How Revenue is Spent at the AMA (2022)

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 270,000 physicians (practicing, retired, residents, and medical students) belong to the AMA. Membership rates vary ($20-$420). As such, dues account for a very small portion (about $34 million or 8%) of the revenue stream for the AMA.

The AMA reported total revenue of $447 million in 2022 (compared to $493 million in 2021), of which only $34 million (8%) came from membership dues. By far, the biggest source of revenue was from “royalties” which totaled $269 million (60% of revenue) followed by subscriptions, reprints, credentialing, and education programs ($85 millions or 19% of revenue), inventory sales ($19 million or 4%), investment income and gain on the sale of assets ($20 million or 4%), and advertising ($15 million or 3%).  In essence, 79% of revenue comes from 2 sources: royalties, and subscriptions, reprints, credentialing, and education programs.

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 $359 million (not including $11 million in depreciation) and can be categorized as follows:

• $211 million (47% of revenue):  Compensation
• $ 41 million (9% of revenue):  Office-related Expenses
• $ 31 million (7% of revenue):  Fees for Services (consult, acct, invest, etc)
• $ 18 million (4% of revenue):  Publications
• $ 14 million (3% of revenue):  Travel and Conferences (including First Class travel)
• $ 13 million (3% of revenue):  Advertising/Market Research
• $  9 million (2% of revenue):  Membership Solicitation/Telemarketing
• $  9 million (2% of revenue):  Grants
• $  8 million (2% of revenue):  Other Expenses (no detail provided)
• $  5 million (1% of revenue):  Subscriptions

As illustrated above, compensation expenses for the 1,361 employees (average compensation of $155,000) used up nearly half of the revenue collected in 2022, followed by office related expenses which used up 9% of total revenue.  Fees for services are fees paid to non-employees, most of which ($29 million) are not detailed on the 990 because the AMA is not required to if the fees are less than 10% of total expenses.

The most highly compensated employee was James L Madara, the CEO who received $2,914,728 in compensation in 2022.  Note:  8 other executives received between $1-$2.6 million in compensation in 2022.

Grants totaled $9 million and were primarily to medical schools, foundations, and other non-profits for a variety of reasons including general support.  132 grants greater than $5,000 were made.

The AMA reported $129 million in net unrealizable losses on investments which was partially offset by a $45 million positive adjustment to net assets and a $15 million adjustment for post retirement benefits resulting in a decrease in net fund assets from $895 million at the beginning of the year to $887 million at year-end.  In essence, the unrealized losses of investments was offset by spending less than the organization raised and the adjustment for post retirement benefits.

Using the above information, every $100 in revenue was spent as follows:

$100:  Revenue

-$ 47:  Compensation

-$  9:  Office-related Expenses

-$  7:  Fees for Services

-$  4:  Publications

-$  3:  Travel and Conferences

-$  2:  Other Expenses

-$  2:  Membership Solicitation and Telemarketing

-$  2:  Grants

-$  3:  Advertising/Market Research

-$  1:  Subscriptions

-$ 80:  Total Expenses

  $ 20:  Excess Revenue: To Fund Balance

As illustrated above, the AMA spent revenue primarily on staff compensation, office-related expenses, pension termination fees to non-employees and travel and conferences.  $80 of every $100 was spent on organization expenses leaving $20 out of every $100 to the general fund.

The Bottom Line:

The AMA raises about $500 million annually, primarily through royalties, subscriptions, reprints, credentialing,  and membership dues. By far, the largest source of income is from royalties which are primarily the fees paid by doctors, groups, hospitals, insurance companies, and the government to use the CPT Coding System, a classification system established by the AMA for classifying medical, surgical, and diagnostic services.

Half of all revenue is spent on staff compensation for the 1,361 employees followed by office-related expenses, fees paid to non-employees, travel and conferences, and publications.

The AMA has $887 million in net fund assets  ($250 million more than in 2019)  which is a significant sum.

To read the IRS Form 990 (2022), click here.