Healthcare associations revamp dues structure to draw 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 dues revenue stable, even as some of their members grapple with shrinking margins.

Recent tax forms from some of the largest associations representing major healthcare stakeholders show wide swings in both directions when it comes to revenue from membership dues.

The Healthcare Financial Management Association, a membership organization for finance 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. “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 Amer- ica’s Health Insurance Plans plunged 17.6% from 2015 to 2016, the latest years for which its tax forms are available. Spokeswoman Kristine Grow attributed the drop to the loss of important members, including UnitedHealth Group in 2015 and Aetna in 2016. Another major player, Humana, left the group as of Jan. 1. But Grow said the association is rebounding, adding four new member plans since Humana’s departure. Despite lower dues revenue in 2016, AHIP’s profit rose to $1.2 million from a $2.3 million loss in 2015.

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, an AMA spokesman said. But dues constitute a comparatively small portion of the association’s overall revenue, 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 rose nearly 14% from 2015 to 2016, the most recent years for which its 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.

Membership dues revenue tends to account for larger proportions of overall revenue at trade associations compared with associations whose members are individuals. In 2017, for example, 90% of the Catholic Health Association’s revenue came from dues. The CHA represents about 650 Catholic hospitals. The AMA drew just 12% of its revenue from dues last year.

In the same way consumerism has changed how healthcare providers deliver services, associations have to develop customized, personal experiences for members, said Deborah Bowen, CEO of the American College of Healthcare Executives.

“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, the 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 organizations’ 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.

Consolidation also prompted the AMGA to create more membership categories. Before 2014, it only had three membership tiers: groups with three to 50 physicians, between 51 and 150, and more than 150. Now, it has five tiers, with the highest being groups with more than 1,000 physicians. Mem- bership in the largest category costs a practice $25,000 annually, while the smallest—three to 50 physicians—costs just under $6,000, O’Connor said.

The American Hospital Association’s dues revenue declined slightly from 2016 to 2017, from $82 million to $81.3 million. Christina Fisher, chief financial officer, attributed the change to the timing of when it received dues checks. Payments received in January count toward the 2018 total, she said.

Fisher said hospitals’ shrinking margins and slowed admissions growth so far aren’t hurting the AHA, which represents about 5,000 hospitals.

America’s Essential Hospitals, which represents primarily safety-net hospitals, saw a nearly 13% spike in dues revenue from 2015 to 2016. 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 rise about 4.3% from 2016 to 2017. The FAH declined to comment, and the CHA at- tributed the increased dues revenue to its members’ higher expenses, which determine membership prices.

Companies and organizations in industries that are challenged expect their corresponding associations to be as lean as possible, said Graham of the American Society of Association Executives. The exception is if the organization has convinced its membership that it can improve their margins through advocacy work or an information campaign, he said. The ASAE doesn’t advise members on profit, but Graham said the more profit that associations make, the less members are generally willing to pay in dues.

Both the AMA and AHA drew profit that was about 8% of their total revenue in 2017: $26.4 million and $11.2 million, respectively.

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.”●