Investments drive AHA profit

The American Hospital Association’s investments failed to perform to expectations in 2011 but still represented more than 83% of the $7.8 million in profits the group posted in fiscal 2011, AHA officials said.

“We had a solid year in 2011,” said Teri Fontenot, the AHA’s board chairwoman, who also is president and CEO of 226-bed Woman’s Hospital in Baton Rouge, La. “We were able to manage expenditures the same way our members handle them daily in their hospitals.”

Despite industrywide challenges, including those detailed when Moody’s Investors Service maintained its negative outlook for not-for-profit hospitals in its recent mid-year report, the AHA for the second straight year made money off its investments. The taxexempt group posted $6.5 million in investment revenue, up from the $3.9 million in 2010. In fiscal 2009, the AHA’s investments suffered a $2.4 million loss.

The investments drove the AHA’s net income, Fontenot said. Investments, in fact, made up 83.6% of those profits in fiscal 2011, according to the AHA’s Form 990, which officials filed last week with the Internal Revenue Service. The AHA’s fiscal year ends Sept. 30.

Profits, or net income, rose by 19.4% to $7.8 million in fiscal 2011 from $6.5 million in fiscal 2010. Total expenses grew 3.9% to $105.2 million from $101.2 million.

AHA President and CEO Richard Umbdenstock became vested in his pension in 2011, Fontenot said. Umbdenstock’s salary and compensation package—which also reflects bonuses, retirement and other payments—sat at $3.3 million for the year. That’s $1.6 million more than in 2010—an 88.4% jump. Umbdenstock ranked third on Modern Healthcare’s association executive compensation list for fiscal 2010, (June 18, p. 23).