Two prominent healthcare associations took big hits on investment income last year, according to new Internal Revenue Service filings.
HFMA, AHIP see losses in latest filings
The Healthcare Financial Management Association, a healthcare association for financial executives, and America's Health Insurance Plans, the leading trade group for health insurers, both saw substantial losses during the worldwide economic crisis.
AHIP lost $4.6 million in 2008 compared with earnings of more than $920,000 in 2007, according to its IRS filing. Investment income losses made up $3.3 million of the total loss. Program service revenue was down by more than $1 million to $22.2 million. Overall, the Washington-based group reported revenue of $69.7 million, down 8.2% from $75.9 million the prior year.
HFMA closed its books on its fiscal year ended in May with a roughly $510,000 loss on revenue of $18.3 million. The Westchester, Ill.-based trade group's separate education foundation—which has a nearly $5 million budget for an annual conference and other seminars—also reported negative investment returns, but ended the year with a gain of about $638,000 on $8.9 million in revenue.
Richard Clarke, HFMA president and CEO, said investment losses reflect the slide in equity markets that hit bottom in March and shrank the value of the association's portfolio. But because the association did not sell the investments at such lows, the losses are not permanent. Revenue from advertising and sponsors also weakened as the nation's economy faltered, he said, but overall member revenue increased for the year that ended May 31.
Dues from HFMA members, payments from affiliates and revenue from publications, education programs and sponsors climbed to $18.7 million from $18.1 million the prior year, a 3.5% increase. Overall, revenue fell 9% to $18.3 million from $20.1 million the prior year, which included investment revenue of $743,737 plus $1.28 million from the sale of stock. Expenses rose 4.2% to $18.8 million from $18 million.
Clarke said the association scaled back its budget for the year that will end in May 2010, including putting wage increases on hold and freezing hiring unless executives deem a position necessary, he said. Six months into its fiscal year, revenue from advertisers and sponsors appears to have improved and membership has not declined, he said. “Things seem to be turning around,” he added.
AHIP revenue was largely generated from membership dues and government grants, both of which were flat year-over-year. The group spent $1 million on lobbying services, $2.5 million on legal services and nearly $9.9 million on consultants. Conferences and conventions cost the group about $307,000 last year.
Another $14.8 million went to AHIP's subcontractors, including member companies, to carry out government grant programs such as those with the Centers for Disease Control and Prevention on immunizations. For instance, Kaiser Permanente subcontracted with AHIP on a CDC grant worth $7.5 million, according to its IRS filing. AHIP ended the year with net assets of $4.7 million, down 51% from $9.5 million the year prior, and reported $209,600 in net unrealized losses on investments. Susan Pisano, a spokeswoman for AHIP, said the organization, like many others, was hit by the bad economy. “I think the expectation is this year would be a better year across the board,” Pisano said.
The newly redesigned IRS filing, the Form 990, included for the first time in 2008 more comprehensive information on governance and executive pay. Karen Ignagni, AHIP's president and CEO, earned total compensation of $1.9 million last year, up 18.8% from $1.6 million in 2007. Along with a base salary of $700,000, Ignagni received $500,000 in bonuses and incentives as well as $741,471 in other compensation and deferred compensation such as retirement benefits and nontaxable benefits.
Clarke's total compensation for the year ended in May was $664,830, including salary, bonuses and other payouts, deferred compensation and nontaxable benefits. The figure also includes $300,713 reported as compensation in prior years. Clarke's compensation for the year ended May 31, 2008, totaled $567,622, though the breakdown was not as comprehensive.
The HFMA reported that it offered perks such as first-class or charter travel, tax indemnification or gross-up payments, and health or social club dues or initiation fees. Clarke said the perks were negotiated under a prior employment contract, but said the HFMA has not paid for him to travel first class in more than a decade and has trimmed other benefits, such as paid travel for spouses and an automobile subsidy.
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