The American Medical Association posted a $2.7 million operating profit last year-a dramatic turnaround from a $15 million operating loss in 1999, according to a newly released report.
It's the first operating profit enjoyed by the Chicago-based AMA since 1996 after three years of losses totaling about $22 million. The group has been struggling with declining membership and a concomitant fall in dues revenue. Officials attributed the turnaround to a "strategic repositioning" that began in 2000 and included the elimination of about 80 jobs.
As recently as seven months ago, during the group's interim meeting in Orlando, Fla., officials forecast that the AMA would lose $6.6 million in calendar 2000.
"We're pleased with the progress we've made and the financial results so far," said Yank Coble Jr., chairman of the AMA's finance committee and an endocrinologist from Jacksonville, Fla. "But the discipline we exercised this past year has to become standard operating procedure. We must continue to allocate our resources strategically-focusing on those programs and initiatives that promise meaningful outcomes for our members and their patients."
The AMA's revenue rose 4.7% last year to $257.1 million. The number of employees at year's end was 1,166, a significant reduction of nearly 14% from the 1999 level of 1,354.
The AMA's "repositioning" plan was designed to save about $20 million over two years through staff reductions, the curtailment or cutback of several programs and other cost savings, according to the annual report, which will be released next week at the organization's annual House of Delegates meeting in Chicago.
Not all the news in the annual report was good: The AMA has budgeted for a $2.3 million operating loss in 2001 based in part on the projected $2.5 million start-up cost of a joint venture formed last year-a database licensing business called HealthCarePro Connect.
In its report, the AMA also cautioned that about 75% of revenue is from sources other than dues and thus is largely dependent on economic conditions. In addition, the report said, continued decreases in membership could have a serious impact on operating results. Last year, membership dues continued to drop, falling 6.8% to $57.7 million.
"Membership is the most crucial area for the AMA," according to the report. "Pursuit of non-dues revenue can partially compensate for the decline in membership dollars, but nothing can compensate for the loss of members. Growth in membership is a key challenge for the AMA in the next few years."