Job Prognosis Favorable in Health-Care Industry

Times Staff Writer

If a sequel to the 1967 movie “The Graduate” were made now, the career advice given to the aimless graduate portrayed by Dustin Hoffman would no doubt be revised from the now-famous line that his future lay in “plastics.” Today, “health care” would be the byword.

One need look no further than Los Angeles to gauge the vitality of the industry. Three of the area’s 10 highest-paid executives at publicly held companies were health-care professionals at Los Angeles-based National Medical Enterprises Inc.: Chairman Richard K. Eamer, President Leonard Cohen and Senior Executive Vice President John C. Bedrosian collectively earned $21.3 million in salary and stock options last year.

Also ranked among the Southland’s highest paid executives last year were Robert Van Tuyle, who earned nearly $1.8 million in salary and stock options as chairman of the Pasadena-based nursing home concern Beverly Enterprises, and Royce Diener, who received nearly $1 million in salary and stock as chairman of Beverly Hills-based American Medical International Inc.


Although the seven-figure incomes earned by some executives aren’t necessarily indicative of the remuneration most health professionals can expect, the pay does illustrate how lucrative opportunities have become for many in the $400-billion-a-year health-care industry since investor-owned companies began in the 1970s to enter a field that had traditionally been dominated by relatively low paying, not-for-profit institutions.

The health-care boom is principally due to two factors, experts say: The demand for health services created by the nation’s rapidly expanding elderly population and an unusually generous third-party health insurance reimbursement system that has fueled double-digit percentage increases in yearly health-care costs.

The increases, experts warn, have begun to slow under recent reforms imposed by the federal government and third-party insurers. And health-care workers, whose salaries can consume up to 50% of a hospital’s operating budget, have borne the brunt of the belt-tightening. Wyatt Co., a Detroit employee benefits consulting firm, reports that hospital and health-care employees saw their salaries rise by only 5.6% in 1984--the smallest increase in nine years.

Still, health care--especially in less-regulated Western states--remains a sellers’ market, with most skilled workers able to find employment, experts say.

A recent national study found that the job market for graduates with master’s degrees in health administration grew stronger between 1979 and 1983. The study, conducted by Korn/Ferry International and the Assn. of University Programs in Health Administration in Arlington, Va., queried 900 of the nation’s 1,214 graduates of MHA programs in 1983 and found that 91% had found jobs after six months, compared to to 85% in 1979.

The average graduate in 1983 had nearly six interviews and two job offers. The length of the average job search was a little more than 100 days, and the graduate earned $27,180 in his first year on the job, up from $19,230 for 1979 graduates.

Overall, health-services administrators held about 303,000 jobs in 1982, according to the most recent data from the Bureau of Labor Statistics, which forecasts that “employment of health-services administrators is expected to grow faster than the average for all occupations through the mid-1990s.”

What’s more, health care is one of the few fields where women executives have been welcomed, although some skeptics point out that many women remain primarily in junior-level positions. That is changing, however, as more women begin to focus on management careers.

In 1983 women health-administration graduates for the first time outnumbered men 53% to 47%, according to Korn/Ferry, a leading New York executive search firm.

Outlook Improving

Although Korn/Ferry has not compiled data since 1983, the employment outlook has become even stronger, experts say.

One university study reports that starting salaries for its June, 1985, graduates range from $25,000 to $55,000. Top-line executives who already have experience now command salaries between $100,000 and $150,000, compared to less than $100,000 five years ago, according to Korn/Ferry.

“If there’s been any change since then, it’s been for the better,” added Paul A. Gross, a vice president at Humana Inc. who heads the health-care conglomerate’s hospital division.

Gross said Humana, based in Louisville, Ky., which owns about 90 hospitals, plans to increase its hiring of MHA graduates this year because of the company’s strong growth.

Hawthorne-based Maxicare Health Plans Inc. plans to increase its 1,000-person work force by 33% and increase the number of managers by 20% during the second half of 1985, said Fred W. Wasserman, company chairman.

However, operators of the nation’s 6,000 hospitals--after watching admissions drop 5% last year--are becoming more cautious about hiring.

“Overall I’d say there is a downturn in hiring, although we are increasing our hiring because we are a growth company,” said Thomas H. Bain, vice president of employee relations for Nashville-based Hospital Corp. of America, the nation’s largest hospital chain, with 420 facilities. Federally mandated Medicare cost-containment measures are “forcing hospitals to adopt tighter budgets. But I think the shake-out is pretty much completed,” he said, adding that hiring by alternative health care providers, such as health maintenance organizations, have eased some of the impact of the hiring downturn among hospitals.

Lower Management Jobs

However, college graduates find their way into the health-care field and are increasingly being hired at lower management levels to oversee hospital jobs in sales, cost containment, quality assurance, computer and information systems and personnel, experts say.

For that reason, graduates may find the road to the top more arduous as younger executives ahead of them settle into top posts. And MHA graduates are encountering more competition from the more than 60,000 MBAs who flood the job market each year. These business-administration graduates have recently diversified beyond traditional entry-level jobs in such fields as investment banking, corporate consulting and the like.

“The big health-care organizations are increasingly looking to business schools (to fill jobs) in those areas where it is not important to have skills in health care,” said Anthony R. Dovner, a professor at New York University and director of NYU’s Program in Health Policy Management.

But Maxicare’s Wasserman, who has both an MBA and a doctorate in health administration, said both degrees can be helpful: “Management-level courses, in general, are useful.” But as with any field, Wasserman observed, “knowledge about the industry is a valuable asset.”