One of the things that was nice about being on the executive team of a hospital was the possibility of making a year-end bonus. The bonus was generally tied to achieving four or five organizational goals, but we had a good team and we generally received 70 to 80% of the monies that we were eligible for each year. The bonus was usually paid in March. Including the bonus dollars, my annual executive salary was well above my previous clinical salary.
One of the questions that any physician thinking about a career as a healthcare executive will consider is: How well will I be compensated? It is probably not the most important question. But it can be a concern for a mid-career physician thinking of making the transition. A reduction in income may not be acceptable, even if it is only temporary.
Like any decision, this question can be difficult to answer, because there are so many variables. But let’s look at this question and see how the finances might play out.
First, let’s look at recent information regarding the salaries of physician executives. According to the most recent survey collected and published through a joint effort of Cejka Executive Search and the American Association for Physician Leadership, here is what we know about the current state of salaries for physicians executives.
- The average salary for a physician in a leadership position was $350,000.
- The highest-paid cohort of physician executives earned $499,000 and included executives with titles such as Chief Strategy Officer, Chief Innovation Officer, and Chief Integration Officer. These are obviously not the traditional CMO nor VP for Medical Affairs.
- Physician CEOs had an average annual income of $437,500.
- Chief Medical Officers earned $388,000 per year.
- The Chief Quality or Patient Safety Officer earned $375,000.
- The Chief Medical Information Officer had an average salary of $372,500.
Now let’s look at average salaries by medical specialty for clinicians. I will present the recent Medscape Physician Compensation Report for 2016 for averages for physicians in the following specialties. There are other surveys available, and various levels of granularity in the data. But the numbers shown below are a pretty good estimate of average salaries.
These salaries will be affected by how many procedures are being done, how many days are spent in the office and how much emergency call is taken (for the pertinent specialties). Comparing the above statistics and graph, it is obvious that anyone practicing a primary care specialty, or a medicine subspecialty, may well make significantly more income by moving into an executive position.
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Work – Life Balance Considerations
Just as there are on-call and other quality of life considerations with regard to clinical medicine, such considerations affect the executive's role.
An executive position is not a 9 to 5 job by any means. I had administrative call – about once every 8 to 10 weeks, for a week at a time. The call was rather easy, helping managers and directors solve problems that came up during off-hours.
There were frequent dinner meetings and weekends spent in board retreats and strategic planning retreats. However, overall, I think the quality of life for an administrator can be much better than that of a busy physician. Most of my physician colleagues are on call every third or fourth day, or making hospital or nursing home rounds on weekends or after office hours. Most surgeons of any type work longer hours than the typical physician executive.
Finally, there are some upfront costs to consider when selecting this new career path. Here are some of the likely upfront and ongoing costs.
- Membership in the AAPL is $295 per year.
- There is course work in the areas of finance, leadership, management, quality, etc. A three-day live course through the AAPL will run about $2,000 to $3,000. A good cross-section of leadership and management topics would consist of the equivalent of three or four such meetings. This may be subsidized by your medical group or hospital employer if you're already involved in committee work.
- You may seek an advanced degree, such as an MHA, MBA or MMM. The MBA can run from $20,000 to $80,000 or more. The Executive MBA provided by the University of Illinois has a cost close to $100,000. The cost of a straight MBA at a top 20 graduate school will generally run $30,000 to $60,000. In a small private university, near my home, the cost is $24,000. The Masters in Medical Management involves similar costs. Some online MBA programs can be completed for under $20,000.
- Completing the CPE (Certified Physician Executive) will cost another $3,000 after all prerequisites are met.
The salary considerations definitely should not be a barrier to considering a job as an executive, unless one is a very highly compensated cardiologist or orthopedist. The quality of life will probably be better than that of most clinicians.
For several primary care specialties, a shift to executive leadership may result in a sizeable increase in salary compared to the typical practitioner. However, there may be upfront costs such as the cost of acquiring an advanced degree or completing a certification, such as the CPE.
I previously listed the four steps to take before choosing a management career. Now is time to do the cost-benefit analysis. The costs to obtain the necessary background education, and possibly an advanced degree, are significant. But, besides the increase in salary I experienced, the intellectual challenges and excitement of mastering a new field more than offset the financial and time commitments required.
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