AMA? BITFD!
Epsilon Theory
November 24, 2020·23 comments·Politics
The American Medical Association positions itself as an advocate for physicians and a leader in addressing health equity. Yet during a critical PPE shortage, it solicited membership fees to access equipment purchases. That contradiction opens onto something larger: a gap between the institution's public mission and its actual revenue model.
- The primary revenue stream is licensing, not membership. In 2018, the organization generated $332 million in revenue, with $158.6 million flowing from licensing its name and membership lists to pharmaceutical companies, device manufacturers, and insurance brokers. Membership dues accounted for just 10%
- Charitable spending is minimal relative to executive compensation. The organization spends more on office equipment, advertising, and membership solicitation than on grants to independent charities and research. In one year, it distributed less than 1% of revenue to external charitable causes while employing executives paid between $880,000 and $2.3 million annually.
- The health equity narrative masks institutional priorities. The AMA's CEO established a Center for Health Equity to address income inequality while previously leading a hospital system that systematically redirected low-income and uninsured patients elsewhere. The contradiction suggests what the organization actually prioritizes versus what it publicly claims to champion.
- Venture capital creates misaligned financial incentives. The organization operates venture capital funds where senior executives hold leadership roles. A $47 million venture fund investment suggests the AMA itself may be the limited partner funding its own executives' private equity plays, creating returns that diverge from the interests of physicians the organization claims to represent.
- The accountability question becomes unavoidable. A supposedly nonprofit, tax-exempt professional association structured as a licensing corporation and hedge fund raises a question about what happens when institutions designed to serve a profession get redesigned to extract value from it. What mechanisms exist when the organization claiming to represent your interests is built to monetize you instead.
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Thanks for digging into this Ben. My physician wife paid many years of dues to AMA before we figured out it was just a front for selling insurance, etc. Who knew all this? Not the average AMA member/victim. BTW, she’s been retired for 12 years, but that doesn’t discourage them from continuing to solicit her “membership”.
I thought I was immune to being shocked by corporate mendacity and greed. Then I started digging into the AMA …
Great research Ben! Too bad, as usual, this will fall on dear ears. Our fine representatives at the federal and state level are too busy focusing on their own survival (and probably getting a few handouts from our friends at the AMA) to do more than perhaps shake an angry stick at the issue for a quick second. Gotta love it! The American Dream come true!**
**if you’re lucky enough to catch on as a CEO at a non-profit or large publicly traded company.
Ben, when I started working with healthcare IT companies 20 years ago, the real shocker was learning that the AMA owns the CPT billing codes and generates significant revenue from licensing them. The AMA is happy to complain about insurance companies claims practices but they’re just as much part of the problem. Best book I’ve read to understand the misalignment among the AMA, physician expectations and medical economics is The Social Transformation of American Medicine by Paul Starr. Docs helped build our beast of a system and the AMA is one of many manifestations of its problems.
I would be very interested to see the fee structure (and frankly the annualized return) of that venture fund. I’d also be interested in their public security ownership and how they’ve managed to make under 2% in dividends (equivalent to a 2yr Treasury in 2018).
…and the scales fell from his eyes…geez! Thank you for the enlightenment. This just pisses me off! I feel compelled to tell every doctor I know to beware of the AMA. I know I’m making a big leap when I say that this just another (albeit in the medical field) example of how so many organizations, companies, brands, government agencies (yes, I said it),etc. in this country in particular have been hollowed out to fit the “insiders” in to either drain it of life or fashion a cloak of invisibility over it while the rest of us live with our fond impressions of what it was, what it meant to us and to others and patronize them in ignorance. You just fed the skeptic in me and I’m still hungry. Thank you!
thinking just how many professional associations there are, it is comforting to know that this is such a rare outlier…as a charter holder of a certain 501(c)3 with 400M revenues I can rest easy, knowing I would find nothing of the kind if I examined their financials…
Pop over to the note thread in the new forums, where we beat on, boats against the current, etc. to uncover any other possible such organizations…but like you, I’m sure we’ve exhausted them.
American Medical Association is treated as a Business League under 501(c) (6) and not all donations are tax-deductible. AMA Foundation is a 501(c)(3) and gets 1 star rating from Charity Navigator. Link to their 990 55% of spending is on Administrative and Fundraising expenses. 4.43 spent to raise $1 AARP? Nope; It’s a 501(c)(4) entity. Social Welfare Organization. Most recent 990 here. Nice reporting.
Great point.
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