Even as it continues to lose revenue from a free fall in membership, the American Medical Association has tapped into other lucrative business operations to post its third consecutive annual operating profit, the Chicago-based doctors' group announced last week.
The AMA, which boosted revenue in almost all of its business operations, reported an operating profit of about $11.7 million in 2002, its third consecutive year in the black after a three-year run of losses that totaled about $22 million.
The substantial operating profit was far higher than the AMA's earlier projected profit of about $200,000. In its report, the AMA says fourth-quarter results were better than anticipated, resulting in revenues from business operations of $6.9 million above forecasts. At the same time, overall business expenses were $3.8 million lower than expected.
"I feel good about our financial showing in 2002," said Herman Abromowitz, a family practitioner from Dayton, Ohio, who chairs the AMA's finance committee. "We've been very successful in leading the AMA through difficult economic times, while ensuring that the AMA's highest priority goals receive the resources they need and deserve."
AMA officials said they have engineered a dramatic turnaround since developing a new strategic plan after posting a record $15 million operating loss in 1999. The plan was designed to save about $20 million in two years by reducing staff, cutting services and streamlining many business operations.
From 1999 to 2000, the AMA shed 188 employees, or nearly 14% of its total workforce. That total number of employees has remained fairly constant since then and stood at 1,151 at the end of 2002, according to the group's annual report.
The AMA's positive numbers were tempered with more bad news about membership, which has represented a continuing problem during the last several years.
After reaching a high of 293,695 in 1999, AMA membership dropped 11.3% to 260,455 by the end of 2002. In 2002 alone, the loss amounted to approximately 18,000 members. Total revenue from membership dues dropped about $4.2 million, or 7.7%, to $50.2 million in 2002, which was almost $12 million less than the 1999 figure.
The financial report was released about two weeks before the AMA's annual meeting in Chicago, where this year 544 members of the House of Delegates will debate whether to transform the doctors' group into an "umbrella organization" with almost no individual dues-paying members. Under the plan, the AMA, acting as a core organization, would receive a portion of the dues for all the members of the more than 100 specialty associations and state and local medical societies.
There is strong sentiment among some delegates for significant change in the day-to-day operations of the AMA, whose loss in membership, some critics say, has been matched by a corresponding decrease in national stature and political clout in Washington.
"At some point, membership will drop to such a level that you have to decide either to close the doors and start over or start to curtail a lot of the services," said Tom Garcia, a Houston cardiologist and a member of Texas' state AMA delegation.
Membership dues represent about 20% of the AMA's total revenue and have dropped about 2.5% since 2000.
Total AMA revenue reached $250.5 million in 2002, up 0.24% for a $600,000 increase from the previous year and about $7.3 million above the forecast. Net income for 2002 amounted to about $100,000 as a result of approximately $11.6 million in non-operating losses, largely because of a decrease in the market value of the AMA's investment portfolio, the report said.
Although revenue for membership dues and advertising declined in 2002, the numbers were up in several other key business operations, including subscriptions, additional publishing revenues, insurance commissions and Internet and database operations. Total general and administrative expenses fell $1.4 million, or 0.76%, to $182.6 million.