Compensation for healthcare supply chain professionals appears to be barreling full-steam ahead toward an occupational milestone, a barrier that may be breached by 2020.
What might that be, you ask? An unprecedented six-figure annual salary.
No, really.
After a mild increase last year, which had followed a two-year slide previously, the average aggregate annual salary for healthcare supply chain professionals shifted into high gear, jumping nearly 8 percent to $95,565, according to the latest annual compensation survey by Healthcare Purchasing News.
Supply Chain pros saw the last such salary spike (nearly 13 percent) back in 2009, ironically at the close of the first year of the so-called “Great Recession.”
Historically, supply chain compensation has weathered the ups-and-downs of progress to emerge today starkly higher than what it was four decades earlier. In fact, during the last decade alone, the aggregate salary for supply chain pros soared 51.3 percent, or $32,380 on average, HPN reported. Furthermore, breaking out data for the two most popular titles — Director/Manager of Materials Management and Director/Manager/Supervisor of Purchasing — showcases an even brighter trend over the four-decade period.
Average annual salaries for materials management leaders, for example, increased more than 222 percent for this year, or $64,804, compared to 40 years ago when HPN debuted as Purchasing Administration magazine. Meanwhile, average annual salaries for purchasing leaders rose 186 percent during that same period, or $50,104, archived historical survey results showed.
Some feel more is necessary to reflect the importance of Supply Chain’s growing but fundamental leadership role in healthcare organizations. (See sidebar, www.hpnonline.com/supply-chain-salary-spikes-shortchanging-potential/)
Nearly 76 percent of survey respondents reported a base salary increase year-over-year at 3.3 percent higher on average than the previous year, which was 3.6 percent higher than 2015’s reported average raise, according to survey results.
Supply chain respondents who reported a base salary increase stated they earn on average $100,072, more than $6,151 higher than the more than 75 percent reporting a raise last year. Nearly 22 percent replied their average salary remains the same for the year.
More than 89 percent of survey respondents attributed their compensation gains to job performance as 6 percent cited a promotion with responsibility changes and another nearly 5 percent noted a change in responsibilities only. Almost 39 percent said they received a bonus for the year with another 4 percent anticipating one within the next year.
During the last few years respondents expressed some concerns about job security, but that seems to have changed this year with a majority (50.4 percent) saying they felt “very secure” in their current position and another nearly 44 percent responding “somewhat secure.”
As a cautionary caveat, HPN advises readers that survey data and trending perspectives hinges on the number and mix of respondents by job title, facility type and location, and gender. For example, more senior-level executives who lead centralized integrated delivery network (IDN) operations generally will elevate salary data, while more buyers at community hospitals may push the salary data lower.
Regional bracketing
In the regional categories, which HPN identifies as Northeast, Southeast, Central, Mountain and Pacific, current overall survey results remain relatively consistent even with some notably curious changes. Chief among them is the much-closer proximity of regional average aggregate salaries to the national average.
Apparently, it pays (well) to work in the Pacific. The Pacific region conquers the compensation roost for the fourth consecutive year (and nine of the last decade), but at a lower rate than the previous year.
The aggregate average salary for supply chain pros in the Pacific region was $101,900, according to HPN’s survey, down 14 percent from $118,400 last year or $16,500. Furthermore, supply chain salaries in this region exceed the national average by no more than $6,300, down significantly for the third consecutive year from the nearly $30,000 spread in 2016, which represented an even smaller spread than in 2015.
For seven years running, the Northeast captured second place with an average salary of $101,500, just missing the top spot by a mere $400. Unlike the Pacific, however, the average aggregate salary in the Northeast actually increased nearly $8,300 more than the previous year.
The Southeast returned to the third spot for the third time in four years. The average aggregate salary among Southeast respondents was $98,846, which is 22 percent higher than the previous year or a gain of more than $17,800. The Southeast region reported the second-largest gain year-over-year. The Southeast also was the region preventing the Pacific region from ruling the salary survey stats for an entire decade as it clinched the top spot in 2013, denying the West Coasters a perfect 10-year reign.
The Mountain region slid into the No. 4 slot with the highest increase of the year, the survey showed. The average aggregate salary among Mountain region respondents surged 23.5 percent to $97,115, nearly $18,500 higher than the previous year.
