Annual Report 2016: Sustainability

In 2016, we ensured our long-term sustainability, our brand, and our relevance to our Members and the public, retaining high-quality leadership and staff in touch with and adaptable to the changing needs and environment of our Members. The following milestones illustrate that we provided exceptional stewardship of AAO-HNS/F assets, enhanced industry support, and nurtured a culture of philanthropy. SUSTAINING THE VALUE OF THE BRAND Communications provided marketing, editorial, design, and content development support for all major Academy and Foundation initiatives including the new ENT clinical data registry, RegentSM, the Annual Meeting & OTO EXPOSM, Global Affairs, and Clinical Practice Guidelines. As the result of a comprehensive review of flagship publications, Communications planned and developed long-term initiatives that will assist the Academy to communicate and engage with Members, the healthcare community, and the public in new and innovative ways. To that end, the open access journal, OTO Open, launches in January as does a new personalized weekly newsletter. New publishing contracts for the Bulletin and Otolaryngology–Head and Neck Surgery will be finalized in the coming weeks. Communications highlights, which reflect the leadership and contributions of the Media & Public Relations Committee; journal Editor in Chief John H. Krouse, MD, PhD, MBA; and Bulletin Editor James C. Denneny III, MD, for this year include: Created and marketed this year’s theme: Value 4U: You Care for Patients. We Care for YOU. Conceived, filmed, and co-produced “How Do You Say Otolaryngology?” video for the Opening Ceremony of the Annual Meeting & OTO EXPOSM in San Diego, CA. Responded to more than 80 interview requests. Recognized health observance months/weeks and produced downloadable multi-media materials and content for individual and practice participation. Provided up-to-the-minute content with the AAO-HNS brand for the patient licensing program. Generated a 35.33 percent increase in the last year in unique visitors to ENTConnect, resulting in 171,369 page views. Visits to the Open Forum increased by more than 400 percent.  Bulletin: Expanded online circulation as a pilot project with targeted, timely patient information content, broadening value to Members and healthcare consumers. Introduced the new quarterly “Practice Profile,” spotlighting different types of practices, their challenges, and the value AAO-HNS provides. Added revenue with supported eblast of each issue’s table of contents. Otolaryngology–Head and Neck Surgery: Commenced the Resident Reviewer Development Program, pairing residents with experienced peer reviewer mentors, providing guidance and practice for the next generation of peer reviewers. Produced 13 new podcasts for a total of 91; 32,257 podcast downloads in the past year (9,756 more than in the previous 12 months). Published special focus sections: Patient Safety and Quality Improvement (December 2015, May 2016, and November 2016). Published a special issue: “40 under 40” in October 2015; the issue is composed of articles whose first authors were residents or young physicians at time of submission. Website (entnet.org): Unique visitors: 6.8 million (up 12 percent since August 2015) Sessions (total visits): 8.1 million (up 12 percent since August 2015) Page views: 10.3 million (up 11 percent from August 2015) Trending: “Find an ENT” tool increased traffic by 60 percent (556,000 potential patients) AAO-HNS FOUNDATION DEVELOPMENT The Development Coordinator, committee, and staff strive to create a culture of philanthropy within the Academy membership, communicate the importance of annual giving and its impact on the specialty, and prioritize exemplary stewardship of the gifts that have been so generously donated to the AAO-HNS Foundation (the foundation). Development efforts this year focused on raising awareness about the foundation and how donor gifts are used to support the specialty, today and tomorrow. New branding was introduced to emphasize the philanthropic aspect of the foundation, using the tag line where dues stop and philanthropy begins. Communication about what is the foundation, why donate to the foundation, and ways to donate to the foundation was developed and added to the website. The foundation’s donor recognition club, the Millennium Society, had 273 members in 2016, including three new members at the lifetime giving level, six new members at the Sustainer level and 20 new members included in the Millennium Society who were not included in the previous year. As