In contrast, one of the largest percentage increases in pay went to CEOs of smaller stand-alone hospitals (those with less than $250 million in revenue), where the top executives received 9% median increases in total compensation. Including the 3.6% raise in base pay, that group's median total earnings rose to $425,000 from $390,000 the year before.
Several other job categories showed similarly large swings in pay, both positive and negative, but Sullivan Cotter officials say many of them are difficult to ascribe much meaning to because sample sizes were smaller. The largest single swinger on the list was the category of ambulatory-care executives at health systems, whose total compensation dropped by 9.5%. But only 35 such executives responded to the survey.
However the largest percentage gainer on the list, nursing executives at the health system level, showed a 9.4% gain in median total compensation based on 61 responses—a gain that observers say is not only actual, but logical. On the hospital-based side, nursing executives saw a 6.6% increase in total compensation, based on 178 responses. Hospital nurse executives earned a median $218,700 in 2010, up from $205,100 the previous year.
Observers say the salaries for nursing executives were not surprising given all the focus in recent years on quality and the patient-service aspect of healthcare, which nurses have a large influence on. Jim Nelson, who became a managing principal with Sullivan Cotter earlier this year, says high-performing nursing executives can also be hard to find, which affects their salaries.
“They are being asked to do more, and there is a dearth of talent,” Nelson says. “They are, now more than ever, equal members of the executive team, and in some cases they're just catching up” on the salary scale.
Similarly, another category of executive positions receiving more attention—and compensation—is information technology executives.
Take a look at the tax filings of your average healthcare system. Chances are that the system's health IT vendor is listed as one of the five highest-compensated vendors for the organization. In many cases, it's the highest. Naturally, experts say, CEOs want someone with an office near theirs to make sure that investment is paying off and being managed well.
The problem is, like nurses, executive-level health IT managers tend to be scarce, which is why health systems are willing to pay them more to stick around. Chief information officers at health systems received median total compensation increases of 5.2%, which put their total pay at $326,600 for 2010, up from $310,400 in the previous year.
“The CIOs of these organizations, who have been through some of the early installations, are in high demand,” says Kevin Reddy, a vice president at executive search firm Furst Group, Rockford, Ill.
Twenty-five systems paid medical informatics executives median compensation of $291,000, an increase in total compensation of 4.6%, and 11 systems reported having a C-suite-level chief network/system development officer with median total compensation of $399,200.
“If I was thinking of putting an electronic health record in place, the last thing I would want is to lose that person midstream,” Reddy says.
But while the systems placed a premium on health IT talent, the hospitals themselves were not following suit. Hospital CIOs saw median total compensation increases of just 0.1%, and total pay of $208,300.
Going forward, experts say it's tough to predict where executive compensation is headed in the next year or two, but already this year consultants say they've seen signs that the picture is going more in the direction where the executives would like to see it.
For example at academic medical centers, many executives saw their salaries frozen last year along with the rest of the staff at their affiliated universities or medical schools, as higher education endowments took a hit in the marketplace. Bolster, of Hay Group, says executives at university-affiliated hospitals are arguing this year that their salaries should be treated differently because they have completely different business models.
“This year so far that idea of being part of a family and therefore having the same kinds of things happen to you is not happening, and as you can guess, those are relatively intense conversations,” Bolster says.
Experts say they've already seen other signs of a thaw in executive salaries this year, as performance has turned out better than boards had expected.
But what of the “lost” income from years in which pay was slowed, frozen or even reduced for a year or more? “Is that trend going to be baked in? Or over time … will they in fact catch up to the rest of the market?” Nelson says. “No one can predict what will happen … but I believe that those freezes or decreases, unless they're designated as temporary, are going to be baked in going forward.”