For the first time in a decade, dues revenues collected by the American Hospital Association dropped last year, according to the AHA's annual tax filing with the Internal Revenue Service.
The loss of $3.4 million in dues revenues contributed to the second straight year that operations at the Chicago-based hospital trade group shrank. That followed years of continuous growth in revenues and expenses.
The change reflects the ongoing downsizing of the AHA under President Richard David-son, who took the reins of the association in 1991. It also reflects the shrinking pool of AHA member hospitals, whose ranks have thinned because of the boom in hospital mergers and acquisitions.
"This is something we anticipated. Every time there's a merger or acquisition, and to a lesser extent a closure, there's a dues impact," said Richard Wade, the AHA's senior vice president for communications.
It also helps explain why the AHA is working to expand its membership to include integrated delivery systems with other types of providers.
Often when hospitals become part of integrated delivery systems, their revenues and expenses are shifted to other parts of the system. That would lower their AHA dues, which are based on hospital revenues and expenses, Wade said.
Wade said the AHA anticipates "a little drop" in membership dues revenues this year.
At the same time, however, the amount of money the association paid last year to its officers, directors and trustees was the largest so far in Davidson's tenure.
According to the AHA's tax filing, the association paid $2.9 million in executive compensation last year. That's up nearly 30% from 1992, Davidson's first full year as president of the association.
Still, 1995's total is down slightly from the high point of about $3.2 million in the past decade. That occurred in 1990, AHA tax returns show.
The AHA filed its latest return, known as Form 990, with the IRS on Aug. 15. It provides a general breakdown of the association's revenues and expenses for the AHA's last fiscal year, which ended Dec. 31, 1995. Form 990 is publicly available.
The most comprehensive financial data about the AHA and its subsidiaries are in its annual audited financial statement, which runs about 60 pages. Last year, the AHA stopped releasing that document publicly and began sending a one-page summary to members of its House of Delegates. The complete statement is available to delegates and other members upon request, AHA executives have said.
The latest tax filing reveals the AHA's total revenues, including dues, dropped 3.2% last year to $80.8 million, while total expenses slipped 3% to $80.1 million. Profits declined nearly 22% to $730,544 last year from $930,399 in 1994. The figures don't include revenues, expenses or dividends from its for-profit subsidiary, AHA Services.
Driving the decline in revenues was a nearly 6% drop in dues revenues to $57.9 million last year from $61.3 million in 1994. It was the first time since at least 1985 that the AHA's dues revenues fell.
The percentage of AHA revenues from dues slipped to 71.7% last year from 73.4% in 1994. To help replace lost dues revenues, the AHA is looking to buy up to four companies whose products and services it could sell directly to its members.
Revenues from investments doubled to $3.8 million last year from $1.9 million in 1994.
On the compensation front, the AHA's senior executive staff received an average raise of 2.3% last year, based on available year-to-year comparisons of six of its top nine executives. Leading the pack was Davidson, whose compensation jumped more than 9% to $603,588.