This year’s Treasurer’s Report covers the calendar year 2000. The Academy experienced a year of robust growth on several fronts. Membership continues to increase both domestically and internationally totaling more than 24,000 for all membership categories. The Annual Meeting in Orlando set a record in revenues of $10 million. The development of on-line patient education material, which was one of the Academy’s new initiatives discussed in last year’s report, now has more than 350 fact sheets, brochures and booklets that can be downloaded from the AAOS website. Further on-line development work will be found under the discussion of the 2001 budget.
The Academy launched its first public service education campaign utilizing television, radio and print media. The campaign, developed by the Public and Media Relations department, was aimed at increasing awareness of injury prevention and maintaining musculoskeletal health. Our public service announcements (PSAs) focused on playground safety, osteoporosis and sports injury prevention as part of the "Prevent Injuries America! Move Better. Play Better. Live Better." program. These efforts have not gone unrewarded. The public relations staff working with the Corporate Relations Advisory Group, a cross functional group of senior Academy and OREF staff, have been successful in obtaining medical industry support through specific sponsorships and general grants. More than $1.2 million in actual contribution receipts and pledges from industry were obtained.
The Washington D.C. office was fully staffed by January 2000 as the Academy expanded its presence on Capitol Hill to five employees. The Orthopaedic Political Action Committee (PAC) is managed by the Washington office. The PAC raised $560,000 from the membership in contributions over the two year 1999-2000 election cycle. The increased level of funding enabled the PAC to step up its contributions thereby securing invitations for representatives of the Academy to attend both political conventions during the general election year. The Washington office also hosts the Board of Councilors’ annual National Orthopaedic Leadership Conference that had a strong turnout of councilors and Board members who visited legislators on Capitol Hill.
In 1999, Academy President Richard H. Gelberman formed "The AAOS in 2005 Task Force" to review the Academy’s organizational structure and mode of operating vis-a-vis current national trends and the needs of the membership. A number of concepts arose from the discussions that were validated by subsequent research. One of the key areas was to continue the development of the Internet to deliver education content to the membership. Another was to empower member volunteers and staff to make product development decisions in shorter time frames without hierarchical review. Plans to implement these concepts were factored into the 2001 budget.
Improving communications with our patients has been another area of much discussion by the Board of Directors. As a result, two new projects have been initiated. One is to partner with Dartmouth University and develop a video for the treatment of hip and knee arthritis with total joint replacements; the video will provide a patient and his or her family all of the options and expected outcomes. Dartmouth has experience developing these videos, which are part of a program entitled Shared Decision-Making.
The other project is a partnership with the Bayer Medical Institute to train a cadre of 25 orthopaedic surgeons to become communication mentors among our membership. These mentors will then hold seminars for other orthopaedic surgeons to improve their communications skills with patients.
Periodically, the AAOS Report or Bulletin has reported on the efforts to organize medical specialties in the promotion of the Bone and Joint Decade 2000-2010 (BJD). These efforts continue. An international gathering met in Washington, D.C. in mid-year to hear an endorsement by former President Clinton. All 50 states and 22 countries now support this effort. Data to measure the Burden of Musculoskeletal Disease demonstrates that musculoskeletal impairment is the number one reason people go to the doctor. Similar to the communication projects noted earlier, one of the primary goals of BJD is to improve communications with our patients. Through these expanded efforts to provide quality information for patients, they, in turn, will better understand their musculoskeletal disorders, injuries, and the risk and benefits of different treatment options. Better educated patients will improve the patient-physician relationship to one in which communication is a two-way street.
Balance Sheet Statement of Assets, Liabilities and Net Assets
Investments of approximately $1.6 million in the building and information systems software and equipment were made at approximately the level of depreciation incurred for the year. Depreciation is a very rough estimate of the amount of wear, tear and obsolescence one’s operating assets experience during the year. Accounts Receivable increased more than $1 million as a result of recording grant and sponsorship pledges from industry and other societies for the first time. In prior years, the pledged amounts were not considered significant enough to adopt this accounting procedure. Accounts payable and accrued liabilities increased almost $1.2 million for a variety of reasons. These reasons included an increase in the deposit requests for the 2001 Annual Meeting, increased reserves to cover group medical insurance benefits, real estate taxes, and liabilities to terminate future contracts related to the Summer Institute.
