10 Questions to Ask When Setting ASC Administrator Compensation

Surgery center staffing costs are a significant part of an ASC budget, and ASC administrators are generally the highest-paid staff member in a center. In order to attract highly qualified candidates while maintaining a tight budget, surgery centers must be careful about how much they pay their leaders. Greg Zoch, partner and managing director with Kaye/Bassman International, discusses 10 concepts that affect compensation for ASC administrators.

1. Why did the previous administrator leave? If you suspect that your compensation is driving away administrator candidates, you should first understand why the previous administrator left his or her position, Mr. Zoch says. Conduct an exit interview with every employee to determine why they are leaving. Make it clear that total honesty is encouraged, and ask if there are any problems within the center that make it an unpleasant place to work. If the administrator is leaving for a higher-paying job, they will often be honest and share that another surgery center in the area pays $10,000 more a year or has a more robust benefits package. Information gathered during exit interviews can be valuable in many ways.

2. What do surgery center administrators make on a national basis? According to data from the ASC Association's 2010 ASC Employee Salary & Benefits Survey, the median salary of an administrator in 2010 was $93,870. Administrators with the CASC credential earned higher salaries, and administrators with the CASC credential and no clinical background earned a median salary of $110,000. Of course, national data is only useful up to a certain point: First of all, Mr. Zoch points out that no one conducting an administrator search is looking for an "average" candidate. If you want an exceptional leader in your ASC, you will probably have to pay more to attract them to your center.

Second of all, national data only gives a broad overview of the amount paid to surgery center administrators across the country. If you live in New York, your average cost of living will be higher, and therefore your salaries will need to increase accordingly. If you live in rural Montana, you can probably get away with paying less than your counterparts in big cities. Start with national benchmarking data to get a feel of the range — most surveys and healthcare experts agree that the average surgery center administrator makes anywhere from $95,000-$120,000.

3. What do surgery center administrators make in your region? Once you have an idea of national benchmarks on ASC administrator salaries, you should hone in on your region and determine what candidates would make at competing ASCs in the area. You can start by eliminating hospitals from the equation, Mr. Zoch says. In all likelihood, hospital outpatient department managers will make more than ASC administrators and do not have experience in the business, regulatory, and operational metrics needed to effectively run an ASC.  ASC owners should look for candidates who bring several years of surgery center experience to the interview.

Instead of looking solely at salary surveys, Mr. Zoch recommends using a third-party service to determine the salaries being paid at local ASCs.  If you're lucky, people may be very upfront with you about the salaries offered at other facilities in the area — but in all likelihood, few will offer you such proprietary information. A third party can help by using their industry contacts to determine how your compensation matches up to surgery centers in the area.

4. What kind of administrator does your surgery center need?
If you're searching for a new ASC administrator, you will pay more for the qualities that really boost a resume to the top of the pile. For example, an administrator with an RN background, an MBA or a CASC credential will demand higher compensation than an administrator with no advanced degrees or certifications. Similarly, an administrator with 15 years of turnaround experience will probably want more money than a clinical coordinator rising into the position of administrator for the first time.

Make sure you're hiring an administrator that fits your surgery center’s needs not just your budget! Your physicians may not care if your administrator has a clinical background, as long as he or she has a good head for business and can take care of the financial side of the operation. Conversely, you may want a surgery center administrator who has spent time as a registered nurse in the operating room and can roll up his or her sleeves when needed.  Don't automatically assume that your candidate has to have every qualification you can imagine — you'll pay much more for a highly pedigreed resume. Sit down with your physicians and determine which traits you're willing to pay for, and which you can really live without.  Then interview only those who fit the bill.

5. How much is the administrator asking for? While national and local benchmarking data is useful to provide a range of administrator salaries, Mr. Zoch says the market will ultimately dictate how much you have to pay your administrator. "Our opinion doesn't count about what somebody should be making or what we've paid in the past," he says. "Ultimately the market tells us what we have to pay." He says once you find a candidate that you like, you may find that you want to pay them $120,000, but they are currently earning $125,000 and want to start at $130,000 at your center.  If the candidate is not willing to budge on his or her price, you will end up with a choice: lose your best candidate or agree to pay the requested salary.  But be careful not to low-ball offers with the expectation of a negotiation.  Offering someone a position that pays them less than they are currently making can turn a good candidate off or kill your chances outright.  Remember you are setting the tone of a new relationship; one that should be based upon fairness among other things.

Mr. Zoch says because of the way the market dictates salary, it's important to find an ASC administrator who will truly benefit your center. He says that he looks for administrators with ASC experience — ideally in an administrator position. He spends time speaking with ASC owners to outline the center's goals, challenges, strengths and budget and then jointly determines what kind of administrator the center needs and how much the center can afford to pay.  In some cases, you may be able to offset a candidate request for higher than normal base salary by offering a robust bonus structure or benefits package; in other cases, they may simply choose to look elsewhere while you find a candidate who fits your budget.

