Less than a year after starting a for-profit data subsidiary, the American Hospital Association plans to merge the business with its publishing company.
A marriage between Healthcare InfoSource and American Hospital Publishing could be approved by the AHA's board as soon as this summer.
Joining the two is a way to avoid duplication, AHA executives said.
"The impetus was to not have two companies in what is or what eventually will become the same field . . . data and publishing," said Richard Wade, the AHA's senior vice president for communications.
The two subsidiaries account for annual revenues of about $21 million, said Jonathan Lord, M.D., the AHA's executive vice president and chief operating officer.
The publishing arm generated revenues of $16 million in 1997, while the data subsidiary brought in about $5 million.
Unaudited after-tax figures show a net income of $500,000 for the data subsidiary last year, Wade said.
"It has been profitable and has actually performed better than projected," Lord said.
MODERN HEALTHCARE first disclosed the AHA's plans to start the data subsidiary last April (April 21, 1997, p. 3).
The AHA had been hunting for new ways to generate revenues since hospital consolidations began to take a toll on dues revenues.
But future overlap between the data subsidiary and publishing company became obvious as the publishing company looked into new media operations and the data subsidiary had to have a publishing component to get information into the hands of customers. A merger between the two was inevitable, Wade said.
Wade wouldn't divulge what the newly merged company will be called, because a choice for the name isn't official.
Many details of the proposed merger aren't worked out yet, including the new management structure.
Deborah Frett is president of Healthcare InfoSource, and Michael Springer is president and publisher of the publishing company. Neither Frett nor Springer could be reached for comment.
The data subsidiary has 10 employees and the publishing company 88, Wade said.
The boards of both the data and publishing subsidiaries have approved the concept of a merger. A board for the new company will be drawn from the existing board members, Wade said.
The next step, Wade said, is to develop a formal business plan and operational structure.
The merger will leave the AHA with two for-profit subsidiaries: the data/publishing hybrid and Insurance Resources, which features compliance services and insurance-related products.
The AHA also has another subsidiary, the not-for-profit American Organization of Nurse Executives.