Becoming a hospital CEO will require a commitment of both time and money. After the years that you spend attaining a Master’s degree and the years that you spend gaining experience that will fulfill CEO requirements, you may be wondering if everything you have done will pay off in the form of fulfillment and also in the form of money. One of the biggest driving factors you need to keep in mind whenever you are pursuing a hospital official position is the salary. While achieving your goals is important in life, ultimately you want to be sure that you will be compensated enough to justify going through the stress. If you are wondering how much you will earn once you finally become a hospital CEO, read this guide to CEO earnings and get a basic understanding.
A hospital CEO salary reflects the high value of a hospital executive in today’s economy. Becoming a hospital CEO requires a lot of focus, self-discipline and passion for healthcare administration. As with other corporate executive jobs, a hospital CEO’s earnings are open-ended. To increase his or her earnings, a hospital CEO needs to perform well on the job and find new and innovative ways to increase the hospital’s revenue while cutting costs. From hospital expansions to mergers and acquisitions, the opportunities for growth in the healthcare industry are excellent.
The Average Salary Versus Hospital CEO Salary Ranges
In many occupations, salaries reported throughout the industry are similar, but in the world of hospital management, salary ranges can be very large. As you are researching CEO earnings in the healthcare sector, you should start by learning how much salaries average out to be. Based on reports that were published by the Bureau of Labor Statistics, the highest ranking officials in the hospital setting earn an average annual salary of $195,460. These amounts have been averaged from 6250 different CEOs throughout the country.
While the average figure gives you a general idea of how much you will make once you become a prominent CEO, the ranges that have been reported nationwide are alarming. CEOs who have little experience or who work in rural areas with small populations will make salaries at the lower end of the scale, reportedly around $118,000 including bonuses. On the other end of the scale, are CEOs of hospitals that are located in urban areas that teach med students, and these CEOs earned a much higher average of $1.7 million per year.
According to the US Bureau of Labor Statistics, the average yearly salary for a US worker is a little over $50,000. Hospital CEOs at the low end of the pay scale can earn twice as much as the national average, and those at the upper end can earn around 34 times as much.
The salary range measures statistical probabilities, and there are always a few outliers in the narrow part of the tail of the distribution. Corporate executives are compensated according to the performance of their organizations, so a hospital that makes a lot of money would pay its CEO very well. A wide range of factors determines the size of a hospital CEO salary, and two hospitals just a few miles apart can pay their CEOs very different amounts.
What Factors Affect the Amount a Hospital CEO Makes?
Hospitals have compensation committees and the members of these committees are ultimately responsible for setting the CEO salary. Contrary to popular belief, the quality of hospital care and customer satisfaction are not considered by the board when voting on how much the CEO should earn. There are a variety of factors that are considered by the committee, and one of these factors is experience. In addition to experience, the board will vote on raises and bonuses if the hospital is growing, if new technologies are being deployed, and if new service lines are being added to the facility. A huge part of a CEO’s salary is based on performance, and some CEO’s can make commissions that are hundreds of thousands of dollars.
The biggest factor that determines hospital CEO salary is a hospital’s revenue. A hospital in a large medical center in the middle of an important city will pay its CEO more than a less active hospital. Some hospitals specialize in cutting-edge treatments for serious conditions such as brain damage and cancer. Patients from throughout the region may be flown to these hospitals for experimental treatment, increasing the hospitals’ revenue with money from patients’ insurance providers.
CEOs that can find ways to increase revenue from various streams can expect to earn higher salaries and larger bonus payments. Hospitals hire top CEOs for the specific purpose of increasing revenue and reducing expenses.
With increased revenue comes increased bonus pay for hospital CEOs. Bonuses are included in a hospital CEO’s contract, and they can even be a part of the CEO’s exit package, or “golden parachute.” While a hospital CEO salary typically reaches six figures, a large bonus can double a CEO’s compensation.
Although hospital CEOs don’t have the same earning potential as executives in the financial sector, such as hedge fund managers and other investors, they can still bring in sizable bonuses for exceptional years. Bonus payments can be especially big for years that a hospital adds a new wing or hires a new specialist.
Hospital Size and Revenue
A CEO who can increase a hospital’s revenue can expect raises in pay and large bonuses. Revenue is largely determined by the number of patients admitted to the hospital and the type of treatment they receive. While rural hospital CEOs won’t have much of an opportunity to increase hospital admittance or offer cutting-edge treatments for serious illnesses, their urban counterparts may have a lot of room to work with.
In big cities with major medical centers, such as Chicago and Houston, a hospital CEO salary can reach seven figures and come with big bonuses at the end of each year. These major hospitals have a lot of room for expansion when it comes to specialist care, experimental treatment and the level of admittance.
Rural Versus Urban Hospitals
While rural hospitals typically have a lower level of admittance, they may offer bonuses to their CEOs for signing on. Although rural hospitals usually don’t have budgets as large as their urban counterparts, they receive funding from many of the same sources.
A hospital CEO who is highly motivated to earn as much money as possible will probably want to look for work in an urban medical center, but rural hospitals are not always cash-strapped. Their budgets tend to exceed their needs and capacities, so the care they offer is more than adequate in most cases. The challenge for rural hospital CEOs is to manage the inflow of patients with conditions that require transfer to bigger hospitals.