6. What "level" of benefits will you offer?
Mr. Zoch says benefits can be divided into three areas: basic health benefits, paid time off and retirement/education benefits. He says surgery centers should not underestimate the power of a strong benefits package to improve an average salary offer. "You have to understand the people who are likely candidates for leadership positions," he says. "What age group do many of them come from?  A great percentage is in their 40s and 50s, and at that age, they may be concerned about health insurance benefits and retirement." He says administrators have certain expectations from benefit packages that competitive surgery centers should try to fulfill to attract strong candidates. For example, most administrators will expect a health benefits package that includes health, dental, vision and either short- or long-term disability. For those centers that want to go "above and beyond" and attract the best candidates, they may consider paying 100 percent of the employee's portion of the health insurance premium— or even 100 percent of the employee's family's portion as well.

The second area centers around paid time off (PTO), which Mr. Zoch says should include a minimum of seven national holidays, two personal days and three weeks of vacation for a minimum of 24 days total PTO. He says surgery centers should hesitate to skimp on vacation to save money.  For example, if the administrator asks for four weeks of vacation, that extra week will only cost the surgery center about $2,000. That amount is negligible in the grand scheme of things and may make the difference between landing a great candidate or an average candidate.  If the ASC's vacation policy is limited by an third party, like a hospital or management company, the ASC may be able to offer extra compensation in lieu of vacation.

The third benefits area includes retirement benefits, continuing education and professional development. Mr. Zoch says providing a 401(k) should be a given, and ASCs should try to match the employee's contribution to some extent. The ASC should also offer to pay for continuing education and professional development to make sure the administrator can continue to hone his or her skills.

7. How much do you plan to offer as an annual bonus? ASCA data shows that in 2010, 75 percent of surgery center administrators were eligible for bonuses. Mr. Zoch says while surgery centers should offer raises to keep up with changes in the market, bonuses can be given to incent and reward good business behavior. He says the average bonus for an ASC administrator is around 15-25 percent of base salary per year. He says bonuses should be based on clear criteria that are set out at the beginning of the year.

The criteria should be limited to a few categories for improvement, and Mr. Zoch says at least one category should be somewhat subjective. This will help boost morale if the administrator works very hard but is unable to lower staffing costs or improve profits — two objective measures that might be included in the bonus criteria. He says the ASC administrator should go through a yearly review, where ASC physician leaders and the board discuss successes, failures and areas for improvement over the past year. He says the ASC can also offer "stretch" bonuses, in which the administrator receives more money for doing a better job. For example, the administrator might receive $10,000 if they hit the target budget portion of the bonus and $20,000 if they exceed budget expectations by 50 percent.

8. How will market fluctuations impact salary over time? Keep in mind when you make a salary offer to a new administrator that you will probably have to factor in annual raises to keep up with market demands. According to ASCA data, the median salary of an administrator increased 1 percent between 2009 and 2010, and that was during a slow economy. Salaries are likely to keep increasing in future years based upon supply and demand. ASC administrators should receive a yearly salary increase if the market shows that administrators in the region are steadily making more money. Otherwise, you risk losing your leader to a competitor.

9. Are there problems with your surgery center that can't be fixed by a higher salary? If your administrator expresses discontent with his or her job, don't automatically assume that a raise will solve the problem. Mr. Zoch says too many surgery center boards "throw money" at unhappy administrators, assuming that a higher salary will immediately improve satisfaction. "Money cannot fix problems that are not monetary," he says. "It's never only about money."

He says if your administrator seems dissatisfied with the job, sit down and discuss the issues or problems with the physicians, staff members, workload and other factors before you discuss a raise.  More than likely, the administrator will bring up a few problems that could be fixed without a salary increase.  Mr. Zoch warns surgery center leaders, "However, if you promise to make changes, you've all got to follow through because if you don't, you will only make things worse."

10. Can your administrator "grow" into the ideal candidate over time? You may want to start a less-qualified administrator at a lower salary if you are confident they can grow into the ideal candidate through training, professional development and continuing education. Of course, this doesn't mean hiring someone with no experience just to save money. But you may not need an ASC administrator with 10 years experience turning around failing centers and an MBA, an RN and a CASC certification. That person will likely cost you more than $120,000 — the higher end of the range of administrator salaries.

Instead, you may want to consider promoting a clinical director who wants to learn the administrator position, if you have the time and expertise to train them.  Then send them to conferences and put them through additional training to help them understand the financial and operational side of the business.  This really depends on the resources you have to invest in training. If your surgery center is successful and the physicians are heavily involved in operations, you can probably hire a less-experienced administrator and give them raises over time. If the center is failing and you need a strong hand to steer you in the right direction, you should plan on paying more money for an expert.  

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