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Health Services Managers

Effective management of health care organizations, and of the considerable resources at their disposal, requires competent managers. Like their counterparts in any organization, health services managers are responsible for facilities, services, programs, staff, budgets, and relations with other organizations.

Health services manager is an inclusive term for individuals in many different positions who plan, organize, and coordinate the delivery of care. Hospitals provide nearly half the jobs in this field. Among the other organizations that employ health services managers are clinics, health maintenance organizations (HMO's), nursing homes, home health agencies, rehabilitation centers, and psychiatric facilities; surgicenters, urgent care centers, diagnostic imaging centers, and other ambulatory care facilities; and offices of doctors, dentists, and other practitioners.

The job of managing a health facility has become highly complex due to the rapid pace of change in medical technology and the emergence of dozens of specialty health professions, in addition to significant changes in consumer expectations, career practices, and health care financing. As a result, the need for professional managers continues to grow.

Also contributing to the need for professional management is the extensive oversight and scrutiny to which many health facilities are subject. Both past performance and plans for the future are subject to review by a variety of groups and organizations, including consumer groups, government agencies, professional oversight bodies, career coalitions, and even the courts. Preparing for inspection visits by observers from regulatory bodies and submitting appropriate records and documentation can be time consuming as well as technically demanding.

Three functional levels of administration are found in hospitals and other large health care settings--executive, internal management, and specialized staff. The chief executive officer provides overall management direction, but also is concerned with community outreach, planning, policy making, response to government agencies and regulations, and negotiating. The job often includes speaking before civic groups, promoting public participation in health programs, and coordinating the activities of the organization with those of government or community agencies. Institutional planning is an increasingly important responsibility for chief administrators, who must assess the need for services, personnel, facilities, and equipment and recommend such changes as shutting down a maternity ward, for example, or opening an outpatient clinic. Chief administrators need leadership ability as well as technical skills in order to respond effectively to the community's requirements for health care while, at the same time, satisfying demand for financial viability, cost containment, and public and professional accountability.

Day-to-day-management, particularly in large facilities, may be the responsibility of one or more associate or assistant administrators, who work with service unit managers and staff specialists. Depending on the size of the organization, associate or assistant administrators may be responsible for budget preparation and finance; personnel administration and in-service training; information management; or coordination of the activities of the medical, nursing, physical plant, and other operating departments.

As the health care system becomes more complex, specialists in financial management, marketing, strategic planning, systems analysis, and labor relations will need to be hired.

Although managers in hospitals and nursing homes are both responsible for the efficient operation of their facilities, their day-to-day duties differ markedly. Hospitals are complex in structure, housing a great many departments--admissions, surgery, laboratory, therapy, emergency medicine, nursing, physical plant, medical records, accounting, and so on. The hospital administrator works with the governing board in establishing general policies and operating philosophy and provides direction to assistant administrators, or vice presidents as they may be called, and department heads who carry out those policies. The administrator coordinates the activities of the assistant administrators and department heads to assure that the hospital runs efficiently, provides high quality medical care, and recovers adequate revenue to remain solvent or make a profit.

Many of the same management skills are needed by nursing home administrators. However, administrative staffs in nursing homes are typically much smaller than those in hospitals--nursing home administrators often have only one or two assistants, sometimes none. As a result, nursing home administrators "get their hands into" the detailed management decisions much more than hospital administrators in all but the smallest hospitals. They wear various hats--personnel director, director of finance, director of facilities, admissions director, for example--analyze data and then making daily management decisions in all of these areas. In addition, because many nursing home residents are long term, staying 2 years or more, these administrators must provide for the psychological and social well-being of residents, as well as for health care.

In the growing field of group practice management, managers tend to the administrative and management functions involved in a large practice. Responsibilities include personnel, billing and collection, budgeting, planning, and sometimes advertising.

Heath services managers in health maintenance organizations (HMO's) perform all of the functions of those in large medical group practices, but they perform one additional function--that of an insurance company. HMO enrollees pay an annual fee that covers almost all care. HMO managers must establish a comprehensive medical benefit package with enrollment fees low enough to attract adequate enrollments but high enough to operate successfully.