Research Institutes and University Hospitals
When it comes to cutting-edge treatment and specialist care, the hospitals located in major universities are among the best. In these institutions, the CEO makes decisions about the type of care to offer patients and the best way to organize hospital functions.
The CEO works with other executives and managers to make top-level decisions about communications, investment, personnel and recruitment. Because research institutes and university hospitals are renowned for their advanced treatment options and specialist care, decisions about medical policies are made by doctors and researchers in the hospital’s various departments. A hospital CEO needs to have general knowledge of medical procedures and techniques to guide this decision-making process.
The CEO Versus Other Hospital Employees
Hospitals have received criticism for the disproportionate payment of their CEOs when compared to the salaries of other employees. According to the BLS, nurses with bachelor’s degrees earn a median salary of $73,300 per year. In contrast, hospital CEOs earn over twice as much at the low end of their pay scale and dozens of times as much at the upper end.
Other executives in a hospital earn salaries more comparable to the CEO than to most nurses and healthcare workers. Some of the top surgeons in major medical centers may earn seven-figure salaries, but they don’t receive the kinds of bonuses that executives get each year.
Hospital CEOs Versus Executives in Other Industries
Healthcare managers earn high salaries. The median annual income of healthcare managers is over $100,000, which is similar to the pay for managers in other industries. Upper-level managers and administrators across all industries can make significantly more money than the national median. The range of a hospital CEO salary is about the same as the range of earnings for executives in other industries. The big difference between running a hospital and running another type of business is that hospitals are dedicated to healing people while most other businesses are dedicated to maximizing profits.
CEOs of major investment banks and financial firms typically earn hundreds of millions of dollars per year. The CEOs of all the major tech companies are multi-billionaires. Hospital CEOs earn a much more modest income than these celebrity executives.
How Can Hospital CEOs Earn More Money?
One of the top responsibilities of a hospital CEO is to find ways for the organization to become more profitable. The CEO meets with executives and managers to come up with a plan for the near future of the organization. The executives and managers in the hospital work on carrying out that plan while the CEO oversees operations and communicates with a wide range of hospital employees and outside experts about the best path forward for the hospital.
The hospital CEO salary increases as these plans are put into action and the revenue of the hospital increases. Hospital CEOs typically sign contracts for five years or more, and the results of their plans can take several years to come to fruition.
Best States for Hospital CEOs
The best states for healthcare management occupations are California, Texas, New York, Pennsylvania and Massachusetts, according to the BLS. Healthcare management includes all managerial and administrative roles in hospitals, clinics, labs and research institutes. Hospital CEOs and other executives are included in this category, so information about the best states for healthcare managers is relevant.
In New York, the median annual salary for healthcare management professions is $143,030 with the top-earning 10 percent of workers taking home close to $300,000 per year. The next highest-earning state for healthcare management professionals is Massachusetts, where they have a median annual salary of $133,900. Hospital CEOs fall into the top 10 percent of earners with salaries exceeding $250,000 per year.
Top Schools for Hospital CEOs
Most universities offer degree programs specifically for healthcare administrators and medical managers. In today’s job market, CEOs are expected to be well-educated, and hospital CEO jobs tend to go to candidates with at least a master’s degree in a healthcare management discipline.
Schools across the country offer highly regarded healthcare administration services programs. The top programs in the country are offered at:
- University of North Carolina at Chapel Hill
- George Washington University
- University of Alabama at Birmingham
- University of Minnesota
Not everyone can attend classes in these universities because of space limitations and distance considerations. Fortunately, nearly every state has a university with a top-notch healthcare management program, so access to this lucrative profession is available to everyone.
Most hospital CEOs have a master’s degree in healthcare management or a related subject. The top degrees for hospital CEOs are the Master of Healthcare Administration, Master of Business Administration and Master of Medical Management. These degrees take two years to complete, and most schools design these programs to accommodate the schedules of students who work full-time.
A hospital CEO can come from a healthcare administration background or a medical background, and there are many other suitable degrees besides the ones mentioned above. Some of the top hospital CEOs in the country were once medical doctors who decided to change careers to become healthcare administrators. With experience and expertise comes a larger set of opportunities in the healthcare administration field.
Who Should Study to Become a Hospital CEO?
The ideal hospital CEO will have an even temperament, strong analytical skills, strong ability to focus and a passion for administrative work. The best way to decide if hospital management is the right profession is to enroll in a college course and speak with professors and other students.
The job of a hospital executive is by no means easy. Millions of people each year depend on hospitals to extend their lives and cure them of debilitating illnesses. A hospital CEO needs to care about healthcare as well as making his or her company profitable.
A CEO’s job is to improve the way that the hospital is run and to market services. As the number one official in the ranks, you can expect to work long hours. Working these long hours and taking on the stress does come with a high salary, but you need to be the right fit for the job. Map out a route to make your goal become a reality and head a hospital that pays well.
With the healthcare industry going through a major expansion, hospital CEOs will continue to be in greater demand than ever before. Executives who perform at their best and make smart decisions about their organization’s future will make the most money. A hospital CEO salary depends on how much money the hospital makes and how much it improves during the CEO’s tenure.
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