As with millions of people around the globe during the last three years, the pandemic finally caught up to compensation levels for healthcare provider-based supply chain professionals as reported earnings contracted a mild case of COVID-19, ebbing and flowing by title, location and gender, according to the latest survey of Healthcare Purchasing News readers.
Even though the majority of titles surveyed saw an overall average increase, those gains were tempered slightly by a drop for the Director/Manager of Materials Management title, which represents the largest title segment. On something of an historic positive note, however, the title also recorded a higher average salary for females in the role – a survey first.
For the fourth consecutive year, the average compensation level for a Director/Manager of Materials Management remains solidly within the six-digit realm at $105,380. But the double twist is that this year’s total is 4.4% lower than last year’s $110,185, and for the first-time females out-earned males $105,768 to $102,461, representing a 3.2% gap. Last year, the gap was more of a vice-versa gulf with male titles out-earning females by nearly 45%.
Purchasing Director/Manager titles experienced a similar outcome with their overall average compensation level puncturing the six-figure mark for the first time at $116,666, more than 54% higher than last year’s $75,588 average. This title, too, saw females out-earning males for the first time, $125,000 to $112,500, respectively. In 2022, the gulf also was flipped but not nearly so wide at 37% and not reaching six digits either.
Both titles accounted for 50% of overall respondents, according to the survey.
Value Analysis titles – Directors, Managers and Coordinators – clocked in with healthy returns, reporting the average compensation level at $124,874 for 2023, up considerably from $82,500 the year before. Females out-earned males in this title category, too, $135,832 to $92,500, a reverse of the results in 2022.
Several other titles within the department reported gains. Chief Procurement/Purchasing/Supply Chain Officer titles reported an average compensation level at $250,000 in 2023, up from $175,000 last year. Senior Buyer/Buyer/Purchasing Agent titles rebounded with a healthy gain this year to $65,714, up more than a third from $49,285 in 2022, which represented a slide from the year before. O.R. Materials Manager/Business Manager titles also reported an increase to $82,500 on average from $67,678 last year.
The vast majority of respondents (nearly 74%) said their compensation level increased with 22% replying it stayed the same, according to the survey. Those reporting an increase recorded one in the familiar 3% range, and more than 62% of those respondents attributed the increase to job performance alone versus a promotion with a change in responsibilities (nearly 7%), the survey showed.
Another positive: Nearly 51% reported receiving a bonus, compared to nearly 47% in last year’s survey. For several years up through 2021, bonus earnings peaked in the 30% range, according to survey archives.
One statistic elicits something of a yellow alert, however. Survey respondents this year feel less secure in their positions. In fact, less than 50% feel very secure and more than 45% only feel somewhat secure. Last year, more than half said they felt very secure and nearly 40% somewhat secure, so lingering labor concerns continue to affect attitudes.
Meanwhile, the average number of employees has remained consistent year-over-year against the over-arching backdrop of labor shortages that many attribute to the recent global pandemic.
Although not illustrated for the second consecutive year, the overall supply chain management compensation composite index (CCI remains something of an unscientific salary stew of results derived by the average aggregate salary of all survey respondents) surged 14% again to $125,938 from $110,400, resetting the all-time high. Historically, since 2005, HPN has recorded 12 CCI increases. This element, while more trivial than statistically relevant, measures more of a subjective impression of attitude and direction.
As a continuing cautionary caveat, HPN advises readers that survey data and trending perspectives hinges on a variety of demographic elements that include 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.
HPN regularly monitors several key trending areas in its annual compensation surveys, including gender, age, experience, longevity, location, education, training and certification.
Respondents this year generally are older and have spent more time within the profession and specifically within their current organizations.
More females responded to the 2023 survey than males for the first time since 2008. In the current survey, 56.7% of respondents were female, 41.8% were male, 1.5% preferred not to answer. Sixteen years ago, for the first time in HPN’s 31-year history, 51% of respondents were female and 49% were male.
A larger group hails from suburban facilities with the majority at non-profit facilities. The largest respondent group – more than a third – represent standalone hospitals versus being part of a healthcare system or integrated delivery network (IDN), which can affect compensation levels.
Respondent profile
Demographically overall, the average composite respondent to HPN’s 2023 Supply Chain Compensation survey is older this year and spent more time in the industry and profession but his or her realm of authority and influence remains rather steady.
The average composite respondent is 58 years of age (up from 54.9 last year), has spent 23.7 years on average in supply chain management (compared to 19.9 years in 2022) and 12.3 years at his or her current facility (up from 10.6 years last year). Respondent departments include 18 employees on average (compared to 18.75 last year).
The average composite respondent works in a department that services 3.4 hospitals (compared to 3.2 last year) on average and 8.1 nonacute care facilities (compared to 7.9 in 2022), according to the survey.
