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EVP report

November 10, 2007

61st Interim Meeting
American Medical Association House of Delegates
Hawaii Convention Center
Honolulu, Hawaii
3:00 PM

Michael Maves, MD
Executive Vice President
American Medical Association

Good afternoon and welcome to Hawaii.  Before we begin I would like to take this opportunity to introduce two important new members of the AMA senior management team:

First I would like to introduce Ms. Marietta Parenti, our new Senior Vice President and Chief Marketing Officer.  Marietta brings an extensive portfolio of experience in marketing, ranging not only from productive time in the agency world, but also a resume of increasing responsibility at a variety of corporations, capped by her tenure as the Chief Marketing officer of the Rehabilitation Institute of Chicago.

Second, Ms. Colleen Lawler has been named our new Vice President for Membership. She comes to us following a distinguished career at the American Academy of Family Physicians where she headed their membership department. 

I know you will join me in welcoming them to the American Medical Association and helping them in their first time at the House of Delegates.

Recently, the Board of Trustees asked me to review and elaborate on my vision for the American Medical Association.  I, along with the senior management team took some time this summer and put together our vision for the AMA.  This presentation is meant to challenge and push all of us to think critically about where we are and where we would like and need to go.

The Board received this in September, and I shared portions of this template with state and specialty executives.  Now I want to challenge you to reflect on our effort and the implications this might have for all of us in the future.
Let’s go back to my beginning. Six years ago, I stood before the House of Delegates and described a very straightforward vision for the association:

  • An AMA responsible for its actions;
  • An AMA with sufficient resources;
  • An AMA physicians want to join;
  • An AMA as the voice of medicine.

Now we could stop right here and simply say – the more things change, the more they stay the same, because this vision still applies. But, things have changed and what I’d like to do today is talk through with you how our experience over the last six years, along with lots of change in the environment in which we live and work influences how we pursue this vision.

The time line chronicles the efforts and significant milestones in the evolution of the AMA from 2001 to the present time. Six months after my initial presentation of the vision, we began the year-long “Organization of Organizations” process. Following this project, we re-engaged McKinsey & Company to do an in-depth, systematic review of membership and business processes that occupied the next 18 months.

In January 2005, my executive team made up of new and existing members of senior management was complete.  This team included Bernie Hengesbaugh, Gary Epstein, Dr. Modena Wilson, Rich Deem, Jon Ekdahl, Dr. Cathy DeAngelis, Bob Musacchio, Denise Hagerty and Maria Maher.

For the past three years, we have been focused on the execution of the McKinsey recommendations through the three pillars of advocacy, involvement and communication:

  • Brand and streamline the AMA agenda;
  • Seek involvement of members;
  • Enhance member benefits;
  • Upgrade relationships with state and specialty societies.

So where does this bring us today?  With regard to the first element of my vision, we have embraced the responsibility that comes with our position in the public.

My personal commitment to continued vigilance is as strong as ever. Your Board and staff have engaged in continuing development activities, such as participation in a program at Northwestern University's Kellogg School of Management that focused on critical elements of corporate responsibility.

Our high standards for medical ethics and professionalism provide us with the code we need to follow.

Second, our strategic, disciplined management of the business operations has led to a period of unprecedented growth in profitability and reserves.  This secure financial base allows us the flexibility to pursue public policy initiatives and other programs.

However, our robust financial health has also drawn criticism from some in organized medicine accusing us of becoming “fat cats” and losing our focus on rank and file physicians. Nothing could be further from the truth.

In fact, our financial success will allow the AMA to engage in significant public policy initiatives such as the for the Voice for the Uninsured Campaign that you will hear about from Dr. Peter Carmel in Reference Committee F tomorrow and other activities.

But, let’s be clear that our AMA’s continued financial stability depends on the sustained performance of both our business services and membership acquisition and retention.

The annual operating cost of AMA as an association, including Advocacy, Professional Standards, and Governance Support is about $130 million while funds from Membership accounts for $37 million, Business Operations $112 million and Investment Income $11 million.

We need to ensure the sustainability of both membership and business operations, for the association would not exist without either.  Therefore, we need to not only continue to explore new business opportunities, but also manage our resources effectively.  And we also need to solve our membership challenge which brings me to my next element.

The continuing decline in our membership challenges us to critically assess our membership offerings and literally redefine our membership value proposition. You may be surprised to learn that most physicians have been a member of the AMA at one time or another.  That’s the good news.  The bad news is that it’s well known in business that it’s more difficult to re-attract former customers than it is to win new customers and the 30 plus year decline in our membership rolls bears this out.

Now, we have made some progress.  In my first year with the association we lost 17,000 members and by April 2005, with an aggressive marketing effort, we had more or less stabilized our membership.  But what we’re doing now is simply “managing the decline” which is not a strategy I want to continue, and I don’t think you do either.

