Healthcare associations revamp dues to draw in more members
Today's professional societies are kind of like buffets, where one price gets you as much food as you want. But increasingly, they're catering more to people who are only looking for specific services—picture getting just the dessert, or the soup.
"Or you may just want the salad and don't care about the main course, and that's all you're willing to pay for," said John Graham IV, CEO of the American Society of Association Executives. "Membership models really are evolving into that type of system."
Regardless of the association type, they're all trying to figure out how to keep their dues revenue stable, even as some of their members grapple with shrinking margins.
Recent tax forms from some of the largest associations representing hospitals and health systems, physicians, C-suite executives, pharmaceutical companies and insurers show wide swings in both directions when it comes to revenue from membership dues.
The Healthcare Financial Management Association, a membership organization for executives, suffered a 9.5% drop in revenue from membership dues from fiscal 2016 to 2017, from $8.9 million to $8 million, according to its latest Internal Revenue Service Form 990 for tax-exempt organizations.
"It's just the general tightening of membership dues throughout the industry," said Rick Gundling, the HFMA's senior vice president of healthcare financial practices. "We saw more organizations tightening up on how many memberships employees can have."
Dues revenue at America's Health Insurance Plans plunged 17.6% from 2015 to 2016, the latest years for which tax forms are available. Spokeswoman Kristine Grow attributed the drop to the loss of important members, including UnitedHealth Group in 2015 and Aetna as of Jan. 1, 2016. Another major player, Humana, left the group in January. But Grow said the association is rebounding, adding four new member plans since Humana's departure.
Despite the lower dues revenue in 2016, AHIP grew its profit to nearly $1.2 million, up from a $2.3 million loss in 2015, which Grow attributed in part to the leadership of then-CEO Marilyn Tavenner. The American Medical Association's revenue from membership dues declined 3.4% from 2016 to 2017, a result of more members enrolling in less expensive categories, such as those for physicians approaching retirement, said an AMA spokesman. Dues make up a comparatively small portion of the physician association's overall revenue, however, which increased 12.7% year-over-year to $317 million in fiscal 2017.
The Pharmaceutical Research and Manufacturers of America's revenue from membership dues increased by nearly 14% from 2015 to 2016, the most recent years for which tax forms are available. Similarly, the Medical Group Management Association grew its membership revenue by nearly 13% from its fiscal 2016 to 2017.
Both PhRMA and the MGMA declined to comment for this article.
Membership dues revenue tends to represent larger proportions of overall revenue at trade associations whose members are organizations, such as health systems, drugmakers or insurance carriers, compared with associations whose members are individuals such as physicians or other executives. In 2017, for example, 90% of the Catholic Health Association's revenue came from dues. The CHA is a trade association that represents more than 650 Catholic hospitals. The AMA, by contrast, drew just 12% of its revenue from dues last year.
In the same way consumerism has changed how healthcare providers deliver services—now happening in pharmacy-based clinics and over the phone—associations have to develop customized, personalized experiences for their members, said Deborah Bowen, CEO of the American College of Healthcare Executives, a professional society that represents hospital and health system administrators.
"It's no secret that (with) professional development dollars, the money you pay to invest in yourself, that people are looking for more creative approaches and more customized approaches," she said.
To that end, ACHE is looking at a number of options for potentially allowing members to "cherry pick" the specific services they need, Bowen said. The price of a membership is currently based on how long members have been with the organization and which of 11 classes they're in. Classes include students, faculty associates and retirees, for example.
The ACHE's dues revenue was flat from 2015 to 2016, the most recent years for which tax forms are available.
Consolidation in the healthcare industry has also affected some associations' bottom lines. The American Medical Group Association, which represents physician practices, doesn't make as much on membership dues when two practices merge. Even though membership prices are based on the number of physicians in a practice, it's still less than the association would take in from two separate practices, said Ryan O'Connor, the AMGA's chief operating officer.
Mergers are especially bad for the AMGA if the group being acquired was a member and the acquirer is not, he said.
"We lose groups that way," O'Connor said. "We're closely attuned to what's going on in the consolidation world."
Consolidation also prompted the AMGA to create more membership categories. Before 2014, it only had three membership tiers: groups with three to 50 physicians, those with 51 to 150, and those with more than 150. Now, it has five tiers, with the highest being groups with more than 1,000 physicians. Membership in the largest category costs a practice $25,000, while the smallest—three to 50 physicians—costs just under $6,000, O'Connor said.
In the hospital world, which has seen perhaps the most financial turmoil in recent years, the American Hospital Association's dues revenue declined slightly from 2016 to 2017, from $82 million to $81.3 million. Christina Fisher, the AHA's chief financial officer, attributed the change to the timing of when it received dues checks from members. Payments received in January count toward the 2018 total, she said.
Fisher said hospitals' shrinking margins and slowed admissions growth so far aren't being felt in the finances of the AHA, which represents about 5,000 hospitals and health systems.
With the goal of improving efficiency, the AHA decided to close its Center for Healthcare Governance, an office that supported hospital trustees through education, conferences, a publication and other services, writing off $1.7 million to do so. The association determined it would be more economical to integrate trustee services into programming that supports its broader membership, AHA Chairwoman Nancy Howell Agee said.
"We were providing really excellent services to trustees, but it reached a fairly small group," she said. "We thought it would make more sense to incorporate that and really retool it so we make it an ongoing part of the AHA's general activities. We're actually seeing a much broader reach as a result."
The center, which existed for 10 years, served about 200 members. Only one of the four full-time-equivalent staff members who worked there is still with the AHA.
America's Essential Hospitals, which represents primarily safety net hospitals, saw a nearly 13% spike in dues revenue from 2015 to 2016, the most recent year for which tax forms are available. The group declined to comment.
The Federation of American Hospitals, which represents for-profit hospitals, and the Catholic Health Association both saw their dues revenue jump 4.3% from 2016 to 2017. The FAH declined to comment, and the CAH attributed the increased dues revenue to its members' higher expenses, which determine membership prices.
The National Association for Behavioral Healthcare managed to grow its due revenue in recent years by diversifying its membership, especially adding more addiction treatment providers. The group changed its name in March from the National Association of Psychiatric Health Systems to better represent all sectors of the industry, said Mark Covall, NABH's CEO.
Companies and organizations in industries that are challenged expect their corresponding association to be as lean as possible, said Graham, of the American Society of Association Executives. The exception is if the organization has convinced its members that it can improve their margins through advocacy work or an information campaign, he said.
Both the AMA and AHA drew profit that was 8% of their total revenue in 2017: $26.4 million and $11.2 million, respectively.
The American Society of Association Executives doesn't advise members on profit, but Graham said the more profit associations make, the less dues members are generally willing to pay.
"Profit is not necessarily something that people strive for," he said.
The AMA spokesman attributed the group's profit in 2017 to more revenue from royalties and journal site licensing.
The AHA's Fisher said the association's goal is simply to have a strong organization while also giving members what they need.
"Our No. 1 priority is to service our members," she said, "certainly not to make a profit."
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