Executive Compensation at the American Medical Association (AMA) 2019

The American Medical Association (AMA) is a non-profit 501 (c) (6) – a professional association and the largest association of physicians – whose primary purpose is to:

• publish the Journal of the American Medical Association (JAMA) – a peer reviewed medical journal that includes original research, reviews, and editorials of medicine;
• maintain a code of medical ethics,
• create and maintain physician data which is sometimes referred to as master files; and
• update and maintain medical classification codes (referred to as CPT codes) used by the government, medical practices, hospitals, and insurance companies in return for royalty fees.

Although the AMA is a professional association, membership dues are surprisingly not a large source of revenue for the organization. There are about 1.1 million physicians in the US, but only about 130,000 practicing physicians belong to the AMA (according to MedPage Today). Membership rates vary with most paying $20-$420 annually. As such, dues account for a very small portion (about $35 million or 10%) of the revenue stream for the AMA.

There are 21 independent voting members (trustees) on the governing board (Board of Trustees), although 26 are listed on the Form 990 (2019), which appears to be due to timing differences.  All board members received compensation although the amounts vary from $16,000 to nearly $300,000.  18 of the 26 (69%) trustees are male while 8 of the 26 (31%) are female.

The AMA reported total revenue of $365 million in 2019 (compared to $332 million in 2018 and $317 million in 2017) of which only $35 million (10%) came from membership dues. By far, the biggest source of revenue was from “royalties” which totaled $194 million (53% of revenue) followed by subscriptions, reprints, education programs and credentialing ($69 millions or 19% of revenue), inventory sales ($22 million or 6%), investment income and gain on the sale of assets ($29 million or 8%), and advertising ($13 million or 4%).  In essence, 72% of revenue comes from 2 sources: royalties, subscriptions, reprints, education program and credentialing.

Royalties is a general term for the fees paid by any doctor, group, practice, hospital, or payers (i.e. insurance companies, Medicare, Medicaid, etc) who uses the CPT (Current Procedural Terminology) Codes/Booklets/Etc (a medical code set established and maintained by the AMA) that the AMA established to classify medical, surgical, and diagnostic services.  This is by far the largest source of income to the AMA who holds the copyright for the CPT Coding system. Therefore, any person or organization that uses the codes must pay license fees (royalties) for the use of the codes.

Expenses totaled $349 million (not including $12 million in depreciation) with the largest expense reported to be compensation.  1,179 employees received $186 million in compensation which equates to an average compensation of nearly $158,000.  However, only 455 employees received more than $100,000 with the 16 most highly compensated reported to be:

• $2,483,665:  James L Madara, EVP and CEO
• $1,340,374:  Kenneth Sharigian, Chief Strategic Officer
• $1,168,413:  Laurie A S McGraw, SVP, Health Solutions
• $1,053,055:  Thomas J Easley, SVP, Publisher
• $1,007,225:  Howard C Bauchen, SVP, Editor in Chief
• $  978,376:  Todd D Unger, SVP and Chief Experience Officer
• $  917,032:  Brian D Vandenberg, SVP and General Counsel
• $  790,596:  Denise M Hagerty, CFO
• $  782,245:  Richard A Deem, SVP, Advocacy
• $  767,341:  Bernard L Hengesbaugh, COO (thru Feb, 2019)
• $  762,946:  Susan E Skochelak, GVP, Chief Academic Officer
• $  687,375:  Leslie Weber, SVP and Chief Information Officer
• $  297,560:  Patrice A Harris, Trustee, President-Elect
• $  292,132:  Barbara I McAneny, President Elect/President
• $  248,880:  Jesse M Ehrenfeld, Trustee/Chair Elect
• $  209,315:  Jack Resneck, Chair-Elect, Chair

The 16 most highly compensated employees received more than $14 million, which equates to an average compensation of $875,000.  However, it is interesting to note the gaps in compensation appear to be because the individuals at the bottom of the list are trustees who sit on the Board.

The most highly compensated employee was James Madara who received $12 million in compensation over the past 5 years:

• $2,483,665:  2019
• $2,536,019:  2018
• $2,245,446:  2017
• $2,269,117:  2016
• $2,035,378:  2015

10 of the 16 (62%) most highly compensated employees are male while 6 of the 16 (38%) are female.

The AMA paid for first class or charter travel and health or social club dues or initiation fees.  In addition, the AMA has various deferred compensation plans. Please refer to the Form 990, Schedule J, Part III, Supplemental information for more information on first class travel, health or social club dues and the retirement plans.

107 independent contractors received more than $100,000 in compensation with the 5 most highly compensated reported to be:

• $3.7 million:  Silverchair, of Charlottesville, VA for IT services
• $1.7 million:  Humach, of Dubuque, IA for consulting services
• $1.4 million:  IQVIA, of Philadelphia, PA for consulting services
• $1.1 million:  City Staffing, of Chicago, IL for staffing services
• $1.0 million:  PBD, Inc., of Alpharetta, GA for order fulfillment services

In summary, the AMA’s golden goose is its medical classification coding system – the CPT Coding System, which is the primary source of the organization’s revenue, followed by subscriptions, reprints and credentialing. 1,179 employees worked for the AMA in 2019; their compensation ($186 million) accounted for the largest expense.   The top executives are compensated millions and the organization paid for first class travel and paid for health or social club club dues or initiation fees.

To read the IRS Form 990 (2019), click here.