I’ve recently been visiting some state society executives to discuss our mutual challenges.  This has been one of the best activities I’ve undertaken in my tenure and it’s also given me much to think about.

I asked one executive about why his society didn’t participate in the recent examination of the Partnership for Growth Membership Task Force.  His reply was, “We saw that all you were going to deal with was invoices, mailings and collections. These are small ideas and we don’t deal with small membership ideas and you shouldn’t either”.

Our value proposition needs to bring us members who stay members.

So I have asked our staff to think differently about membership and to undertake a reassessment of our membership value proposition considering fundamental questions like:  What are the real benefits of membership?  What could they be?  And then, armed with that market-driven information, I have asked them to generate big ideas that address physician needs today and well into the future.

Our challenges of membership acquisition and retention have also put us at a crossroads in our ability to be effective as the voice of medicine.  There are at least three components we need to examine:

  • Voice of whom?
  • Voice with whom?
  • Voice for what?

We claim to represent all physicians, some 800,000 in practice today, but we can count only a fraction of those doctors as members. I don’t think we do as good of a job of as we could in communicating to our members and I’m sure we don’t reach many of the U.S. practicing physicians.  On the other hand, I have physicians who are not members, but feel they get great value from our business products and services. In our membership model, how do we account for these doctors?

Do our decision-making process and governance processes help or hurt our efforts?  I think this is a question we need to seriously address.  Our governance must focus on the big issues that are of greatest concern to physicians.  We touched on this in the Org of Org Process, but we really never got to the heart of the matter.  Our membership and House of Delegates must reflect the demographics of physicians in practice.  Something needs to be done. 

Again, in my meetings with state society execs they say they are having increasing trouble attracting community physicians into active membership and leadership roles.  And without that input, we may find ourselves increasingly irrelevant. To achieve our vision of the AMA as the Voice of Medicine, we need to come to terms with relationships among AMA, states and specialties

Together we are stronger, but what are the areas of commonality that bind us together?  What are the distractions that cause fractures in that relationship?  What role does or can the HOD play in this process?

Frequently we will discuss or debate an item within the House of Delegates only to have no one abide by the decision.  Are we going to hang together or hang separately?  We meet in the House of Delegates as a body twice a year, but are we really listening to one another? Are we committed to a single voice?

Let me try to elaborate.  Our traditional alignment with the state societies was nearly complete. However, change is constant. Pressures on state medical societies and the AMA are altering these relationships so that (without assigning a value judgment) we are trending apart with state societies focused on local and national advocacy, grassroots activities, physician recruiting and immediate service requirements.

The Litigation Center, Advocacy Resource Center and participation in governance are still areas we do together. And states are still the testing ground for novel solutions to problems such as medical liability reform.

On the other hand, while the AMA and specialty societies historically have had less interaction, we now have an important and deepening agenda around areas such as CPT, RUC, SOPP, FDA drug safety and national advocacy.

How does the AMA fit into these changing organizational dynamics, changing physician practice patterns, changing physician demographics and the ever increasing mission requirements of organized medicine?  A challenge indeed.

Finally, we also need to ask ourselves, year in and year out, whether we are effectively using the levers for change that are available to us. Consider our AMA agenda as a series of boxes cutting across internal departments, geographic and specialty societies.  Push elements are instruments to change the world in which physicians practice – pass a law, obtain a judgment, stop a regulation.

Pull elements provide physicians with tools to be effective in the world in which they live – professional guidelines, ethics, practice management, continuing education.

We need to use both levers to be effective and to be relevant to the argument.  What the balance of these levers has been in the past, where push tools may have predominated, may not be right for the future where recent success has emphasized the power of pull technology.  In fact, we will advance our profession only by using both push and pull.

So what does all this mean?  Let me reiterate, my vision for the AMA is unchanged and steady, but as you have seen, our challenges have changed dramatically.

First, let us continue to be not only an AMA responsible for our actions, but also an AMA relevant to the dialogue of health care in this country.

Second, we will continually evaluate optimal scenarios for business growth.  This is the core of the viability of our AMA and critical to its future.

Third, we will secure a compelling value proposition for the AMA.  Small changes are not the solution. To quote Daniel Burnham, the architect who led the rebuilding of Chicago after the great fire said:  “Make no little plans.  They have no magic to stir men’s blood and probably will themselves not be realized.  Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will not die.”

Finally, if we are to remain the voice of medicine, we need to honestly engage one another about our strengths and weaknesses.  We need to achieve alignment within organized medicine and to use all of the tools, both push and pull, to help physicians and patients in a meaningful and achievable way.  I for one can hardly wait to get started.  Have a great meeting.