Information systems executives in managed-care organizations averaged $92,000 in base salary and $107,000 in total cash compensation in 1996, according to a survey by a Rockford, Ill.-based executive search firm.
Traditional factors influencing salary, such as experience and education, appeared to have less impact on salary than did the tax status and the size of the organization.
Not-for-profit HMOs tended to pay more than for-profit organizations, even though the level of experience in managed care was higher among for-profit information systems executives, according to the survey by Furst Group/MPI.
Large HMOs covering more than 300,000 lives paid their information executives more than those of smaller organizations, even though the executives overseeing the largest operations were less likely to have a graduate degree or even a degree at all.
The survey attracted 54 responses from among the 400 executives receiving the questionnaire, a 14% response rate.
Overall, the respondents averaged 16.2 years of experience in management information systems, with half that time spent in the managed-care field itself.
The findings indicate most of the executives started in another industry before coming to the relatively new industry of managed care, says Dave Appino, a Furst Group consultant and author of the survey.
Managed-care experience was greater among executives of for-profit HMOs, however-an average of 8.9 years, compared with 6.6 years in the not-for-profit ranks.
Pressure to operate profitably descended earlier on for-profits, Appino says, prompting them to get aggressive about computerization earlier and to search for executive experience that was more directly related to specific problems in managed care.
More experience in managed care doesn't translate into higher compensation, however. Executives in for-profit companies averaged $89,000 in base salary in 1996, compared with $98,000 for executives on the not-for-profit side.
Experience may actually be contributing to the lower salary level, says Bob Clarke, principal of Furst Group.
Because some for-profits hired their experienced hands early on and are retaining them, the companies don't have to go outside and compete for information systems executives on the open market, Clarke says.
Although they have to satisfy their employed executives, the pay increases for longtime employees generally ease up, he says.
In addition, overall experience in the management information systems field is less on average for respondents from for-profit companies-14.9 years, compared with 18.8 at not-for-profit HMOs.
Levels of both managed care and overall experience did not vary much among the three classes of HMOs grouped by number of covered lives. But average base compensation varied significantly, from $76,000 at smaller operations to $111,000 for executives in charge of tracking more than 300,000 covered lives.
Clarke says the information volume and complexity of large managed-care operations require skills and savvy that add up to higher compensation. Larger HMOs will have multiple and changing health plans, multiple payers with different sets of contractual agreements, and swings in enrollment that place sudden new demands on information processing and database management, he says.
Information systems executives require enough knowledge about the HMO's software vendor to hold it accountable as well as enough strategic vision to see future information problems before they hit, Clarke says.
Executives are increasingly tapping higher education for the strategic know-how. More than half the survey's respondents hold a nontechnical undergraduate degree rather than a degree directly related to computer technology.
Nearly half the respondents hold a graduate degree, of which 80% are in a nontechnical discipline such as health administration, public health and business administration, Appino says.
For the time being, however, education takes a back seat to size of an executive's responsibility when it comes to compensation.
About 85% of respondents from the largest organizations had an undergraduate degree, compared with 92% of the two smaller groups.
And only 43% of executives in HMOs of more than 300,000 covered lives hold a graduate degree, compared with 64% of those in HMOs of 100,000 to 300,000 covered lives.