Working Conditions

Health services managers often work long hours. Facilities such as nursing homes and hospitals operate around the clock, and administrators and managers may be called at all hours to deal with emergencies. The job also may include travel to attend meetings or to inspect health care facilities.


Health services managers held about 181,000 jobs in 1990. Half of all jobs were in hospitals. About a quarter of health services managers worked in nursing and personal care facilities and in offices of physicians. The remainder worked in outpatient care facilities, other health and allied services, medical an dental laboratories, and offices of dentists and other practitioners.

Training, Other Qualifications, and Advancement

As is generally true with managerial jobs, most entrants transfer from other occupations. Knowledge of management principles and practice is the essential requirement for a position in this field, and such knowledge often is gained through work experience. Nonetheless, formal educational preparation is important, especially for those who wish to advance in the profession. Although a nurse supervisor may rise to director of nursing services based upon merit or performance, for example, a master's degree in health administration (MHA) is usually necessary for advancement beyond nursing director. for some other positions, a degree in career, personnel administration, or public administration provides an appropriate background; many graduate programs in these disciplines offer concentrations in health administration.

Many hospitals are setting up separate ventures such as outpatient surgical centers, alcohol treatment centers, and home health care services. When they operate at a profit, separate companies such as these can funnel needed revenue to the hospital. To operate and manage these subsidiary companies, hospitals--or the corporations that run them--are looking outside the health industry for managers with well-established skills in profit and loss analysis, marketing, and finance. Nonetheless, graduate education in health services administration remains a prerequisite for many upper level administrative positions within hospitals and their subsidiaries.

Academic programs in health administration, leading to a bachelor's, master's, or doctoral degree, are offered by colleges, universities, and schools of public health, allied health, and career administration. The various degree programs provide different levels of career preparation. The master's degree--in hospital administration, health administration, or public health--is regarded as the standard credential for many positions in this field. Educational requirements vary with the size of the organization and the amount of responsibility involved. Generally, larger organizations require more specialized academic preparation than smaller ones do.

To enter graduate programs, applicants must have a bachelor's degree, with courses in natural sciences, psychology, sociology, statistics, accounting, and economics. Competition for entry to these programs is keen, and applicants need above average grades to gain admission. The programs generally last between 2 and 3 years. They include up to 1 year of supervised administrative experience, undertaken after completion of course work in such areas as hospital organization and management, accounting and budget control, personnel administration, strategic planning, and management of health information systems.

New graduates with master's degrees in health or hospital administration may be hired by hospitals as assistant administrators or, more often, as department heads or project directors. Postgraduate residencies and fellowships are offered by hospitals and other health facilities; these are normally staff jobs. Growing numbers of graduates from master's degree programs are taking jobs in HMO's, large group medical practices, and clinics as these facilities continue to flourish. Students should be aware, however, that mid level job transfers between HMO's, large medical groups, and hospitals may be difficult. Employers place a high value on experience in similar settings because some of the management skills are unique to each setting.

Relatively few master's degree recipients take administrative positions in nursing homes or life-care communities, although graduates of the small number of long-term care administration programs generally do so. Many nursing home administrators pursue graduate education while employed, however.

New recipients of bachelor's degrees in health administration usually begin their careers as administrative assistants or assistant department heads in larger hospitals, or as department heads or assistant administrators in small hospitals or in nursing homes.

The Ph.D. degree usually is required for positions in teaching, consulting, or research. Nursing service administrators are usually chosen from among supervisory registered nurses with administrative abilities and advanced education.

Licensure is not required in most areas of health services management, except for nursing home or long-term care administration. About 18 States currently require at least 2 years of college for licensure, while about 20 require a bachelor's degree. All States and the District of Columbia require these administrators to pass a licensing examination, and most students prepare for it by completing a special course of study. These preparatory courses, usually consisting of 100 to 200 hours of study in long-term care administration, are available through some colleges, universities, and home study programs. The licensing examination covers principles of administration; management of a long-term care facility; the role of government in long-term care; environmental health and safety; and medical, psychological, and social aspects of patient care. Nearly half the States require applicants to complete an internship known as an Administrator-in-Training program before taking the licensure examination. This internship generally lasts 1 year and is supervised by a licensed administrator. Since requirements vary from State to State, persons considering a career in long-term care administration should investigate licensing requirements where they wish to work.

