Like other organizations throughout the country, the American Hospital Association could not dodge the impact of a deteriorating economy last year.
The AHA, which represents more than 4,600 hospitals and systems, saw its total profit tumble 86% to $699,634 in 2001, after a robust 2000 when the organization reported a $5.1 million profit. A $6.7 million drop in investment income was to blame for the decline last year, said John Evans, the AHA's chief financial officer.
"Operationally we did well," he said in an interview with Modern Healthcare last week. "Investment-wise we did poorly. Everyone else did poorly, too."
Despite the decline in profits, the AHA rewarded its executives with a 6% increase in total compensation in 2001, or $1.8 million, according to the AHA's Form 990, its annual filing with the Internal Revenue Service as a tax-exempt organization.
Total compensation includes salary, employee benefits contributions and expense-account allowances. AHA employees also earned more in 2001. Total compensation for all employees was $22.5 million, 6% higher than in 2000.
The association had its share of good news, too, as it continued its recent trend of modest increases in the amount of money it collected from members. Membership dues increased 3% to $54.5 million in 2001. Dues revenue peaked in 1994 at $61.3 million.
Gary Mecklenburg, immediate past chairman of the AHA board of trustees and president and chief executive officer of Northwestern Memorial HealthCare in Chicago, said the organization is continually adding members.
Overall, the AHA posted total revenue of $73.1 million last year, down from 2000 when revenue totaled $78.2 million (Aug. 19, p. 6). A weak economy was to blame for the smaller revenue totals. The revenue would have increased from the prior year if investment declines were excluded, Evans said. The association's expenses declined slightly to $72.4 million.
Program service revenue declined again in 2001, dropping 4% to $15.8 million. The revenue comes from the AHA's fee-for-service activities, including publications, educational programs, trade shows and research contracts. The decline was a result of "belt tightening" across the field as members cut back on traveling and purchases after the Sept. 11 terrorist attacks, AHA spokesman Richard Wade said. The AHA's for-profit subsidiary, Health Forum, reported a loss of $5.4 million as advertising and meeting revenue took a hit.