(Continued from p. 122)money. Since Davidson took over in 1991, the AHA gradually has shed most of its fee-for-service activities, leaving it almost totally dependent on dues revenues.
Association dues are set by a sliding scale based on hospital expenses. Last year, the AHA's House of Delegates amended the association's bylaws to permit the trade group to implement a new but undetermined dues system whenever the AHA resolves its membership issue (Aug. 15, 1994, p. 4).
In 1993, the AHA generated an $8.4 million profit on total revenues of $133.8 million, including all revenues from its for-profit subsidiaries. But $7.6 million in net income came from dividends from its subsidiaries.
In May, the AHA sold off its highly profitable liability insurance company, which alone generated $6.9 million in profits in 1993 (May 15, p. 17).
The AHA's results for 1994 and financial performance so far this year haven't been released. But sources said last year that association department heads were asked to budget for a 25% reduction in revenues for this year.
McEntee confirmed the story, but said the internal request to budget for 25% less was a contingency plan that never had to be implemented.
"It's just part of good financial planning," she said.
McEntee also characterized the continuing downsizing of the AHA, and the creation of the position of senior vice president for member relations and strategic development, as planned changes that weren't prompted by any financial or membership crisis.
She said Davidson is making good on a promise he made in 1992 to trim the AHA's work force by as much as 30% by the end of this year.
As of July 20, the AHA employed 670 full-time-equivalent employees, or nearly 25% fewer than the 887 FTEs employed by the AHA on July 1, 1991, when Davidson took over.
Hardest hit during that period has been the AHA's Chicago office, which the association still identifies as its corporate headquarters. The number of FTEs in Chicago has dropped by nearly 30% to 580 from 820. Meanwhile, the AHA's Washington staff has nearly doubled to 77 from 44. And the number of FTEs in the AHA's nine regional offices has been cut to 13 from 23.
Also part of the master plan, according to McEntee, was the new senior vice president position, which the AHA filled last December with Neil Jesuele, a former marketing executive for Johnson & Johnson.
Since then, Jesuele has been constructing what the AHA has dubbed its new "value in partnership" strategy, which essentially is a re-emphasis on the service and education portion of the association's role-a role that many hospital executives say was neglected for years, especially during the push for national healthcare reform.
Low grades on service.
In fact, hospital executives who filled out the AHA report card gave the association's service and education efforts some of the lowest grades in the survey (See chart, p. 117).
"The AHA has been in the thick of healthcare reform, and now it's time to get back to basics," Jesuele said in an interview.
The goal of the member services strategy is to establish a common service and education plan between the AHA and state and local hospital associations, and between all three hospital groups and hospitals themselves.