American Medical Association Business Information, Profile, and History

Company Perspectives:

Core Purpose: To promote the science and art of medicine and the betterment of public health.

History of American Medical Association

The American Medical Association is the oldest and largest advocacy group representing American physicians. The AMA represents about one-third of the nation's doctors. It publishes the weekly Journal of the American Medical Association, one of the most prestigious and influential American medical journals, as well as a host of other journals and books. Members have access to data services and to insurance through its insurance arm. The AMA is one of the nation's leading lobbying forces, and its political action committee, which dispenses money to political campaigns, is also one of the nation's wealthiest. The association runs awareness campaigns on health issues and works to shape governmental policy that affects doctors and patients. The AMA derives about one-quarter of its revenue through its annual membership fees. Other revenue comes from corporate grants and from sale of its publications and data services. Policy for the AMA is set by its 550-member House of Delegates.

Roots in the 19th Century

The American Medical Association was founded by a group of doctors in 1847 who were affiliated with various local and state medical associations. The doctors were concerned that medical education in America was not regulated on a national level. Medical schools had inconsistent standards of what students had to study and master to graduate as 'physicians.' A school that termed itself a 'medical' school might actually have a curriculum that deviated from what had become 'traditional' medicine--healing arts associated with mystic beliefs or unscientific precepts. The AMA opposed healing approaches such as homeopathy, a popular system based on the beliefs of a German physician that prescribed tinctures of herbs and minerals that had been so diluted as to render them biologically inactive. AMA members were traditional medical doctors, and the organization tried to ensure that institutions calling themselves medical schools were not teaching alternative or spiritual healing. It also called for the raising of educational standards. Even the nation's leading medical schools, such as Harvard and Yale, turned out sadly underprepared doctors, and many other medical schools operated neither entry or exit requirements, accepting all who could pay and granting degrees to all who completed the course. The AMA also tried to combat the prevalence of 'quack' medicines--potions with secret ingredients of doubtful use or safety, which were widely available before the invention of modern drugs. By 1849 the AMA had established a committee to educate the public about the dangers of quack medicines. The AMA also sought to raise standards of medical journals. Many scientific journals flourished briefly in 19th-century America, and few gave any guarantee that what they published was factual. In 1882 the AMA founded its Journal of the American Medical Association (JAMA). The Journal promoted the AMA's views, and set itself high journalistic standards. Nathan Davis, one of the founders of the AMA, was the first editor, and it was published by a firm in Chicago. That city became national headquarters for the association.

The early AMA was a loosely organized group, and it was only one among many American medical associations. By 1901, the AMA had mostly failed in its efforts to influence national medical policy, and the group decided to reorganize. The association adopted a new structure in 1901. Abandoning its early structure of state and local chapters, the group adopted a new constitution in 1901 that gave it a more national character. Decisions were to be carried out by an elected body called the House of Delegates. In 1902 the AMA adopted official permanent headquarters in Chicago. The group was now a nonprofit corporation with the power to conduct business anywhere in the United States. After the reorganization, the group redoubled its efforts to raise standards of medical education. In 1906 the AMA put out its first directory of medical schools. It also put out a directory of licensed physicians that year. After the reorganization, the AMA began to grow quickly, with many states doubling or tripling their membership. By 1906, the AMA had 50,000 members nationwide. The rejuvenated group continued its crusades to promote higher educational standards and to combat medical fraud and quackery. It also put out more journals, following JAMA with the Archives of Neurology and Psychiatry in 1919 and the Archives of Surgery in 1920.

Response to Reform in the 1920s and 1930s

The AMA continued to grow through the 1920s and 1930s. The group spoke authoritatively on a variety of health issues, influencing national policy on such questions as food safety and psychiatric evaluations for people accused of crimes. This was an era of broad social reform, when labor-rights issues were prominent. Reformers and legislators worked to pass laws guaranteeing workers old-age pensions and reimbursement in case of injury. Many reformers were interested in passing legislation that would give workers mandatory health insurance coverage, thus ensuring them of medical treatment. The AMA registered its opinion on compulsory health insurance in 1920, when its House of Delegates passed a resolution condemning any national health insurance policy. The group feared that government would interfere in the relationship between doctor and patient, and that physicians would not be adequately compensated for their services under a compulsory insurance system. Throughout the 1920s, the AMA opposed changes in the way physicians were paid. It disapproved of contract medical practices, in which, for example, a mining company paid a doctor a salary to look after its workers at a mining camp. It also disapproved of group hospital plans, whereby employers or groups would pay a lump fee to hospitals to cover hospitalization costs for its workers or members.

