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From the December 2001 Issue |
CIOs: Their Challenges An in-depth look at healthcare information technology executives—what they are making and what makes them tick.
HIPAA is no longer their No. 1 challenge, and when it comes to salary satisfaction, top guns in healthcare IT who don’t hold CIO titles aren’t entirely thrilled with their compensation. Is it enough to make them head for non-healthcare pastures? Not by a long shot. Some 70 percent of healthcare IT executives plan to stay at their current organizations or move to other healthcare organizations within the next five years. Less than 10 percent plan to leave healthcare, and less than 5 percent plan to join e-health organizations. Health Management Technology’s 2001 survey of healthcare information technology (IT) executives reveals intriguing patterns in salary, satisfaction, responsibilities and expectations of the future. Salaries and compensation, for instance, appear to be significantly impacted by geographic region, overall IT budget, and type of healthcare organization involved, while job satisfaction and expectations of the future show consistency across sub-segments. Who’s Who In the past, HMT’s survey has targeted executives who hold only the title of CIO or equivalent within healthcare provider organizations (HCOs). Yet, at many healthcare organizations of all types and sizes, the most senior IT executive holds the title of director of IT/IS, not CIO. To fully capture the major tendencies among a diverse group of senior IT executives, we included in this year’s survey both CIOs (or IS/IT vice presidents) and IS/IT directors who are their organizations’ top IT executives. A total of 178 IT management personnel at unique healthcare organizations responded to our Web-based survey in August and September. Of these, 128 were the most senior IT executives in their organizations, including 53 CIOs, VPs of IS or equivalent, and 75 directors of IS/IT or equivalent. Respondents worked in integrated delivery networks (IDNs), academic medical centers, single hospitals, physician groups and managed care organizations. They worked in 25 of 50 states, representing all major geographical regions of the U.S. Organization Type and Size Is the type and size of a healthcare organization a good predictor of its having a CIO position? In general, the answer is yes, as Figures 1 and 2 (below) illustrate. However, the relationship seems stronger for HCO type than for size. Figure 1. Distribution of CIOs and IT Directors by Organization Type (%)
Excluding children’s hospitals (lightly represented among respondents), the organization type most likely to have a CIO is the managed care organization (73 percent). Interestingly, IDNs and academic medical centers are roughly equally likely to have CIOs or directors of IT as their top IT executives. When it comes to the relationship of levels of operating revenue to specific job titles, Figure 2 shows relationships at the extremes. The clearest instance is at the lowest revenue level ($50 million or less), where only one quarter of HCOs have CIOs—and at the lofty $751 million to $1 billion range where the trend is reversed Figure 2. Distribution of CIOs and IT Directors by Organization's Revenue Level (%)
Compensation
When average bonuses and anticipated raises are included in the analysis, the difference between CIO and IT director salaries grows. As a group, CIOs enjoyed much higher bonuses than their director-level colleagues (7.6 versus 2.3 percent), although IT directors’ expectations for salary increases next year almost paralleled their CIO counterparts.
CIOs’ salaries ranged from $50,000 to $234,000, while IT directors’ salaries ranged from a very low $27,500 up to $140,000. Yet 23 percent of IT directors reported base annual salaries of $100,000 or more. At the same time, 55 percent of CIOs reported base annual salaries over $100,000, with the remaining 45 percent of CIOs reporting salaries below $100,000. Thus, almost a quarter of IT directors reported base salaries above those of almost half the CIOs. Similarly, bonus reporting showed uneven distribution within both groups. Approximately 47 percent of CIOs and 71 percent of IT directors received no bonuses in 2001. While the difference in bonus money may seem significant, it’s important to remember that many healthcare IT executives received no bonuses at all. Responsibilities and Salary The regional salary data in Figure 4 (see the December 2001 issue of Health Management Technology) is consistent with expectations of regional variations in salaries and cost of living, as well as with trends in other IT salary surveys. However, the variations across regions reported above, combined with the overlaps in salary ranges reported in the prior section, suggest that there are other, more influential determinants of compensation. Two of these are the organization’s total IT budget and the number of full-time employees that the CIO or IT director supervises. Figure 5 demonstrates the relationship between IT budget levels and average annual base salaries for CIOs and IT directors. There is one noteworthy anomaly in Figure 5. The average CIO salaries for organizations with total IT budgets of less than $1 million and $1 million to $2 million are essentially the same. That is, for the CIO category, there is no difference between these two budget levels in terms of average salary. Thus, these two budget levels could be collapsed into a single level for CIOs. Interestingly, there is a significant difference in average salary between these two IT budget levels for IT directors. As Figure 6 illustrates, the number of full-time employees (FTEs) for whom the IT executive has responsibility is also closely associated with his base salary, and the relationship is almost linear across the FTE segments shown in the graph. Career/Salary Satisfaction By and large, CIOs and IT directors enjoy their jobs; the majority report high levels of satisfaction. But when it comes to compensation, their satisfaction is another story. Some 92 percent of CIOs and 85 percent of IT Directors reported being “satisfied” or better with their careers. Futhermore, 60 percent of CIOs and 54 percent of IT directors reported being “very satisfied” or “extremely satisfied” with their careers, as Figures 7 and 8 denote. Strikingly, the distribution of responses for CIOs across the satisfaction levels is very similar to that for IT directors. Both are skewed toward the higher satisfaction end of the spectrum. As we have seen before, the differences occur at the extremes: More CIOs are “extremely satisfied” and more IT