The American Hospital Association has agreed to endorse a series of publicly available healthcare data products in exchange for collecting an undisclosed royalty on product sales.
It's the first time the nation's largest hospital trade group will be lending its name to products sold outside its membership ranks.
The Chicago-based AHA unveiled the agreement Sept. 8-the same day Sunbeam Corp. sued the American Medical Association for backing out of a controversial product endorsement deal (See story, p. 3). AHA officials, however, said there is no similarity between the AMA and AHA programs and they don't expect a similar controversy.
"The AMA is simply endorsing a product that's already on the market," said Richard Wade, AHA senior vice president for communications. "We're investing in science and research on a product that will be used in a very direct way with patients. Our endorsement is not vital to the marketing of the product."
The AHA's endorsement arrangement is part of its $2.4 million investment in a for-profit venture connected with famed health services researcher John Wennberg, M.D., of Dartmouth Medical School in Hanover, N.H.
The for-profit company, Boston-based Fairview Medical Services Corp., formed in August 1995, is a subsidiary of a not-for-profit organization co-founded by Wennberg called the Foundation for Informed Medical Decision Making, based in Hanover.
As part of the deal, the AHA will receive royalties from products sold by Fairview. Specific revenue projections for the venture weren't disclosed, but organizers of the project are excited about its potential.
"Our goals have it in the hundreds of millions of dollars," said George Bennett, Fairview's chairman and chief executive officer. "The products will be formally endorsed by the AHA, and the AHA will receive an endorsement royalty on any sale made by Fairview. Our market is quite large, and the phone is ringing off the hook."
The AHA's investment will account for 7% of Fairview's $32 million budget.
The not-for-profit Foundation for Informed Medical Decision Making, founded in 1987, develops information technology designed to assist in the clinical decisionmaking processes. For example, the foundation markets videos and interactive computer technology that allows a heart patient to decide between an angioplasty and open-heart surgery.
"These are a set of tools developed by seven academic centers from around the world," said Jonathan Lord, M.D., the AHA's chief operating officer. "For the last 21/2 years the AHA board and management team have been working on helping people become better personal managers of their healthcare."
Lord said there wasn't a bidding process in the selection of Fairview.
Fairview hopes to sell the information, which will come primarily on 11 videos, to health plans, self-insured employers, the government and other risk-bearing provider groups. The products also will be sold to AHA members.
It has yet to be decided whether the AHA logo will be used on the products marketed, but AHA executives said the association's name will be prominent.
Bennett said proceeds from the sale of products and services by Fairview will pay for future foundation research efforts. In addition, Fairview will offer grants through the foundation to AHA members interested in developing their own products.
"We will be able to put dollars back into the research community to develop more tools," Lord said.
"The purpose of Fairview is to get the information out there," Bennett said. "We want to make certain we get the best science translated into clinical practices."
The foundation uses Fairview to market its products, and Fairview has the distribution rights to the foundation's work. Bennett said the foundation consists mostly of academic clinicians who aren't versed in marketing, which is where his services come in.
The AHA board approved the venture at its April meeting.
The chairman of the AHA's board, Reginald Ballantyne III, president and chief executive officer of PMH Health Resources in Phoenix, couldn't be reached for comment.
Said AHA President Richard Davidson in a statement: "We're investing in products that we believe will help patients through difficult decisions. Helping people become better health managers is one of the goals set by the AHA's board of trustees. This investment will fit our strategic objectives as well as provide new revenue for the AHA."
The AHA has been trying to find ways to stem the tide of falling revenues because of declining dues payments. Its dues revenues decreased nearly 3% last year to about $56.4 million (Aug. 25, p. 2).
The AHA will be represented on Fairview's board by Carolyn B. Lewis, an AHA trustee and trustee of the Greater Southeast Community Hospital in Washington.
Other major investors in Fairview include British United Provident Association, the largest private insurer in the United Kingdom; Massachusetts General Hospital in Boston; and Dartmouth College.
The AHA-Fairview deal came about through the AHA's relationship with Wennberg. The AHA publishes Wenn-berg's Dartmouth Atlas of Health Care, which details regional variations in clinical practices and utilization.
Lord will get a seat on the foundation's board, joining Wennberg and other prestigious healthcare names such as C. Everett Koop, M.D., former surgeon general.