By 1933, the Great Depression had exacerbated already existing problems in the nation's medical care. Huge numbers of unemployed could not afford to pay doctors, and there was no national policy for dealing with this crisis. The AMA worked with the Roosevelt administration in drawing up some legislation that affected health care. For instance the AMA approved the administration's plan to have the government pay for medical care for federal employees under the Civil Works Administration, enacted in 1933. But the AMA continued to oppose any broader form of national health insurance. The AMA had formed a Bureau of Medical Economics in 1931, which spoke out against any insurance plans that might change the way doctors were compensated. The group put out pamphlets, spoke on the radio, and supplied high-school debating teams with material backing the AMA's position against compulsory insurance. The Social Security Act was passed in 1933, giving all Americans retirement benefits. But largely because of the vociferous opposition of the AMA, the act lacked any national compulsory health insurance. The AMA continued to oppose group health insurance practices in the 1930s, until in 1938 a federal prosecutor pressed charges against the group for threatening to expel doctors who worked for a non-profit cooperative Group Health Association in Washington, D.C. The case was long and complex, and eventually, the AMA paid a fine.

Meanwhile, the AMA continued to crusade against quack medicines. In 1936 the AMA began offering its Seal of Acceptance to food manufacturers who passed standards of safety and hygiene and who did not advertise unproved benefits of their products. The association also spoke out on issues of general nutrition. It recommended enriching milk with vitamin D in 1936, and promoted the use of iodized salt to prevent hypothyroid disease. In 1938 the AMA published a book called The Normal Diet. This was the first comprehensive and authoritative listing of what Americans should be eating.

A Strong National Voice in the 1950s and 1960s

The AMA continued to work on familiar issues during World War II and after. The group promoted public health issues such as the fluoridation of drinking water and the curbing of drunk driving. It worked on medical education standards, forming a new committee in the 1940s to accredit programs granting medical degrees in the United States. In 1950, the AMA's Council of Medical Education published for the first time a list of foreign medical schools that met the AMA's standards.

At the same time, the AMA continued to lobby Washington against national health insurance. When President Truman again raised the idea of mandatory national health insurance in 1948, the AMA quickly spoke out against it. The AMA began levying dues from its members for the first time in 1949, which gave the organization ready cash to pay for publicity. Over the 1950s, the association spent millions of dollars on various campaigns to influence opinion against national medical insurance. This fight intensified in the 1960s, when John F. Kennedy came to office pledging to provide medical insurance for the indigent aged, a program that became known as Medicare. The AMA spent heavily to block Medicare. The group claimed 180,000 physician members at that time, and all received posters and pamphlets for their offices to inform patients of their doctor's opposition to Medicare. Its writers produced speeches for members' use, put out radio advertisements and full-page ads in big-city newspapers, and came up with instructions for the AMA's Women's Auxiliary to begin a letter-writing campaign. In 1961 the AMA began contributing money to politicians' election campaigns. As a nonprofit organization, the AMA could not contribute money directly, but it set up an organization called the American Medical Political Action Committee, or AMPAC, to filter money to its candidates. AMPAC apparently had vast resources from the beginning and is still one of the wealthiest political action committees in the nation.

The AMA brought in revenue through annual membership dues and by selling advertising in its publications. Ad revenues rose in the 1960s, peaking in 1967 with $13.6 million, which was more than 40 percent of the organization's total revenue. After 1967, however, advertising revenue fell sharply following the enactment of new regulations by the Food and Drug Administration that slowed the process of bringing new drugs to market. As a result, pharmaceutical companies cut their advertising budgets, and the AMA found its income shrinking. The AMA raised membership dues to take up the slack, bringing them up from $45 to $70 in 1967. Inflation and the lack of advertising revenue put the association in a perilous financial position at the end of the 1960s, and the AMA began the 1970s in the red.

The 1970s and 1980s

In the early 1970s the AMA began to lose members when several state chapters stopped requiring their members to be AMA members as well. Mostly as a result of this, the AMA lost 11,671 members in 1971. The association was unable to convince board members to raise membership dues enough to make up for lost revenue. At the same time, journal publishing costs were rising quickly. By 1974, the AMA was at the point of having to borrow money to meet its payroll. A new president, James Sammons, took over that year, and he immediately instituted financial reforms. The AMA shut down some of its committees and cut some staff. Members were asked to send in a special $60 assessment to ease the organization's plight. This raised $7 million in 1975. Sammons and a fiscal committee reviewed the dues-collection system and worked actively to recruit members. The AMA began operating under a strict fiscal plan that aimed for increasing membership fees to cover operating costs for a period of five years. Though the number of regular members declined in the late 1970s, growing numbers of residents and students signed up. In 1975 the AMA had just over 179,000 total members. 8,700 were residents, and 8,100 students. By 1982, total membership was 213,400. The number of residents and students had risen sharply, to 27,900 and 26,900, respectively.

Sammons also overhauled the association's publishing ventures. A single group vice-president for publishing became responsible for all publications, and all were reviewed. As a result, some ceased to publish, and others were sold. By 1979, the AMA's publishing division was financially sound. It began bringing in money through new projects with broad consumer appeal, such as the AMA Family Medical Guide, published in 1982.

