AAOS stands on strong foundation
As I begin my year as president of the AAOS, I would like to provide you with a snapshot of the financial and programmatic status of your Academy. Recently, some pessimists painted a gloomy financial future for the Academy. Despite their negative objections, however, I can tell you that our financial foundation has never been stronger and that 2003 was a banner year for the Academy.
With an annual budget of more than $40 million, the AAOS noted a 2003 operating income of nearly $600,000. This healthy surplus is attributable to both decreased expenses and increased income. A leadership review group — the first vice president, second vice president, immediate past president, treasurer and chief operating officer —critically reviews the budget and measures of success for each major program and department.
Last year, several programs that had either completed their goals or were no longer central to the AAOS mission were discontinued. Budget decreases for several departments were recommended to the Board of Directors. All new 2003 programs and initiatives required a business plan and measures of success prior to Board approval. The Finance Committee teleconferenced on a near monthly basis to scrutinize these business plans. As a result of this fiscal discipline, expenses were held flat for the year.
Income for AAOS operations traditionally is derived from three major sources — Annual Meeting revenues, fellowship and member dues, and sales of educational products.
Our successful 2003 Annual Meeting in New Orleans brought in more than $10 million in income. This is quite a remarkable feat given the fact that, unlike most medical association meetings, registration is free for fellows and international members.
The 2004 meeting under the leadership of my predecessor, James H. Herndon, MD, will be even more profitable for the Academy, when all costs and revenues are totaled. Overall registration was nearly 30,000, the second highest ever for our association. Member attendance was 9,523, a record for the Annual Meeting. More than 3,900 international surgeons attended, and more than 400 orthopaedic residents benefited from the Fourth Annual Resident Symposium on Practice Management. More than 800 orthopaedic surgeons attended the Board Review Course, and more than 31,000 Instructional Course Lecture tickets were purchased. Industry exhibits numbered 419 and 30 to 40 exhibitors were turned away because of space constraints. The meeting was an unmitigated success thanks to the hard work of the staff and the Annual Meeting Committee and its chair, Richard Kyle, MD — our newly elected second vice president.
The May 2003 fellowship dues increase did change the relative percentage of revenues dues contribute to our annual budget. This dues increase, however, was specifically planned and implemented to cover valuable new member benefits including Orthopaedic Knowledge Online, subscription to the Journal of Bone and Joint Surgery, and our expanded communication and health policy initiatives. Dues now represent slightly more than 30 percent of our annual revenues, a significantly lower percentage than in nearly all other large professional associations.
Revenues from educational products vary from year to year depending upon what new publication titles are released. The next edition of the popular Orthopaedic Knowledge Update, OKU8, will be marketed in 2004 for release in 2005, and increased sales of other texts targeting non-orthopaedic physicians, medical students and the public are expected this year.
Meeting challenge of competition
At its December 2003 workshop, the Board of Directors analyzed the current marketplace for orthopaedic educational materials and will be working with the Conway Consulting Group to ensure a continued strong marketplace for AAOS products. A similar in-depth review of AAOS continuing education (CME) courses will be conducted this year.
The orthopaedic CME market is rapidly evolving and new strategies of collaboration with specialty societies and orthopaedic industry will be necessary. The AAOS track record for educational products and courses is unsurpassed, and the Board is committed to continuing this strong tradition.
A new, previously untapped source of revenue is our recently established OREF/AAOS Development Office, under director Dane Duval. Dane will be exploring and cultivating relationships with corporate America to partner in various AAOS education, research, communication and public awareness programs and initiatives.
Although these collaborative programs must be planned with the highest ethical and professional standards, they promise to enhance the AAOS impact on the musculoskeletal health of our patients and the public.
Favorable financial signs
Finally, the AAOS investment portfolio increased in value by more than $5 million during 2003. The increase more than offset investment losses from the three previous years during the stock market decline. AAOS investment reserves are sufficient that we can easily weather the year-by-year fluctuations in our operating gains and losses. The addition of our new Chief Financial Officer, Rich Stewart, will help ensure our continued fiduciary stability.
All of these favorable financial signs mean that we will have more than adequate funds to move ahead with current and future programs in education, communication, research, academic affairs and health policy. Your Academy dollars will be well spent to bring value to the fellowship. In future messages, I will update you on the progress of specific programs. In the meantime, I encourage you to contact me with your concerns and ideas.
Robert W. Bucholz, MD