The Joint Commission on Accreditation of Healthcare Organizations may have been buffeted by criticism last year, but that didn't stop the money from rolling in.
Profits at the Oakbrook Terrace, Ill.-based healthcare accrediting agency topped $5 million on record revenues of $84.4 million in 1993.
The $5.2 million in net income represents the highest aggregate earnings by the JCAHO since 1986, when Dennis O'Leary, M.D., took over as JCAHO president. It's also a 53% increase over 1992's profit of $3.4 million.
Last year's total revenues, meanwhile, represent a 22% increase over 1992's total revenues of $69 million. That increase countered a 20% increase in total expenses to $79.1 million and gave the JCAHO a record 6.2% profit margin for 1993 (See chart).
Measured in annual revenues, the JCAHO is now almost as big as the American Hospital Association, whose core operations generated $88 million in revenues last year.
The JCAHO's financial results for 1993 were contained in the not-for-profit organization's annual tax filing with the Internal Revenue Service. The filing, known as Form 990, is available for public inspection. The JCAHO filed its Form 990 for 1993 on Nov. 14.
The filing comes at a time when the JCAHO is fighting with a county board and local school district to preserve its exemption from property taxes as a public charity under Illinois law.
In June, a DuPage County (Ill.) Circuit Court judge stripped the JCAHO of its exemption, ruling that it acted more like a business than a public charity (July 25, p. 3). The JCAHO has appealed with several unlikely allies coming to its defense (See related story, this page).
Fueling the JCAHO's record-breaking year were big increases in accreditation survey revenues and revenues from other sources, such as educational programming and publications.
Revenues from accreditation survey fees jumped more than 26% to $58.7 million, the JCAHO's tax filing revealed. The increase reflects a 6% surcharge that the JCAHO placed on accreditation fees starting in 1993.
The surcharge, which will expire in 1996, was implemented to help fund the research and development of the JCAHO's clinical indicator monitoring system, known as the IMSystem.
The rise in survey fee revenues also reflects the fact that the JCAHO conducted nearly 500 more accreditation surveys last year than in 1992. Last year, the JCAHO did 7,578 surveys, compared with 7,081 surveys during 1992.
Meanwhile, revenues from the sales of publications, publication subscriptions and educational program fees rose nearly 19% to $21.2 million.
The number of educational programs sponsored by the JCAHO rose to 388 last year from 356 in 1992. And the number of publications issued by the JCAHO jumped to 260,608 from 150,149.
Dr. O'Leary's total compensation rose 9% to $387,493. That includes $349,280 in salary, $16,990 worth of contributions to his employee benefits program and $21,223 in expense account allowances.
Karen Timmons, the JCAHO's chief operating officer and second-highest paid executive, earned $241,343 in to-tal compensation last year. That also represents about a 9% increase in total compensation. It includes $220,094 in salary, $13,032 worth of contributions to her employee benefits program and $8,217 in expense account allowances.
The JCAHO's latest tax filing also disclosed several other items of note.
The organization paid Ernst & Young, a national accounting and consulting firm, $1.3 million for consulting services.
And it paid Washington-based Gold & Liebengood $96,000 for lobbying work on its behalf during the national healthcare reform debate. Gold & Liebengood is the lobbying subsidiary of the international public relations firm of Burson-Marsteller, which began working for the JCAHO in August 1993.