Regulatory changes, technological advances, and the rise of hospital mergers have long influenced the growing demand for healthcare administrators and their earning potential. Major hospital systems, independent hospitals, physician practices, HMOs, assisted living facilities, and more have always relied on health administrators to ensure the resiliency of their healthcare systems.
Still, COVID-19 ushered in a whole new appreciation for the expertise that outstanding healthcare administrators bring to the table. As the coronavirus took hold of our nation’s healthcare system, healthcare administrators were charged with the inconceivable task of completely rethinking the delivery of healthcare. Changes to regulations and reimbursements, the meteoric rise of virtual healthcare, disaster readiness issues like disinfection products and personal protective equipment, and an infrastructure that simply wasn’t prepared for a pandemic demanded health leaders who could navigate this highly complex and unpredictable healthcare environment.
Now, more than ever, healthcare establishments rely on the expertise of healthcare administrators to strategize, execute, and implement plans, policies, and approaches that are redefining and reimagining the face of healthcare – and they’re willing to pay big to attract and secure the best talent.
Examining the Rise in Salaries and Total Compensation Packages for Healthcare Administrators
The trends in healthcare administration are clear: despite COVID-19’s best efforts to pillage and plunder our nation’s healthcare system, administrators that go on to earn mid-career executive MBAs and move into executive leadership roles are still doing pretty well for themselves.
A 2020 Modern Healthcare Executive Compensation survey, which gathered information from 376 health systems, found that just 16% of hospital and health systems eliminated bonuses for healthcare executives in 2020. Instead, total cash compensation (which includes bonuses, stock options, retirement savings, etc.) increased about 3.2% for executives across more than 1,000 hospitals.
Larger health system executives overseeing organizations with more than $3 billion in net revenue enjoyed weighted base salary increases of 4.2% and pay increases of 10.2% between 2019 and 2020, while those overseeing health systems with revenue of less than $1 billion saw weighted base salary increases of 3.4% and pay increases of 4.5% during this time.
The survey broke also down changes to both the median base salaries and total compensation for hospital executives between 2019 and 2020:
- President and CEO, stand-alone hospital: Base salary change: 10.1%; total compensation change: 5.9%
- President and CEO, system-owned: Base salary change: 0.8%; total compensation change: 6.5%
- Chief financial officer, stand-alone: Base salary change: 2.2%; total compensation change: 4.0%
- Chief nursing officer/top patient care executive: Base salary change: 3.3%; total compensation change: 3.9%
- Chief information officer: Base salary change: 3.0%; total compensation change: 7.3%
- Chief human resources officer: Base salary change: 0.9%; total compensation change: 4.8%
- Hospital administrator: Base salary change: 4.1%; total compensation change: 7.0%
- Operations: Base salary change: 1.9%; total compensation change: 2.6%
- Foundation or fund development: Base salary change: 2.5%; total compensation change: -0.7%
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Salary Trends for Professionals in Healthcare Administration
The U.S. Department of Labor Bureau of Labor Statistics (BLS) provides a close look at what our nation’s healthcare administrators are earning and where.
Note that the following BLS salary stats reflect base salaries only for healthcare administrators and not total compensation, which includes bonuses, stock options, retirement savings, and more.
Mirroring the rising salary trends highlighted by Modern Healthcare, the BLS revealed an average salary of $118,800 for healthcare administrators in the U.S. as of May 2020 — a steady rise in recent years:
- 2019: $115,160
- 2018: $113,730
- 2017: $111,680
- 2016: $109,370
The highest earners in the field, who likely oversee major hospital systems, have extensive industry experience, and hold C-level titles, earned about $195,630 as of May 2020, which reflects a significant increase, year over year:
- 2019: $189,000
- 2018: $182,600
- 2017: $176,130
- 2016: $172,240
Between 2016 and 2020, the average salary for hospital administrators increased by nearly $9,500, or about 9%, while the average salary for the top-earning hospital administrators increased by nearly $24,000, or about 14%.
But even early career professionals in healthcare administration have seen their salaries increase in recent years. As of May 2020, the BLS reported that those fairly new to the field with just a few years of experience and/or those working for smaller healthcare organizations earned about $78,820 – a steady increase year over year:
- 2019: $76,770
- 2018: $76,050
- 2017: $75,340
- 2016: $73,710
In the past handful of years, salaries for early career healthcare administrators increased about $5,000, or about 7%.
Industries Where Healthcare Administrators Are Out-Earning Their Colleagues
Not all industries are created equal in terms of healthcare administrator salaries. In fact, according to the BLS, many of the top earners in the field work outside of healthcare delivery in specialized roles in areas that include pharmaceutical manufacturing and health insurance, while some work as business consultants that help operations run leaner in all these industries. In all instances, these are the kinds of jobs that typically go to experienced administrators that hold master’s degrees and specialized MBAs in health administration.
As of May 2020, the following industries reported the highest average salaries among healthcare administrators:
- Pharmaceutical and Medicine Manufacturing: $216,910
- Navigational, Measuring, Electromedical, and Control Instruments Manufacturing: $162,580
- Scientific research and development services: $149,150
- Computer systems design and related services: $146,650
- Insurance carriers: $146,090
Within the confines of institutions that delivery healthcare services, healthcare administrators earn the highest average salaries in specialty hospitals, followed by general medical and surgical hospitals:
- Specialty hospitals: $121,260
- General medical and surgical hospitals: $117,630
- Medical and diagnostic laboratories: $114,080
- Physicians’ offices: $105,140
- Psychiatric and substance abuse hospitals: $104,800
- Outpatient care centers: $101,800
- Home healthcare services: $98,690
- Skilled nursing facilities: $90,970
What Healthcare Administrators and Earning and Where They’re Earning the Most
As of May 2020, the BLS revealed that healthcare administrators in our nation’s capital (home to the famed George Washington University Hospital, which is affiliated with the George Washington University School of Medicine and Health Sciences) earned the highest average salary, at $142,380, followed by those in:
- New York ($135,640): Home to NYC Health & Hospitals, the largest public health care system in the nation, with more than 70 locations throughout NYC’s five boroughs.
- Connecticut ($129,710): Home to major players like Yale New Haven Hospital, Hartford Hospital, and Yale New Haven Health.
- California ($122,800): Home to national names like Cedars-Sinai Medical Center, Stanford Healthcare, and Kaiser Permanente.
The highest paid healthcare administrators (according to average salary) were also found largely in California, which is undoubtedly a result of the high cost of living in this West Coast state:
- San Francisco (also includes Redwood City, and South San Francisco), CA: $162,530
- San Jose (also includes Sunnyvale and Santa Clara), CA: $159,300
- Vallejo (also includes Fairfield), CA: $154,960
- Madera, CA: $148,320
- Nassau County (also includes Suffolk County), CA: $147,640
- San Rafael, CA: $146,350
- Sacramento (also includes Roseville, Arden, and Arcade), CA: $140,220
The following BLS chart provides a breakdown of what healthcare administrators at all levels— entry-level/early career, average, and executive-level/highly experienced— are earning where you live:
May 2020 Bureau of Labor Statistics salary and job market trends for medical and health services managers represent national and state data, not school-specific information. Conditions in your area may vary. Salary statistics representing entry-level/early career healthcare administrators = 25th percentile; executive-level/highly experienced healthcare administrators= 90th percentile. Data accessed August 2021.
Data from Modern Healthcare Executive Compensation Survey represents healthcare executive average and median base salaries and total compensation in 2019 and 2020. Data accessed August 2021.