To continue the stylistic attribution trend that debuted last year, HPN once again reached out to a variety of supply chain professionals that spanned editorial advisory board members and survey respondent for their reflections. With the aim to motivate their speaking freely and to protect them from repercussions in a politically charged and sensitive culture, HPN granted these editorial sources relative anonymity, identifying only by gender and region.
Gender matters
Men continue to earn more than women across the board among healthcare provider organizations (something that isn’t so monolithic in other industries and segments). The gap between them periodically has narrowed and widened since HPN started conducting this survey decades ago. For the two years (2008 and 2023) that the survey showed women out-earning men within a variety of titles, the result, by and large, was attributed to a larger response from female professionals.
As the compensation gap continues between the genders, what will it take for that gap to narrow permanently and for compensation levels to be more competitive and equivalent, if not equitable?
Short of more women entering the profession and more men leaving the profession, much depends on how compensation is determined, according to one East Coast supply chain executive.
“I think the gaps could be caused by varied responsibilities versus title, but I also do that that women going in and out of the workforce due to family responsibilities during their careers could cause some loss of compensation and earning power,” she indicated. “Overtime, if pay is focused solely on responsibility and performance versus longevity, this could narrow the gap.”
A second East Coast supply chain executive contends that attention and intention to change the process will make the difference.
“There would need to be a conscientious effort to true up the salaries at the role level for the same knowledge, skills and abilities across the industry in synchrony a la the start of the Indy 500,” she said, evoking the famous auto race that occurs near the end of May each year. “This would mean keeping up with promotions and onboarding of new talent, with eyes wide open to equality. This will go a long way to comply with diversity, equality, inclusion and fair treatment and full participation of all people.”
Age, experience, longevity
In general, the more experience you gain and/or the longer you stay within an organization, the more you can earn in terms of compensation, influence and power. How might the proverbial “lifer” who may remain longer with fewer organizations or even spending an entire career with one stack up against the proverbial “job hopper” who moves around frequently from organization to organization to advance/elevate his or her title, compensation and career?
The East Coast supply chain executive questions whether that’s a reliable or even valid comparison.
“I think the important thing to focus on is opportunity,” she noted. “If opportunities present themselves within the same organization over time, and you enjoy the work you do, then continue. The advantage to going to other organizations would be to gain experience or opportunity that could not be gained where you are currently – such as if the organization is too small or downsizing due to financials, etc. One’s career can also be driven by personal responsibilities during which time title and compensation may be sacrificed for flexible schedules and time with family. Sayings like, ‘the grass isn’t always greener’ and ‘money isn’t everything’ can ring true.”
The second East Coast supply chain executive notes that the pandemic may have redefined how people see and think about the workforce going forward.
“What we learned during the past three years is that for most positions your workforce can be anywhere in the world and be effective at what they do,” she said. “Between virtual meetings, email, sharing platforms and change in corporate culture anything is possible. It is almost an expectation that organizations seek out new thought leaders to create flexibility in restructuring regardless of the type of industry – healthcare is no exception. Individuals need to expand their thinking to be valued to industries as well. There is a balance between what is known and how much will continue to be learned and moving on to share what you know to help other organizations improve. There should be an acceptable cycle for either end of the spectrum to minimize casting aspersions.”
Hospital type, general location
Historically, the trend seems to be that the higher-compensated Supply Chain executives and professionals seem to entrench themselves at larger, urban not-for-profit hospitals, followed by suburban not-for-profit hospitals and then for-profits followed by government facilities. (Note that more respondents from suburban facilities participated in this year’s survey, which likely contributed to lowering the compensation data.)
Further, locations in the Pacific and Northeast regions – as defined by HPN in the graphic – continue to lead the nation with consistent six-figure salaries.
One considerable market change during the three-year pandemic was the higher interest in and emphasis on nonacute care and telehealth/telemedicine – particularly during quarantine – that slowed acute-care visits for anything outside of emergencies and pre-existing inpatient stays.
Further, tightening budgets as reactions to economic challenges – including labor shortages accelerated by the pandemic – sparked an elongated busy season of mergers, consolidations and acquisitions.
“I think the trends follow opportunity,” the East Coast supply chain executive observed. “Consolidation continues to be experienced within healthcare organizations. Larger organizations can often offer more opportunity for advancement. This could be reflected in lower salaries showing in the multisite and multistate sector as this may demonstrate local titles being less compensated than corporate-level multisite positions.”
The nonacute and telehealth influences on compensation remain in flux, if not in question, for the East Coast supply chain executive.
