Sunday, September 2, 2012

Negotiating Salary or Hourly Rates - Updated 2015

Recently I received a request to write a blog post about negotiating salary and/or hourly rates.  I've avoided this topic until now because the financial aspects are always a complicated and touchy subject.  I'm certainly not giving away any trade secrets when I say that consulting firms and staffing firms make their money by placing Healthcare IT Professionals at their client sites for either contract work or permanent placement. 
Placing someone into a permanent position is usually a cut & dried affair.  The firm will source, approach, screen and present qualified candidates to their client, if one is chosen and agrees to employment the firm will receive a % of that person's first year's salary as a "finders fee".   The industry standard is 20% but it can be higher or lower depending on the type of position being filled and the rates agreed upon by the client. 
With regard to contractors, the firm follows the same scenario as above but the candidate will be retained for a specific amount of time to complete a specific project.  Regardless of the employment method the consultant chooses (1099, corp to corp or W2) the firm will bill their client at a higher rate than they are paying the consultant to increase their bottom line.
A firm determines the client bill rate by considering the following factors:  the consultant's desired hourly rate, the "burden" to carry that consultant (man hours spent for recruitment, any necessary care the consultant will require during the contract, cost of pay rolling, any benefits provided, liability insurance and how long the contract is expected to last etc.) and X amount of dollars for profit.  The rates charged to clients vary a great deal in this industry, in particular; large consulting firms tend to charge higher rates than the smaller staffing firms. 
There are a number of general differences between "Consulting Firms" and "Staffing Firms", the easiest way to sum them up is:  Consulting firms are larger organizations that can provide groups of consultants at one time to their healthcare clients to assist with large scale implementations or system upgrades etc.  Generally consulting firms will hire industry consultants as permanent employees, pay them a salary with benefits and provide performance bonuses, they will also utilize W2 hourly consultants and corp to corp, 1099 consultants when necessary. A staffing firm will usually be responsible for filling gaps and will provide services to both healthcare / hospital systems and consulting firms.  Typically, staffing firms do not hire permanent salaried consultants.

So, what does all that mean when it comes to negotiating rates? 
> Well, if you are seeking a salaried position your rate is going to be whatever yearly salary you have come up with that makes sense to you.  Your recruiter will ask you up front for a figure and I suggest you give them one.  If you're needing $120K and their client is only willing to pay $80K for the role, then you are aware immediately it isn't a fit and you aren't wasting your time.  Always be up front about your salary demands and try to be reasonable.  If you want an idea what the industry standards are in a particular geographical area for your qualifications... check out:
>Being an hourly contractor is a bit more complicated, some contractors are tuned in to their qualifications and the industry shortage of qualified contractors so they feel they can ask for the moon and the stars and they're going to receive it.  In part, this is true, but if you aren't a seasoned pro, or your social skills are lacking, don't assume the client will keep you around just because finding a replacement will be difficult. 
The best practice is to be flexible with your rates, but have a hard stopping point.  Also, take into account other benefits of a particular engagement and adjust your rate accordingly:  does it offer remote work (come down in rate a bit), does it require coast to coast travel (come up in rate a bit), is it a long term engagement - 12 months or more (come down in rate a bit), will you learn new skills (come down in rate a bit), are there difficult tasks associated with the role (come up in rate a bit) and so on. 
Below I've listed some industry averages for various roles and also a few reasons why you should work through a consulting firm or staffing firm instead of trying to work directly for the healthcare / hospital system. Keep in mind these rates are just an example and can vary quite a bit due to numerous factors.*   And, as always, your comments are appreciated!

Go-Live Support Analyst -  $40 - $60  / Hour
Trainer -                               $55 - $75 / Hour
Certified Trainer -                $65 - $95 / Hour
Principal Trainer -               $75 - $100 / Hour
Junior Analyst -                   $45 - $75 / Hour (varies wildly depending on product knowledge)
Analyst -                              $55 - $85 / Hour (varies wildly depending on product knowledge)
Senior Analyst -                   $65 - $110 / Hour (varies wildly depending on product knowledge)
Project Manager -                $75 - $150 / Hour (varies depending on background & product exp)
Project Director -                 $95 - $175 / Hour (varies depending on background & product exp)
(the above rates do not factor in travel expenses)
*The rates above can increase dramatically if you have a clinical background, particularly an RN, MD or Clinically related PhD.

Reasons to seek contracts through consulting or staffing firms:
1.  The firms have direct contact to the internal hiring managers and can communicate your strengths directly to them.
2.  The firms can offer healthcare benefits during the engagement
3.  The firms will continue to negotiate extensions for you.
4.  The firms will work to find you future engagements

Reasons to seek permanent employment through staffing firms:
1.  The firms have direct contact with the internal hiring managers and will present your resume directly to them, on the other hand, when applying via a hospital web site your resume often falls into a "black hole" or it has to be processed through HR before the IT hiring manager ever sees it.
2.  The firm will negotiate your salary requirements (and it's in their favor to get you higher pay)
3.  The firm can often present your resume to multiple clients
4.  The firm may have a number of roles that are not posted online
5.  The firm normally has developed a strong working relationship with their client and might be aware of upcoming roles that would interest you but have not yet been announced.

Changing Trends: 
Throughout 2014 and into 2015 the industry as a whole has been trending downward where hourly rates and salaries are concerned.  Additionally healthcare clients are seeking more Contract to Hire individuals and not as many contractor/consultants, and more local candidates than travelers. While the rates above are still accurate, the trend is now on the lower end.

*Copyright - Expressed permission must be granted by the blog owner to recreate, copy or use this material* - but please feel free to share the link if you enjoyed the content!


  1. From Linkedin:
    Joseph Kuratana, PMP, CSM • This is a wonderful, well written, and very informative article! Thanks Cherie.

    Thank you Joseph!!

  2. Via Email:
    I was introduced to your blog through a person on LinkedIn for Negotiating Salary or Hourly Rates.
    You did such a great job! There are so many individuals that are getting into the consulting market and really need this information.

    Thank you again.
    Cindi Gardner

    - Thanks Cindi... I'm grateful that this blog has been useful to folks in the industry!