Investments
The Academy’s investment portfolio broke even for the year as interest and dividends offset the loss of market value. The S&P 500 index declined 9 percent for 2000. Overnight investments of the operating funds provided more than $280,000 of additional interest income.
Statement of Activities
| Revenues increased $1.9 million from the prior year, due to higher registrations at the Orlando Annual Meeting, and the dues increase effective May 1, 2000. Expenses increased, as well, in most areas. Communications and Public Relations expenses were up $1.3 million as the public relations area was formed during the third quarter of 1999 and therefore did not incur a full year of activity, which was the case in 2000. Health Policy spending was $500,000 higher, reflecting the increased staffing of the Washington office and PAC activity during the presidential election year. Unfortunately, Course Operations experienced increasing expenses while revenues declined. The Board of Directors has reviewed this situation and asked the Council on Education to address this matter. Efforts have been underway for the past year to decrease the losses. |
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Research and Scientific Affairs expenses increased more than normal due to their involvement in producing the Dartmouth Atlas of Musculoskeletal Health Carepublished late in the year.
The net operating revenues and operating expenses resulted in a loss of $590,000. This loss was expected and budgeted for. In my report last year, I advised that the 2000 budget would run a deficit, and that funding would be provided by the dues increase, netting $1 million, and an equal amount to be provided from prior years' net assets. Investment income and an increase in temporarily restricted contribution receipts and pledges more than offset the operating loss to an increase in net assets for the year of $460,000. This was down significantly from last year when investments added more than $3.5 million to the 1999 net asset increase. |
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2001 Budget
As was noted earlier in this report, the Academy continues to expand its development of information available on the website. A significant increase in spending ($740,000) was approved by the Board of Directors to develop the Orthopaedic Knowledge On-line (OKO) project. A description of this project, to provide orthopaedic physicians the latest and most extensive coverage of medical knowledge, was the feature article in the June 2001 Bulletin. More information is on page 44 of this issue. Based on membership input, two new areas were budgeted: the formation of an Academic Affairs Council and related committees, and a formal practice management function within health policy. With the addition of these areas, the Academy Board approved $740,000 of funding from prior years’ net assets for the 2001 Budget.
Summary
A recent AAOS survey revealed that more than 2,600 of you volunteered time and contributed your talents during the past year in support of the Academy/Association’s Strategic Plan Goals. These goals encompass education, research, communications, public relations, and advocacy of our health policy positions and are reflected by the accompanying charts. Additional member volunteers are currently being sought to develop the new areas of practice management and academic affairs. Ours is a vibrant organization made possible by you, working in partnership with dedicated staff.