The Central region occupied the fifth and final spot with an average aggregate salary of $83,692, which represents a slim 2 percent hike over the previous year’s result, or $1,614, and represents the only region to report a figure that falls below the national average, according to the survey.
Gender gulf
Two curious, and arguably disturbing, trends seem to be shaping up overall among men and women in supply chain pro ranks.
Men earn more among their gender at a larger margin; women earn slightly less among their gender. Men breached the six-digit barrier last year and continue the momentum. In fact, the average aggregate salary for men in each of the five regions surpassed $100,000 for the first time, according to the survey, and surpass the overall national average. Last year, women supply chain pros in the Pacific region alone fell $3,750 shy of the $100,000 mark as those in the other four regions — as well as the national average — didn’t even come close to that milestone.
Nearly 54 percent of survey respondents were men in the current survey, which was conducted in March and April, while nearly 45 percent were women; slightly more than 1 percent declined to list their gender.
Men reported their average annual salary this year at $113,185, an 11.5 percent jump over last year’s figure, or nearly $11,700. That also represents an 18.4 percent premium over the national average, or more than $17,600.
Women reported their current average annual salary at $74,199, a 3 percent slip from the previous year, or almost $2,200 lower. That total also represents nearly 22 percent or roughly $21,400 below the national average.
The gap between the overall national averages for men and women remains even wider at nearly $39,000, the survey showed.
In the regional breakdowns, men in the Southeast region reported the highest average salary at $122,381, surpassing the Northeast at $120,060.
Men in the Pacific region earned the third-highest at $110,833, followed by men in the Mountain region at $107,188 and men in the Central region at $101,500.
The gap between the highest- and lowest-earning regions for men (Southeast vs. Central) slimmed to nearly $21,000. Last year, that gap (Pacific vs. Southeast) had widened to nearly $58,000.
For the third consecutive year, women in the Pacific region earned the most at $88,056, a nearly $8,200 decrease from the previous year’s results. Average salaries for women this year, regardless of region, failed to come close to the overall national average, according to the survey.
Women in the Mountain region came in No. 2, reporting $81,000, a steep rise over last year’s total of $65,577. Average salaries for women in the Northeast finished third for the second consecutive year at $77,891, barely exceeding 2016’s total of $76,929.
Women in the Southeast region reported an average salary of $71,389, nearly $6,000 below last year’s total, followed by women in the Central region at $66,544, more than $5,600 lower than last year.
The gap between the highest- and lowest-earning regions among women tightened to more than $21,500, nearly erasing the spread achieved in the previous year.
The compensation gap between the genders widened to more than $35,400 on average across all five regions.
From a gender perspective, the regional salary gap between the largest and smallest ranges fell to more than $28,200, following a year that saw it ballooning to nearly $39,000, compared to the 2015’s average of more than $26,000.
The Southeast region led the widest gender-based salary gap at nearly $51,000, followed by the Northeast at nearly $42,200. The Central region came in third at nearly $35,000, followed by the Mountain region at nearly $26,200 and the Pacific region at nearly $22,800. Most noteworthy is that the spreads for all five regions were wider this year than last year.
Demographic composition
Nearly 78 percent of survey respondents (surpassing the 2016 total) reported their department management position as Supervisor, Manager, Director, Vice President or higher, which may account for the considerable spike in reported compensation. Of that group, nearly 51 percent said they serve as a Director or Manager of Materials Management, more than 14 percent serve as a Director, Manager or Supervisor of Purchasing, more than 9 percent as an Executive, Senior or Corporate Vice President, nearly 2 percent as COO or Chief Procurement or Purchasing Officer and nearly 2 percent as administrator/CEO. The remaining respondents represented professionals who managed specific functions within the department.
Directors and Managers of Materials Management reported an average salary of $93,974, more than $3,100 higher than last year’s total, but nearly $1,600 below the aggregate overall national average, according to the survey.
Purchasing Directors, Managers and Supervisors posted an average salary of $77,045, which accounts for more than a $9,900 jump from last year’s segment and continuing the bouncy, topsy-turvy, up-one-year-and-down-the-next rhythm of this segment.
Interestingly, Executive, Senior and Corporate Vice Presidents reported an average salary of $187,262, which represents a nearly $19,000 gain from the previous year and erases last year’s equivalent decline from 2015. As in last year, this title grouping’s salary represented almost double this year’s overall aggregate national average.
