The Federation of American Hospitals has recovered from the unusual financial fallout it faced from the Sept. 11, 2001, terrorist attacks.
Shortly after the attacks, the lobbying group for investor-owned hospitals spent $500,000 on a television ad that called hospital workers "an army of heroes" and aired on public affairs shows in Washington and six markets that featured a significant presence of for-profit hospitals (Nov. 19, 2001, p. 6).
"We dipped into our reserves for that," federation President Chip Kahn said. "Those are the kinds of things your reserves are for, when members choose to do those kinds of advocacy."
The federation posted net income of nearly $21,000 for 2002, according to its Form 990 tax filing with the Internal Revenue Service. That reversed an $804,000 loss in 2001. Revenue was up 4.5%, to nearly $7.7 million. With no ad campaign in 2002, public relations expenses fell 75% to $206,000.
The biggest reason for the turnaround was the federation's sharp reduction in spending on public relations, especially advertising, Kahn said in an interview. The group's finances also benefited from a 13.1% increase in revenue from its annual convention, held in March in Washington. The increase to nearly $1.5 million snapped a three-year streak of revenue declines for the meeting, according to previous years' tax filings. In his two years as head of the federation, Kahn said, "We've been looking very hard ... at rejuvenating the annual meeting and improving the program." The business exposition that accompanies the federation's private policy meetings has drawn more vendors, he said.
Kahn's compensation, including salary and contributions to employee benefit plans, was just under $699,000. That's up 3.8% from 2001, when Kahn and his predecessor, Tom Scully, were compensated a combined total of about $673,000.
Revenue from member dues, which are determined by a formula driven by the member's revenue, was $5.8 million, up 4.7% from a year ago and 33% from 1997. The federation would not specify how many hospitals are members, saying only that the number is more than 1,000. No change in the dues formula is anticipated.
Legislative expenses, which primarily cover lobbyists hired by the federation, fell 15.8% from 2001 to about $496,000. Since 1997, however, legislative expenses have risen 80.7%, according to previous filings.
Research was one area where spending rose significantly. The federation spent about $218,000 on research in 2002, up nearly 64% from the previous year, although the 2002 figure is up only 15.2% from 1997. Research into what has driven the rising costs of running a hospital-co-sponsored by the federation and the American Hospital Association (Nov. 25, 2002, p. 4)-was responsible for a large portion of the increase, Kahn said.