As chief financial officer of one of the largest multispecialty groups in the country, Dennis Fuhrman fields numerous calls from recruiters.
They're looking to fill CFO slots at other large medical groups nationwide.
"The (multispecialty CFO) appears to be in greater demand than I've ever seen before," said Fuhrman, who has no interest in leaving his current job at Dakota Clinic, a 170-physician group in Fargo, N.D.
Historically, physicians tended to skimp on administrator salaries. In a dramatic shift, medical groups are shelling out for top talent.
Compensation for medical group administrators increased an average of 8.8% from 1994 to 1995, according to the Englewood, Colo.-based Medical Group Management Association. Increases were significantly higher for the top jobs, particularly those that call for experience in managed care or large groups (See chart).
"As groups grow in physician numbers and net medical revenue, administrators and managers are taking on more responsibility, and the reward is better salaries and benefit packages," said Laurel Weinstein, MGMA survey operations project manager.
The MGMA, America's largest professional organization for medical group administrators, is experiencing increased demand for its services and has made managed care a priority in its educational programs.
Five years ago, hospitals were the destination of choice among graduate students in healthcare administration at the University of Colorado in Denver, which graduates about 25 students each year. Today, it's medical groups.
Large medical groups have bigger revenue streams than some hospitals. "The real future is in group practice. It's not in hospitals," said Errol Biggs, director of the university's center for health administration.
Physician practice management companies, fueled by money from Wall Street, are paying top dollar. Those companies, notably Nashville, Tenn.-based PhyCor, "are really selective about who they're hiring. They're looking for the best of the best, and they're getting it," Biggs said.
Besides generous pay, performance-based bonuses and stock options, PhyCor offers administrators seats on its local boards-something that traditional physician groups don't, Biggs said.
To develop fresh talent, both PhyCor and Birmingham, Ala.-based MedPartners, another leading company, offer internships to graduate students in healthcare administration.
Richard D. Wright, vice president of operations at PhyCor, said managed-care skills are the most critical now. That includes experience in negotiating risk contracts, medical management and assembling physician networks that will be marketable to health plans.
Traditionally, PhyCor has recruited administrators with experience in physician practices, but it's broadened its criteria to include those with physician services experience in hospitals, home health and ambulatory settings, Wright said.
MedPartners acquired most of its talent by purchasing sophisticated medical groups and independent practice associations, said Alissa Varnon, director of human resources. She said MedPartners also promotes strong internal communication to transfer knowledge among its administrators in different markets. But in some cases, she said, the company asks for leads on job candidates from the physicians whose practices it manages.
"This is certainly a market where companies have to be adaptable to change and creative in the way they solve their staffing or recruiting problems," she said.
As hospitals merge and lay off staff, some administrators are jumping to medical groups.
Chief executive officer salaries at medical groups remain lower on average than those for top jobs at hospitals, but they are catching up. And CEOs of large groups can earn more than heads of small hospitals. In 1995, CEOs of groups with 51 to 100 physicians earned an average of $160,000. That compares with $140,000 for CEOs of hospitals with 600 or fewer employees, according to a survey by Phoenix-based Management Compensation Services (July 8, p. 33).
Biggs said one former hospital administrator he knows, who was laid off after 15 years, has started an unpaid yearlong fellowship at a medical group.
He said physician groups often want to hire hospital administrators in the belief that they will know how to negotiate with the hospital.