With its finances under better control, the AMA continued to fund national campaigns on public health issues in the 1980s. In 1981 the group recommended more study on the effects of dioxin and Agent Orange, chemical defoliants deployed in the Vietnam War, which could have lingering health effects. The AMA also began a renewed campaign to curb the harmful effects of alcohol in 1982. It called on its state chapters to work for legislation that would raise the legal drinking age to 21. The AMA began educating physicians and healthcare workers in 1984 about the symptoms and treatment of child abuse and neglect, and in 1985 the organization began working toward nationwide curbs on tobacco smoking. The AMA called for a ban on tobacco advertising, and also supported legislation that banned smoking on public transportation. That year the AMA also began an education campaign regarding AIDS that continued through the 1980s.

The 1990s and Beyond

Though total membership in the AMA continued to grow, the percentage of doctors who belonged to the organization declined from the mid-1960s on. At the height of the group's campaign against Medicare, the AMA claimed at least 70 percent of American doctors as members. By the mid-1990s, the AMA represented only about 40 percent of American doctors. The group spent lavishly on its public outreach campaigns, backed by money from its for-profit arms such as its successful publishing division. But revenue from membership did not keep up. The group lost money in 1993 and 1994. A sharp increase in advertising revenues made up the loss in 1995, but by the mid-1990s it was clear that the physicians' group was troubled. Close to 90 percent of doctors over the age of 70 were members, but fewer than 35 percent of those aged 30 to 49. The group had worked hard to sign up students and residents at reduced rates, but the full rate for regular membership was over $400 in the mid-1990s, and apparently many younger doctors felt the price was too high. At the same time, the AMA had taken increasingly conservative political stances, and its political involvement in Washington often displayed mixed motives. For instance, although the group endorsed gun control as a public-health issue, its political action committee also gave generously to the campaigns of politicians who were outspoken supporters of the National Rifle Association. In 1997, the AMA suffered a scandal when it revealed an arrangement it had signed with the Sunbeam Corporation, a small-appliance manufacturer, to give the firm's goods an AMA seal of approval in exchange for royalties. AMA members protested that the arrangement tarnished the group's image. The AMA was forced to break the deal with Sunbeam and eventually had to pay substantial damages to the company. The fracas meant a new loss of members, and that, combined with the payment to Sunbeam, sent the AMA into the red once again. The group also lost money in 1999, ending the year with a loss of $5.4 million. Revenue from dues continued to shrink, and the organization had also had to spend millions to prepare its computers for the year 2000.

The group continued to struggle with ways to attract and retain members in the 2000s. At a meeting in June 2000, the AMA revealed a new plan, to let doctors pay a one-time fee to join for life. At the same time, the AMA entertained proposals to drop dues altogether, and automatically grant membership to all American physicians. By 2000, the AMA claimed only about 30 percent of American doctors as members. The organization had struggled with dwindling membership for decades, and the trend did not seem as if it would reverse easily.

Faced with this probability, the AMA looked for ways to trim its budget and to bring in more money. At its 2000 national meeting, the group announced it would begin to peddle its information technology services. The AMA's executive vice-president, E. Ratcliffe Anderson, claimed in an article in Modern Healthcare (June 19, 2000) that the AMA was 'probably the most data-rich entity anywhere in the world of medicine.' Information technology initiatives, such as a new online health network called 'Your Practice Online,' would bring the group the financial success it needed in order to continue to fund its work.

Principal Competitors: American Nurses Association; American Academy of Family Physicians. Booth, Bonnie, 'AMA Seeking New Lifetime Membership,' American Medical News, August 7, 2000, p. 17. Burrow, James G. AMA: Voice of American Medicine, Baltimore: Johns Hopkins Press, 1963. Campion, Frank D. The AMA and U.S. Health Policy Since 1940, Chicago: Chicago Review Press, 1984. Dreyfuss, Robert, 'Which Doctors? The AMA's Identity Crisis,' New Republic, June 22, 1998, pp. 22-26. Fishbein, Morris. History of the AMA 1847-1947, Philadelphia and London: W.B. Saunders, 1947. Gibbons, Don L., 'Dr. Sammons Weathering Storm,' Medical World News, December 25, 1989, p. 17. Gorman, Christine, 'Doctors' Dilemma,' Time, August 25, 1997, p. 64. Harris, Richard, 'Medicare: We Do Not Compromise,' New Yorker, July 16, 1966, pp. 35-70. Jaklevic, Mary Chris, 'AMA Loses Millions,' Modern Healthcare, June 14, 1999, p. 3 ------, 'AMA's Profits Climb 17% in 1996,' Modern Healthcare, June 23, 1997, p. 20. McCormick, Brian, 'Re-Organized Medicine,' American Medical News, February 2, 1998, p. 7. Melcher, Richard A., 'The AMA Isn't Feeling So Hot,' Business Week, September 1, 1997, p. 33. Thompson, Elizabeth, and Kristen Hallam, 'AMA Reminds Members of What It Can Do,' Modern Healthcare, June 19, 2000, p. 6.

Chronology

• Key Dates:

• 1847: AMA first meets in Philadelphia.
• 1882: AMA founds the Journal of the American Medical Association. 1901: The group reorganizes.
• 1935: AMA successfully inhibits passage of national health insurance as part of Social Security Act.
• 1949: AMA begins charging membership dues.
• 1974: The association is near bankruptcy.
• 1997: AMA celebrates its 150-year anniversary.