How Much Should a Surgery Center Administrator Be Paid?

1. Todd Flickema, MBA, senior vice president, Surgical Management Professionals: You need to first ask what level of an administrator you need for the facility. This will be dictated or at least heavily influenced by the size of the facility, types of cases, number of partners and the political climate of the area all feed into this. For example, at one center you may have a single specialty and the partners may all be from the same clinic. In this situation it may be very prudent to operate the facility with a DON Administrator who has or can be provided with adequate business support.

Then go to the other extreme. The next center may be a large multispecialty center in a competitive market. Now you will be talking about an executive with healthcare management experience. Most of the people that fit this category will either come from or did come from a hospital setting. You are now competing with hospitals for this executive and will be paying salary and benefits commensurate with that level of individual.

We find that many centers we have gone into the owners tend to go the less cost route and in some cases short change themselves. This is understandable as the owners don't always have a full appreciation for the level of complexity of running these centers. The complexity of the industry has really grown quickly and so we think more and more centers may be in that area of either not knowing what they don't know or having that suspicion of maybe there is a better or different way we should be doing things.

2. Jim Stilley, FACHE, CASC, CEO, Northwest Michigan Surgery Center (Traverse City, Mich.): First, agree on a common description of administrator. There are all types of administrators, even in the ASC industry. When you have an administrator that can create a desirable "investor and employee" culture, support quality clinical decision making and run a highly successful business ... pay them whatever they want because they are definitely worth it!

Here are some little discussed items that an advanced administrator can do for your center — just of the few things I have done in the last few months in addition to the day-to-day management:

  • Negotiate insurance contracts, carving out implants, for under-reimbursed cases resulting in $200,000 in net revenue.
  • Lead, cultivate and create revenue streams instead of managing and maintaining existing ones.
  • Recruit and retain profitable case generating physicians.
  • Renegotiate increased healthcare benefits and coverage at a zero percent increase to center or employees.
  • Renegotiate natural gas futures to a fixed rate that saves $2,000 a month in energy cost.
  • Select and manage a 401K plan with above 14 percent return in a down market.
  • Oversee and successfully refute state government "fishing expeditions" for use tax and personal property tax increases.
  • Understand insurance premiums, limits and deductibles for myriad of insurance policies needed to run a multimillion dollar business. Medical malpractice premiums can be whittled down by understanding how they are created (I cut mine by $20,000 this year).
  • Provide leadership in tough situations, i.e., work with and oversee peer review, working toward solutions with physicians and even firing a popular staff member who cannot maintain the high level of patient safety our industry demands.
  • Provide behavior counseling and encouragement to staff members (all the time knowing that your evenhanded actions will never be known beyond your office).
  • Visit and provide job assurance to four loved and valued team members in the hospital after they are diagnosed with various types of cancer.
  • Get called in the middle of the night for myriad of alarms, boiler and air handlers' issues, auto accidents and other staffing dilemmas.
  • Work an average of 55-60 hours per week.
  • When cases drop 10-15 percent because of a weak economy, develop plans that retain jobs and give positive leadership comments to scared employees who are worried about their household incomes.
  • Make the unpopular but needed decisions on low census and staffing levels.
  • Find and retain talented RNs and staff members who are priceless while still feeling confident to release those that aren't (many times leaving yourself extended rather than retaining a potential quality issue).
  • Ensure that your word is your bond — always under-promise and over-deliver.

As I see it, the real problem with executive pay is that the value is in the eye of the beholder. It isn't until you lose a great CEO/administrator that boards realize their benefit. The decay caused by their loss may not be felt for several years.

3. Anonymous: ASC administrators should be paid based on the number of ORs and procedures performed in their ASC. I receive $110,000 per year for six ORs. I think that is a fair wage with 10 years ASC administration experience, and an MBA and CASC.

I think that wage should extend to $130,000 per year as a range. I also do not believe that for six ORs, you should receive less than $95,000 per year.

4. Anonymous: I think the compensation should include either 1) an ownership stake if permitted by law or 2) a healthy bonus opportunity to encourage the administrator to focus on the same things that the physicians do.

Those elements work — I know because I have one.

5. Anonymous: An administrator salary should depend on the number of ORs, facility volume, geographic location, clinical background and profitability of the center. I find that the salary surveys are often completed by a small number of facilities skewing the results.

I am very active in the New Jersey surgery center community and am often called by head hunters for positions in the tri-state area. For a three-room facility with around 4,500 cases a year, I see most places offering $120-140k as a base salary based on experience. In addition, I have known of centers that give the administrator a bonus from 0.5-2 percent of owner distributions or net profit. I also know of centers that the administrator is able to buy a percent of over a certain period of time. I know several administrators in New Jersey whose year end compensation was between $150-250k.

Share your thoughts on this question by e-mailing Scott Becker at sbecker@mcguirewoods.com.

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