Sincerely,
Andrew J. Weiland, MD
Treasurer
Assisted by Ron Kaye, CPA, the
Academy’s Director of Finance and Planning
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SY-Short Year ended December 31, 1997
CY-Calendar Year ended December 31, 1998-2000 BY-Budget Year ended December 31, 2001 Education and Organizational services Percentages for years 1997-1998 have been restated for activities now included under Communication & Public relations |
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Combined statements of Assets, Liabilities and Net Assets
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As of December 31 |
2000 |
1999 |
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Cash and temporary cash investments |
$7,042,216 |
$7,271,879 |
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Accounts receivable (net of an allowance for doubtful accounts of $180,000 and $83,000, respectively) |
2,984,070 |
1,871,475 |
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Publication and electronic media inventories |
710,932 |
540,215 |
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Investments-at market |
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Permanent fund |
16,099,861 |
16,830,002 |
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Operating Reserve Fund |
2,000,000 |
2,000,000 |
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Surgical Skills Education fund |
6,500,000 |
6,500,000 |
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Project fund |
5,479,872 |
5,816,264 |
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Due to Operating Fund |
2,425,309 |
1,288,282 |
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Total investments |
32,505,042 |
32,434,548 |
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Prepaid Annual Meeting, course and |
1,976,848 |
1,446,880 |
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Deferred product costs |
1,133,307 |
1,045,684 |
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Land, building, furniture and equipment, Land and land improvements |
1,169,300 |
1,169,300 |
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Building and building improvements |
17,828,237 |
17,110,009 |
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Furniture and equipment |
6,829,250 |
5,993,058 |
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Total cost |
25,826,787 |
24,272,367 |
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Accumulated depreciation |
10,492,322 |
8,921,570 |
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Property and equipment net |
15,334,465 |
15,350,797 |
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Total assets |
$61,686,880 |
$59,961,478 |
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Liabilities: |
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Accounts payable and accrued liabilities |
$5,118,580 |
$3,959,291 |
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Future course fees |
302,275 |
315,232 |
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Deferred dues |
3,670,606 |
2,953,170 |
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Deferred annual meeting revenue |
5,684,854 |
6,016,588 |
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Deferred product revenue |
228,209 |
494,842 |
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Total liabilities |
15,004,524 |
13,739,123 |
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Net assets: |
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Unrestricted |
45,367,265 |
45,667,691 |
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Temporarily restricted |
1,315,091 |
554,664 |
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Total net assets |
46,682,356 |
46,222,355 |
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Total liabilities and net assets |
$61,686,880 |
$59,961,478 |
Combined statements of activities
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For 12 months ended December 31 |
2000 |
1999 |
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Program revenues |
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Membership |
$10,237,716 |
$9,269,735 |
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Annual Meeting |
9,894,285 |
8,713,378 |
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Products |
8,475,289 |
8,723,834 |
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Continuing education |
3,190,435 |
3,556,553 |
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Specialty society management |
2,065,600 |
2,004,774 |
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Facility management revenues |
929,949 |
929,238 |
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Other revenues |
1,258,633 |
917,214 |
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Total revenues |
36,051,907 |
34,114,726 |
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Program expenses |
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Membership |
1,073,597 |
978,949 |
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Annual Meeting |
5,204,991 |
4,928,993 |
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Products |
6,913,961 |
6,803,007 |
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Continuing education |
4,469,852 |
3,974,541 |
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Specialty society management |
2,197,535 |
2,037,520 |
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Facility management expenses |
1,984,471 |
2,245,133 |
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Total expenses |
21,844,407 |
20,968,143 |
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Supporting services |
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Governance |
3,167,035 |
3,143,390 |
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Health policy |
2,225,12 |
1,718,426 |
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Research and scientific affairs |
1,772,324 |
1,365,096 |
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Education, international services and marketing |
2,375,873 |
2,014,131 |
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Communications and public relation |
2,630,254 |
1,313,481 |
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General and administrative |
2,626,985 |
2,483,866 |
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Total expenses for supporting services |
14,797,597 |
12,038,390 |
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Increase (decrease) in unrestricted net assets before investment activities and MODEMS activity |
(590,097) |
1,108,193 |
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Investment activities Dividend and interest income on investment |
772,904 |
976,536 |
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Gain (loss) on investment funds |
(483,233) |
2,585,644 |
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Total investment activities |
289,671 |
3,562,180 |
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MODEMS expenses Increase (decrease) in unrestricted net assets |
(300,426) |
(459,173) 4,211,200 |
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Change in temporarily restricted net assets Contributions |
1,763,730 |
554,664 |
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Recognition of temporarily restricted funds Increase in temporarily restricted net assets |
(1,003,303) 760,427 |
– 554,664 |
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Combined increase in net assets |
460,001 |
4,765,864 |
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Net assets at beginning of year |
46,222,355 |
41,456,491 |
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Net assets at end of year |
$46,682,356 |
$46,222,355 |