The American Hospital Association regained its financial footing in 2019 after an expensive retirement plan change and investment slump resulted in a loss the previous year.
The Chicago-based hospital lobbying group reported a $6.6 million excess of revenue over expenses in its IRS Form 990 for calendar 2019, a noteworthy swing from 2018's $6.4 million loss. Revenue grew 6.4% year-over-year to $142.8 million in 2019. Expenses fell 3.2% to $136.2 million.
The same factors that drove 2018's loss contributed to last year's gain, said Christina Fisher, the association's chief financial officer. The organization spent more than usual on retirement pay in 2018—$19.1 million—because it shifted to a defined contribution plan. This year, the AHA spent just $9.7 million on retirement pay and benefits.
It also helped that the investment markets were kinder last year. The AHA reported a $5.7 million year-over-year increase in investment income.
"Those two factors went essentially the other way as key drivers: less expense because we don't have the one-time impact of the retirement plan and a significant increase in investment income," Fisher said.
The AHA spent $52.3 million on salaries and wages last year, including $10.5 million for its highest-paid executives, officers, directors and trustees. That's up from $50.6 million in 2018, with $10 million for the highest earners.
CEO Rick Pollack made $4.7 million in total compensation last year, compared with about $2.8 million in 2018. The difference is mostly because of money vested from his supplemental executive retirement plan, said AHA Board Chair Dr. Melinda Estes, who also serves as CEO of St. Luke's Health System in Kansas City, Mo. About $1.7 million of Pollack's total compensation in 2019 had been reported as deferred on a prior tax form.
The AHA's former chief operating officer, Maryjane Wurth, was the second-highest-paid employee in 2019, with about $2 million in total compensation last year, up from $1.3 million in 2018. Wurth retired this year, replaced by Michelle Hood. Tom Nickels, executive vice president of government relations and public policy, made $1.5 million, about the same as the prior year. General Counsel Melinda Hatton made $1 million, also close to her 2018 compensation.
Forty percent of the AHA's employees, or 177 people, made more than $100,000 in total compensation last year, down from 60% of employees in 2018. Fisher said that wasn't the result of a strategic action.
The AHA spent $24.3 million on lobbying last year—17.8% of expenses—compared with $22.5 million in 2018, or 16% of expenses. If there is a further uptick in lobbying spending in 2020, it wouldn't just be because of the November presidential election, Fisher said, noting that 2020 is "completely unprecedented."
"So when I'm talking to you next year, who knows what it will look like," she said. "But we didn't have anything in particular planned."
Revenue from membership dues fell 0.7% to $81.9 million in 2019, compared with $82.5 million in 2018.
Education programs spiked 13.4% year-over-year to $27.3 million in 2019. Fisher said the AHA has used feedback from members and other stakeholders to improve its programming. She said 2019 was a strong year for support from not only institutional members, but from individuals working in hospitals.
The AHA also announced last year the creation of its Center for Health Innovation and a startup competition, for example, Estes said.
The AHA paid $422,300 in severance last year to Ryan Frazier, its former senior vice president of member relations, even though he left the organization in March 2018, according to the tax form. Frazier's nine-month stint with the AHA was brief, yet costly for the organization. The AHA also paid Frazier $339,464 in severance in 2018.
Just six months into holding that position, Frazier informally announced via Twitter his unsuccessful bid for mayor of Aurora, Colo., a Denver suburb. His official campaign kickoff event was Feb. 2, 2019, one month before he left the organization. Frazier, who did not return a request for comment, currently runs a consulting firm in Aurora.
The amount paid in severance is based on employees' separation agreements, Fisher said. She declined to say whether Frazier left voluntarily.
Estes said she thinks 2019 was a strong year for the association because it focused on access to care, affordability and its innovation agenda.