean and mean as they can, just like several other sectors."
Related Articles on Hospital Compensation:
10 Recent Stories on Hospital Salary and Compensation
Physician Executive Compensation: How Are Top Physician Leaders Paid?
3 Factors Influencing Hospital Executive Compensation