Health services managers are often responsible for millions of dollars of facilities and equipment and hundreds of employees. They need a command of career and communication skills that allows them to make timely policy decisions and to motivate subordinates to implement those decisions. Administrators, especially head administrators, of all types of health organizations need to be self-starters.

In order to create an atmosphere favorable to good patient care, managers must like people, enjoy working with them, and be able to deal effectively with them. Managers also should be good at public speaking.

Health services managers advance in the profession by moving into more responsible and higher paying positions. They may do this within their own institution, or by shifting to another health care facility or organization. Frequently, the first job in a large institution is fairly narrow in scope--department head in charge of purchasing, for example. Advancement occurs with promotion to successively more responsible jobs such as assistant or associate administrator and, finally, chief executive officer (CEO). Health services managers sometimes begin their careers in small hospitals in positions with broad responsibilities, such as assistant administrator. Regardless of the path of advancement chosen, the ultimate occupational goal in hospitals and nursing homes is the position of CEO.

Outside the more traditional avenues of advancement, many managers take staff positions with the Veterans Administration, U.S. Public Health Service, or State or local departments of public health. Others find positions with voluntary health agencies such as the American Cancer Society or with trade and professional associations in the health care field. A growing number of jobs are available with firms that provide health management services on a contract basis. Jobs also are available in health planning agencies and professional review organizations. Individuals with academic training or experience in health administration are well suited for such positions.

Job Outlook

Employment of health services managers is expected to grow much faster than the average for all occupations through the year 2000 as the industry continues to diversify. Most job openings, however, will result from the need to replace personnel who transfer to another field or retire.

The various areas of health services management will grow at different rates in the years ahead. This reflects anticipated changes in the organization and delivery of health care due to overwhelming pressure to control costs.

Hospitals account for by far the largest proportion of health care spending. They are likely to remain a focal point for cost containment, and will not contribute as heavily to job growth in health services management in the future as they did in the past. Hospital employment is expected to grow more slowly than average between now and 1995, and the number of hospitals may actually decline. Restructuring of the hospital industry--the spinning off of separate companies to provide ambulatory surgery, alcohol and drug rehabilitation, or home health care, for example--will reduce the number of jobs in hospitals, while creating opportunities in the subsidiaries.

The importance of the hospital sector for employment of health services managers should not be underestimated, however. The rapidly changing hospital environment will provide career and advancement opportunities for managers with appropriate skills and experience. As hospitals become more specialized, concentrating on services that they are particularly well suited to deliver--whether it be neonatal care or burn treatment, for example--managers with strategic planning and marketing skills will be needed. Managers will also be needed to plan, install, and oversee comprehensive systems for monitoring and controlling resource use.

Facilities that provide outpatient care are expected to provide many of the new jobs for health services managers. Demand will be stimulated by the very rapid expansion of HMO's and group medical practices, and the emergence of such outpatient facilities as urgent care centers, surgicenters, cardiac rehabilitation centers, diagnostic imaging centers, and wellness centers.

HMO's continue to grow in number and membership, and they will provide numerous jobs for health services managers through 1995. Physicians forming group practices to take advantage of economies of scale and shared expenses are expected to provide many opportunities for administrators in the area of medical practice management. Ambulatory facilities such as outpatient surgical centers and after-hours clinics are expected to experience very rapid growth due to their convenience and competitive fee structure. As such facilities become more widespread, additional jobs will be generated.

With better medical care and healthier lifestyles, Americans are living longer than ever before. Very rapid growth in the number of older people in the years ahead is likely to exert strong pressure for an expansion of long-term care facilities--not just nursing homes, but home health agencies, adult day care programs, life care communities, and other residential facilities.