directors are only “somewhat satisfied.” These differences are consistent with expectations because CIOs have achieved the higher title and status (and income). Both groups are significantly less satisfied with their salaries than with their careers. Only 68 percent of CIOs and 49 percent of IT directors are “satisfied” or better with their salaries. A full 41 percent of the latter say they are only “somewhat satisfied” and another 9 percent are “not at all satisfied.” Figure 8 (see the December 2001 issue of Health Management Technology) is visually striking because it depicts almost perfect mirror images of career and salary satisfaction for IT Directors, the first skewed toward greater satisfaction, the second toward less satisfaction. This effect is not very strong for CIOs, even though their salary satisfaction curve is shifted to the left compared to their career satisfaction. Job Challenges Respondents were asked to identify the single most significant challenge in their current position (Figure 9). Both CIOs and IT directors identified their organizations’ culture/structure, financial constraints, and HIPAA compliance as their first, second and third most significant challenges. Nevertheless, there were significant differences in the percentages of each group’s respondents that identified each of these three challenges. A wide margin in both groups identified their organizations’ culture and structure as their biggest challenge. Meanwhile, HIPAA compliance—which was cited as the most significant external challenge by 37 percent of CIOs surveyed by HMT in 1999—was identified by a low percentage of respondents. Two years ago, organizational culture and structure was cited as the most significant “internal” challenge by only 6.5 percent of respondents, while financial constraints was the most frequently identified internal challenge in 1999 survey, cited by 26 percent of respondents. The heightened concern about organizational culture and structure since 1999 possibly can be explained by two factors: The problems and risks posed by HCOs’ culture and structure have been exacerbated, and/or concerns over HIPAA compliance have been assuaged over the past two years. Most likely, both dynamics have impacted these results. The late 1990s saw a surge in new acquisitions of information and systems in the healthcare industry, partly in preparation for Y2K and partly in response to opportunities presented by the Internet. Despite the investments made by HCOs—more than $125 billion dollars over the course of the 1990s, according to Sheldon Dorenfest—IT managers still commonly lament the difficulty in getting caregivers and other personnel to use the new systems the way they were designed to be used. Using new computer monitors to stack paper-based records may be more of an urban legend, but the image resonates with IT professionals in healthcare. The relative decline in concern over HIPAA compliance may, in part, be attributed to increased confidence to address new regulations. IT executives may have greater confidence because of their general success in responding to the Y2K threat and the perception that HIPAA compliance is an ongoing effort that depends on both technical and procedural solutions. Healthcare IT executives often have pointed out over the past year that Y2K was an event, while HIPAA is an ongoing process. Professional Expectations When asked what they anticipated doing three to five years from now, both CIOs and IT directors gave similar responses (see Figure 10). Almost half of each group expected to remain at their current healthcare organizations, auguring notable stability of employment and solid loyalty to current employers. Additionally, another 21 percent of CIOs and 25 percent of IT directors expect to be working for an HCO, but at a different organization. In sum, 70 percent of both groups expect to be working for an HCO in the next three to five years. Still, a slightly higher percentage of CIOs expect to remain at their current organization while a slightly higher percentage of IT directors expect to change HCOs. These small differences likely reflect the fact that CIOs have reached the top of their careers, while IT directors can gain significantly higher status and income by switching HCOs. Also noteworthy is that a much higher percentage of CIOs (15 percent) than IT directors (4 percent) anticipate retiring in the next three to five years. This should provide considerable opportunity to IT directors seeking promotion by switching organizations. For their part, some 8 percent of IT directors anticipate leaving the healthcare field, while another 4 percent anticipate working for an IT vendor or consulting firm. Conclusion IT executives at the nation’s healthcare organizations experience a wide range of compensation, responsibility, working conditions, job and salary satisfaction, challenges and career expectations. Nevertheless, there are distinct patterns of experience between those senior IT executives who hold the titles of CIO and IT director. CIOs reported much higher levels of salary satisfaction, but interestingly, similar levels of career satisfaction to their IT director counterparts. In other areas, such as areas of greatest challenge and expectations of the future, the pattern of responses for both groups was similar. As the profession and healthcare industry continue to experience new opportunities and challenges, Health Management Technology will provide updates and analyses of the latest developments. © 2001 Nelson Publishing, Inc |
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By
John Morris, principal of Market Frequencies, an information design and marketing communications company that specializes in research reports, proposal writing and other technical communications and marketing materials. Morris, who holds a doctoral degree in the social sciences, is author of numerous publications and proprietary market research reports on the IT and healthcare industries. Contact him at
Figures 3a
(right) and 3b (below) show the average annual salary and percentage bonus in 2001 and the expected percentage raise in 2002 for CIOs and IT directors—and what a difference a title can make. In 2001, the average CIO salary was $115,500, some 52 percent higher than the average annual salary for IT directors who earned $76,000.
But in this case, a picture is not worth a thousand words. In fact, these averages identify only the most general compensation trends. Although CIOs clearly earn more than IT directors in the aggregate, salary averages reported in Figure 3a obscure a significant overlap in the ranges of compensation for the two groups.