More than 77 percent of survey respondents said they are employed at non-profit facilities, reporting a $100,169 aggregate average salary and representing the first time such salaries exceeded six-figures. Meanwhile, for-profit (investor-owned) facilities employed more than 18 percent of respondents that reported an aggregate average salary of $79,524. Both groups saw a $6,000 to more than $8,000 increase year-over-year, or at least double from last year. The remaining more than 4 percent worked at government-owned facilities and reported an aggregate average salary of $81,000.
Consistent with previous years, survey respondents were relatively evenly spread across rural, suburban and urban facilities. More than 37 percent reported they work in rural facilities ($80,378 aggregate average salary), more than 32 percent in suburban facilities ($106,216) and more than 30 percent in urban facilities ($102,964).
More than half (52.2 percent) of survey respondents said they work in standalone hospitals that were part of a group purchasing organization (GPO). More than 35 percent were part of an integrated delivery network (IDN), more than 8 percent part of an accountable care organization (ACO) and the remaining more than 4 percent at a standalone hospital independent of a GPO.
Once again supply chain pros from standalone hospitals accounted for the largest group of survey respondents at more than 40 percent with an aggregate average salary of $74,677, which is nearly $3,400 above last year’s total. Nearly 33 percent said they work at a local, in-state IDN or multi-hospital system, reporting an aggregate average salary of $110,600, almost $4,100 higher for the year. Nearly 18 percent said they work at a multi-site, multi-state IDN or system with the highest average salary of the groupings at $127,256. This represents a nearly $17,000 surge from the previous year’s average total for that segment, and more than $31,000 in gains over a two-year period, according to HPN research.
Almost 56 percent of survey respondents oversee supply chain management for a single hospital, according to the survey, while more than 16 percent said they manage supply chain operations for one or two additional hospitals. More than 7 percent handle three or four additional hospitals. Nearly 9 percent of survey respondents said they oversee supply chain operations for five to six additional hospitals, more than 4 percent seven to 10 additional hospitals and nearly 8 percent more than 10 additional hospitals.
More than 84 percent of supply chain pros provide supply chain services to a variety of non-acute facilities, such as clinics, surgery centers and physician offices, among others. In fact, slightly more than half (50.4 percent) service more than six non-acute care facilities, while nearly 14 percent cover one or two facilities, more than 9 percent three or four facilities and nearly 11 percent five or six.
For the second consecutive year, survey respondents generally hailed from larger facilities with the average respondent hospital overseeing 434 licensed beds with an occupancy rate that exceeds 71 percent. In comparison, the average hospital size for respondents in 2016 was 432 licensed beds with a 70 percent occupancy rate.
HPN’s survey showed a noteworthy change in reporting structure for supply chain pros. While reporting to the CFO consistently earns the top spot among the title options to choose, the CFO garnered a much larger portion of the pie this year with nearly 43 percent reporting to that position, accounting for a nearly 8 percent gain for the year.
Another 20 percent said they report to the Director or Manager of Materials Management, which roughly matched 2016 results. Nearly 12 percent said they report to the Executive, Senior or Corporate Vice President of Supply Chain or Support Services. Almost 9 percent said they report to the CEO, according to the survey.
Educational advancement drives salary increases, the survey showed. Nearly 35 percent of survey respondents earned Bachelor’s degrees as their highest level of education, while nearly a quarter held post-graduate degrees, more than 18 percent associate’s degrees and 23 percent high-school diplomas. All salaries, regardless of education level, saw increases year-over-year with the smallest increase at more than $1,300 and the largest nearly $19,000.
In terms of certification, the most significant change involved the Certified Materials & Resources Professional designation with nearly a third (31.7 percent) saying they earned CMRP status, which represents more than a 10 percent increase over last year’s total. The remaining certifications saw changes of no more than 3 percent either way.
The average respondent to HPN’s 2017 salary survey almost replicates that of its 2016 respondent as being is 53.7 years of age, has spent more than 21 years on average in supply chain management and 12.5 years at his or her current facility (all parameters fairly consistent with previous years on record). Their departments include 17.9 employees on average that service 2.5 hospitals other than their own and/or 8.7 non-acute care facilities, the survey showed.
Rick Dana Barlow | Senior Editor
Rick Dana Barlow is Senior Editor for Healthcare Purchasing News, an Endeavor Business Media publication. He can be reached at [email protected].
