Healthcare Compensation Still Strong

John Commins, for HealthLeaders Media , January 13, 2011
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Editor's note: This piece is based on John Commins' Nov. 15 online column, "It's Good to Be in Healthcare." Visit, click on the HR tab, then the HR Strategies link.

Despite all the ululating about shrinking reimbursements and the impact of federal healthcare reform, and any of a number of financial icebergs out there, let's acknowledge that it's good to be in healthcare.
Numerous surveys show that physicians, highly skilled clinicians, and healthcare executives in the United States are the most highly compensated class of workers on the planet. Physicians held the top six positions for median pay in Money magazine's Best Jobs in America survey. Nurse anesthetists were ranked No. 7, with a median salary of $156,000.

New survey results from Executive Compensation 2010/2011 show that hospital CEOs earn an average $353,900 per year, (CEOs at not-for-profits average $225,400; at home care facilities, $282,300 a year; at physician clinics, $254,000; at behavioral health facilities, $241,300; and at long-term care facilities, $235,700.

These executives, physicians, and skilled clinicians undoubtedly would make a strong argument that they deserve the salaries they're getting. Besides, it's what the market is paying, and it's hard to blame anyone for earning as much money as he or she can.

However, let's put this in perspective. According to the U.S. Census Bureau, 4.1% of U.S. households had an income between $150,000 and $200,000 in 2009, and 3.9% had an income of $200,000 or higher, while 11% of U.S. households earn between $15,000 to $25,000 annually. The median household income in the U.S. that year was $50,221.

"Cost containment" in healthcare means shifting more costs onto the backs of patients, about 90% of whom earn considerably less than physicians and hospital executives. Studies consistently show that healthcare inflation is relatively constant, at about 7% or so every year---often double or triple the Consumer Price Index---in boom times and in busts.

Maureen Maitland, vice president of Standard & Poor's Indices, attributes the rise in healthcare costs to supply and demand; healthcare providers are charging more because they can. "Basically the demand for healthcare is high, and physicians and hospitals are trying to meet their budgets, and are able to put these rate increases through," she said.

This is unsustainable. More and more, middle-class Americans are feeling the pinch of rising health insurance premiums in an era of stagnant wages. So far, public scorn and blame has been directed almost entirely at the health insurance industry. That will change, however, as more people look for explanations and scapegoats. Will the criticism be fair? Given the rage out there in the public, it almost doesn't matter. Brace yourself for renewed public interest in C-suite and physician income. A lot of people are figuring out what we already know: It's good to be in healthcare.


John Commins is a senior editor with HealthLeaders Media.

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