“For supply chain, experience in serving the nonacute sector is certainly important and following the impact of insurance coverage in these areas will be drivers of service needs,” she said. “Understanding what will drive margins in these areas will be important. Those with knowledge of the insurance sector will be valued contributors. Also, creating new delivery models for nonacute and telehealth needs will be key. Patients want ease of use and fast delivery of required supplies.”
The second East Coast supply chain executive expresses wonder about healthcare delivery options post-pandemic.
“It will be interesting to watch this over the next several years based on how trends in care should be moving versus how they move,” she indicated. “I have sensed that compensation for virtual work, work away from large health centers, etc., should not be as highly regarded as those working in diverse, highly stressed environments, but if quality and effectiveness of the care cycle brings value to the health system those factors should be less relevant. There are needs to be filled at levels that were not relevant just five years ago.”
Pandemic reflect
Now that the global COVID-19 pandemic officially has been declared to be in our rear-view mirrors and with healthcare organizations continuing to operate in a nominal fashion, the question lingers about how supply chain professionals – executives, leaders, managers – can or might use this development to argue for “fair” compensation – similar to the veteran sports star negotiating the final two years of a contract after a grueling but otherwise successful season.
Of course, because fewer supply chain professionals feel as secure within their organizations than in years past, value interpretations may be a bit muddled.
However, the East Coast supply chain executive urges caution.
“The difference from a sports analogy is that not all organizations are having successful seasons,” she countered. “Many have not yet recovered from pre-pandemic performance. This is driving consolidation and new partnerships are being formed to survive the next few years. Supply chain was demonstrated to be a key lynchpin in providing patient care. That work should be rewarded and recognized, but the work of healthcare in general continues to struggle in how to provide more care to more patients with less cost. Supply chain can lead innovation in this area and continue to provide value, and in turn, drive compensation and reward.”
The second East Coast supply chain executive recommends a clear re-evaluation of priorities.
“There tends to be a disconnect between what/who was important the last three years and the short sightedness of getting back to past revenue volumes,” she noted. “If we are all listening to the same music, it should be leading healthcare away from our big systems and providing healthcare versus sick care. [The] COVID-19 pandemic exposed healthcare’s underbelly to what chronic but treatable conditions did to wide age and geographical groups. Getting back to ‘prevention is worth a pound of cure’ is pretty sound advice. I recently talked about creating value to a group of supply chain professionals and used a quote from a physician who gave a recent keynote address: ‘Let’s not go after that shiny new object. Let’s just turn some stuff off. That would make a huge difference for us right now as far as tech goes.’
“The HR issues attributable to burnout and short-staffing for nurses, physicians, techs, others begs to let up on bringing too much continual change to our healthcare environments so it can catch up and refocus on patients,” she continued. “We need to support our staff and ensure among other resources that supply chain is there to provide much needed infrastructure.”
Incomparable comparables
If you scan a variety of web sites, such as Salary.com and Indeed.com, as well as the Institute for Supply Management’s annual salary survey, you’ll likely find that on average the base compensation for supply chain professionals in every industry segment save for those working for healthcare providers seems to be at least 50% higher than even the highest compensation levels cited by HPN readers.
To compare, per Salary.com: “The average Top Supply Chain Management Executive base salary in the United States is $266,318 as of May 1, 2023, but the range typically falls between $229,181 and $313,761. The average Supply Chain Director salary in the United States is $181,597 as of May 1, 2023, but the range typically falls between $161,738 and $203,159. Salary ranges can vary widely depending on many important factors, including education, certifications, additional skills, the number of years you have spent in your profession.”
The East Coast supply chain executive attaches more of a nobility to supply chain operations within healthcare providers.
“Many in healthcare supply chain have come up through healthcare organizations and understand both the challenge and pride that comes with service to patients,” she insisted. “Oftentimes this focus on the patient drives different decisions and requires a balance between financial impacts versus a human life. When investors become the ones to be satisfied, a difference focus drives profits. For those that are patient-focused, the for-profit mentality may not be as satisfying, no matter what the salary difference.”
It's all about mindset and motivation, according to the second East Coast supply chain executive.
“Healthcare supply chain professionals are passionate about patients and those who care for them,” she said. “It’s rewarding in more aspects than dollars; however, all that they have been through the past three years, what they are doing to assure all processes are tweaked, and collaborating with all things supply chain internal and external to their healthcare environment deserves appropriate compensation and recognition. Many provider-based healthcare supply chains are not only restructuring their departments but are integral to system restructuring related to costs, processes and value creation to assist their organizations in maintaining relevance to the communities they serve.”
Editor’s Note: For additional information and research, visit Salary.com, Indeed.com and ISM at these links:
https://www.salary.com/research/salary/benchmark/top-supply-chain-management-executive-salary
https://www.indeed.com/career-advice/finding-a-job/highest-paid-supply-chain-jobs
