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Hospital Executive Pay Contributes to Outsized Healthcare Spending

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By Phil Cohen

The federal government’s analysis of Medicare spending early this month highlighted several specialties that received a higher percentage of disbursed funds. Another survey, however, highlights which group of hospital employees actually earns the highest salary: administrators.

A Compdata Surveys analysis revealed that those in charge of the hospital as a business earn far more than the medical practitioners in their employ: a $584,000 average salary for the insurance CEO versus $185,000 for a general doctor. Hospital CEOs and surgeons had closer average salaries, yet the former still out-earned the latter by nearly $100,000 per year.

The trend of rising executive salaries accelerated in the 1990s and has continued to rise since then. In addition to actual salaries, many of these executives earn millions more in non-salaried compensation such as stock options. In even greater contrast, the average emergency medical technician earns just over $27,000 a year and many hold down additional jobs to make ends meet.

Rapidly expanding compensation packages are “necessary to attract top executives” according to hospitals and insurers, but their cost adds to the patient’s bottom line: as much as 30 percent of a hospital bill is purely administrative costs. Meanwhile, American insurance payments include $606 per person for administrative costs. (Norway spends $35 per person annually on those same costs.)

Backlash against large executive salaries includes doctors who are pushing for lower healthcare prices, such as a group of 75 doctors in northwest Wisconsin that published an ad in January calling for healthcare reform.

If rising costs and slow payments are keeping your healthcare company from growing, PRN Funding’s invoice factoring services for healthcare vendors can close the cash flow gap. Learn how healthcare factoring can help your company and apply online to begin factoring today.

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Phil Cohen

About the author

Philip Cohen is the founder and President of PRN Funding, LLC. PRN Funding is an extraordinarily focused niche player in healthcare funding. With years of…... Read More

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