Two prominent physician associations reported their financial status to the Internal Revenue Service, with the American Medical Association reporting a loss in its 2008 IRS Form 990 and the Medical Group Management Association reporting a gain for the fiscal year ended June 30, 2009.
One down, one up
AMA loses $21.3 million; MGMA gains $1.8 million
The organizations, of course are vastly different—with the Chicago-based AMA having about 236,000 individual members at the last official count and the Englewood, Colo.-based MGMA having 22,500 members who lead or manage 13,700 medical practices where almost 275,000 physicians work.
The AMA in its return for the 2008 calendar year reported a loss of $21.3 million, a sharp drop from the previous year’s gain of $31.4 million.
The Form 990, dated Nov. 13, differs from the AMA’s 2008 annual report, dated Feb. 27, 2009, which stated that the AMA came out $2.5 million ahead. The explanation the AMA provided is that the Internal Revenue Service requires a revenue-minus-expenses accounting of the AMA’s not-for-profit operations on the 990 form. In contrast, the annual report includes the consolidated financial operating results of both the not-for-profit parent organization as well as its for-profit subsidiaries that have to file separate tax returns.
The AMA’s revenue fell 14.5% to $227.6 million in 2008, down 14.4% from $266.1 million in 2007, according to the 990.
The Form 990 indicated that investment income was a major reason for the AMA’s operating loss for 2008. The form reported that the organization lost $494,147 on its investments last year, compared with the almost $33 million it made from its investments in 2007. (The 2008 annual report listed investment income of $800,000 and noted that the market value of its investment portfolio had decreased by $77.8 million.) In a further breakdown, the tax form indicates that the AMA did earn more than $12.3 million in dividends and interest, but this was offset by the sales of securities and other investments which it sold at a $12.8 million loss. (The “loss” figure includes expenses associated with the sale.)
The AMA’s 2008 tax form also shows that salary expenses rose almost 7.2% to more than $115 million from $107.6 million in 2007, and states that the AMA has 1,156 employees. In April 2009, the AMA announced it was eliminating 100 open and existing positions. Any savings from that move won’t be listed until the 2009 reports.
The Form 990 also requires organizations to list the compensation of their officers and top management staff. At the top for the AMA was Michael Maves, its executive vice president and CEO who had a base salary of $616,204, received a bonus of $220,000 and earned other compensation that together totaled $956,893. Bernard Hengesbaugh, the chief operating officer, received a $452,247 base salary, a $250,000 bonus, and other compensation for a total of $798,809.
The MGMA, meanwhile, for its fiscal year—which ran from July 1, 2008, to June 30, 2009—came out almost $1.8 million ahead. That number is 16.7% ahead of last year’s profit of just over $1.5 million. (Although it was reported for the 2008 tax year, MGMA Chief Financial Officer Leah Brash noted that the numbers reported were actually for the organization’s fiscal 2009.)
Brash said that changes made to the Form 990 make it difficult to compare salaries and compensation increases from previous years. As with the rest of the Form 990, the MGMA’s numbers had reflected the compensation paid in previous fiscal years, but a change in the law requires compensation to be listed for the calendar year. The new requirement was done so the figure on the Form 990 matches the employee’s W-2 form, Brash explained. As a result of the change, compensation figures listed in the MGMA’s 2008 Form 990 include six months worth of pay that had been reported on the 2007 form.
William Jessee, 63, the MGMA president and CEO, had a total compensation package of $986,659, which included $727,240 from January through June that had been included on the 2007 990 form. Brash said Jessee’s compensation includes a $479,839 base, a $54,228 bonus and $283,592 in previously deferred compensation that he cashed in during 2008.
James Cauble, executive vice president and COO, received $270,156 in total compensation, which included a base of $243,756 as well as income of $136,278 that had been reported on the 2007 form.
In all, compensation for the MGMA’s 174 employees totaled $14.1 million, which was up about 3% from the previous year’s total of $13.7 million.
Total expenses actually fell about $2,000 and were around $25 million. Revenue was up a little less than 1% to almost $26.8 million from $26.5 million.
Membership dues rose 2.4% to $8.4 million from almost $8.2 million; and revenue from conferences and education climbed 2.5% to almost $8.1 million from $7.9 million. MGMA’s investment income fell nearly 53% to $226,276 from $476,269.
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