Opportunities for health services managers in nursing homes should be extremely favorable, in view of the exceptionally rapid growth that is projected for the population 85 years of age and above, expected to exceed 4 million persons by 1995. Compared to people in their 60's or 70's, very old people experience a greater incidence of chronic diseases and incapacitating conditions, and are far more likely to require institutional care. Nursing homes will need additional managers as these facilities add beds and expand the scope of their activities. Some nursing homes, for example, are already moving into the area of community care by setting up respite and adult day care programs.

Overriding concern for cost containment is producing shorter stays for hospital patients and, at the same time, generating demand for "after-care" in a rehabilitation unit, nursing home, or at home. Rapid employment growth in the home health field is anticipated for the same reason, and also because of technological advances that make it possible for patients to receive services at home that previously would have required a hospital stay. Examples are intravenous chemotherapy and home ventilators for respiratory support. Opportunities for administrative positions in home health will be found in visiting nurse associations and other nonprofit agencies, in hospital-based home care programs, and in the rapidly expanding for-profit sector.

New approaches to delivering care for the sick and dying will create some openings in hospices, which may be free standing or based within a hospital or nursing home. Hospice programs are very small and take a personal approach to each patient. The hospice movement stresses emotional and spiritual support for the dying patient and the family, and ready availability of drugs to control the excruciating pain that often accompanies terminal cancer, the disease most often suffered by hospice patients. Because the movement is so new, it is too soon to say what background lends itself best to hospice management.

Job opportunities for health administration graduates are expected to be best in HMO's, group medical practices, and nursing homes, although these jobs may not pay as well as hospital jobs. Traditionally a favored employment setting for health administration graduates, hospital management has become increasingly attractive to people with formal training in career administration. The suddenness of hospitals shift from a service to a career orientation is expected to sustain demand for new MBA graduates. This development, coupled with slow industry growth, will greatly intensify competition for entry level jobs in hospital administration. One result may be that new graduates will be offered jobs at the department head or staff level rather than at the assistant administrator level, as was commonly the case until recently. Very stiff competition for upper level management jobs will continue, a reflection of the pyramidal management structure characteristic of most large and complex organizations.

In nursing homes and other long-term care facilities, where a graduate degree in health administration is not ordinarily a requirement, job opportunities for individuals with strong career or management skills will continue to be excellent.


The median earnings for all health service managers were $32,355 in 1990. The middle 50 percent earned between $23,866 and $43,460. The lowest 10 percent averaged less than $16,650, the highest 10 percent more than $53,900. The personal standing and performance of the administrator, geographic locations, type and size of facility and type of ownership are all factors in determining the earnings of administrators. For example, median salaries for hospital CEO's range from $75,000 in hospitals with fewer than 150 beds to $143,100 in hospitals with 500 or more, according to the Hospital and Health Care Report, 13th edition, 1989/90, published by the Executive Compensation Services, a Wyatt Data Services Company, Fort Lee, N.J.

Management incentive bonuses based on job performance are increasingly commonplace in executive compensation packages.

Related Occupations

Health services managers plan programs, set policies, create marketing plans, and coordinate the use of resources for a health facility agency. Other administrators with similar responsibilities include social welfare administrators, emergency medical services coordinators, public health directors, comptrollers, department store managers, directors of data processing, and recreation superintendents.

Sources of Additional Information

Information about health administration and academic programs in this field is available from:

American College of Healthcare Executives, 840 North Lake Shore Dr., Chicago, Ill. 60611.

Association of University Programs in Health Administration, 1911 Fort Myer Drive, Suite 503, Arlington, Va. 22209.

National Health Council, Health Careers Program, 70 West 40th St., New York, N.Y. 10018.

American College of Health Care Administrators, P.O. Box 5890, 8120 Woodmont Ave., Suite 200, Bethesda, Md. 20814.

The American Association of Homes for the Aging maintains a listing of positions available and positions wanted in nonprofit nursing homes, life care communities, and housing for the elderly. For details, write:

Job Mart, AAHA, 1050 17th St. NW., Suite 770, Washington, D.C. 20036.


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