In­vest­ments drive AHA profit

Modern Healthcare - - THE WEEK IN HEALTHCARE - Ashok Sel­vam

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).

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