How Revenue is Spent at the American Medical Association (AMA) 2023

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 million physicians in the US, but only about 250,000 practicing dues-paying physicians belong to the AMA. Membership rates vary ($20-$420). As such, dues account for a very small portion (about $35 million or 7%) of the revenue stream for the AMA.

The AMA reported total revenue of $468 million in 2023 (compared to $447 million in 2022, $493 million in 2021, $386 million in 2020, $365 million in 2019, $332 million in 2018 and $317 million in 2017 – so revenue has been on an upward trend over the past 5 years), of which only $34 million (7%) came from membership dues. By far, the biggest source of revenue was from “royalties” which totaled $285 million (61% of revenue) followed by subscriptions, reprints, credentialing, and education programs ($84 millions or 18% of revenue), inventory sales ($13 million or 3%), investment income and gain on the sale of assets ($31 million or 7%), and advertising ($12 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 $403 million (including $10 million in depreciation) – 86% of revenue – and can be categorized as follows:

• $236 million (51% of revenue):  Compensation
• $ 45 million (10% of revenue):  Office-related Expenses
• $ 34 million (7% of revenue):  Fees for Services (consult, acct, invest, etc)
• $ 19 million (4% of revenue):  Travel and Conferences
• $ 19 million (4% of revenue):  Publications
• $ 18 million (4% of revenue):  Other Expenses (no detail provided)
• $ 11 million (2% of revenue):  Membership Solicitation/Subscriptions
• $ 11 million (2% of revenue):  Advertising/Market Research
• $ 10 million (2% of revenue):  Grants

As illustrated above, compensation expenses for the 1,369 employees (average compensation of $172,000) used up half of the revenue collected in 2023, followed by office related expenses which used up 10% of total revenue.   Fees for services are fees paid to non-employees, most of which ($33 million) are not detailed on the 990 because the AMA is not required to if the fees are less than 10% of total expenses.

Grants totaled $10 million and were primarily to medical schools, foundations, and other non-profits for a variety of reasons including general support.

The AMA reported $80 million in net unrealizable gains on investments and a negative $8 million adjustment for post retirement benefits resulting in an increase in net fund assets from $887 million at the beginning of the year to $1 billion at year-end.

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

$100:  Revenue

-$ 51:  Compensation

-$ 10:  Office-related Expenses

-$  7:  Fees for Services

-$  4:  Publications

-$  4:  Travel and Conferences

-$  4:  Other Expenses

-$  2:  Membership Solicitation and Subscriptions

-$  2:  Grants

-$  2:  Advertising/Market Research

-$ 86:  Total Expenses

  $ 14:  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,

The Bottom Line:

The AMA raises nearly $500 million annually, primarily through royalties, and subscriptions, reprints, credentialing, and education programs. 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 (and a gold mine for the organization).

Half of all revenue is spent on staff compensation for the 1,369 employees followed by office-related expenses,  and fees paid to non-employees.

The AMA has $1 billion in net fund assets  which is a significant sum.

To read the IRS Form 990 (2023), click here.