a way of thanking donors for their generosity, a special lounge at the Annual Meeting is created exclusively for donors who are part of the Millennium Society. At this year’s Annual Meeting in San Diego, we welcomed 109 donors in the lounge and hope to increase that number in Chicago! Strategic goals were met for the year with a 10 percent increase in the number of donors and increases in the dollars raised both for the Annual Fund and the Hal Foster, MD Endowment. Donations to the Annual Fund for FY16 were $157,000, used to fund CORE grants, travel grants, humanitarian and international programs, and other programs, not supported by dues or fees, to improve quality and patient care. Endowment donations were just under $200,000, invested to generate earnings to support foundation programs in future years. The “Legends of Otolaryngology” fundraising program honoring an otolaryngologist who has made significant contributions to the specialty, kicked off in San Diego, where the first legend to be honored, M. Eugene Tardy, Jr., MD, delivered the inaugural Legends lecture: “‘Mosquetors Verry Trublesum,’ the Fascinating Medical Travails of the Lewis and Clark Expedition.” Dr. Tardy did not disappoint. Approximately 500 guests filled the room, all of whom we hope will consider a donation to the Annual Fund, of any amount, in honor of Dr. Tardy and what he means to the specialty. We thank all donors who have made a charitable gift to the foundation. These donors are the bedrock of providing the funding needed to support the AAO-HNS Foundation’s programs today and ensuring the future of the specialty for generations to come. ANNUAL MEETING SPONSORSHIP & INDUSTRY SUPPORT Key components to the success of creating Value 4 attendees of the Annual Meeting are the partnerships developed with industry. Through the efforts of the Global Education, Meetings, and Strategic Partnership Business Unit, the financial support from industry has increased by 22 percent compared to last year. We were able to offer more and enhanced sponsorship opportunities at the 2016 AAO-HNSF Annual Meeting & OTO EXPO. The total financial support was $705,000. Some of the additional and enhanced sponsorship opportunities included: Introduced electronic banner ads and highlighted listings in the meeting mobile app to provide the opportunity for the attendees to interact with the sponsor. Provided additional exposure to industry partners throughout the convention center and a number of hotels within walking distance of the convention center. Provided the opportunity to receive support for food and beverage for the attendee breaks. The sponsorship and support included three components, which are Corporate Marketing and Sponsorship, Corporate Sponsored Education Initiatives, and Unrestricted Grants. AAO-HNS ACADEMY ADVANTAGE The Academy Advantage program continues to provide Members with special discounts on products and services to assist in providing relevant solutions to the challenges Members and their medical practices are facing. Following are the Academy Advantage trusted companies that participate in the program, which in return provides financial support for AAO-HNS/F mission and objectives.       PREMIER PARTNERS The Doctors Company – Medical Liability Insurance Health eCareers: online Career Board and Career fair at the Annual Meeting Officite – Website Design/Marketing     PARTNERS AllMeds: Electronic Health Record (HER) and Practice Management Solutions Services Rendia (formerly Eyemaginations): In-Office Patient Education Optum™: Coding Resources FINANCIAL REPORT FISCAL YEAR 2016 (FY16) Expense savings of almost 23 percent more than absorbed a 4 percent shortfall in revenue leading to a positive contribution to net asset reserves for the fiscal year July 1, 2015 – June 30, 2016 (FY16). Significant savings were realized in staff related costs, including consolidating 10 management positions into seven, and in consulting expense, where contingency budgets were in place that were not necessary to use. Contributing to the shortfall in revenue was lower than expected Annual Meeting attendance in Dallas and lower membership retention, budgeted at 94 percent but realized at 92 percent. While a break-even budget had been planned, a positive (unaudited) $3.6M variance from the break-even operating budget was realized for the fiscal year. Investment and other non-operating activity netted a loss of $1.1M, mainly due to unrealized losses related to investments. Combining operating and non-operating activity, the combined (unaudited) contribution to reserves for FY16 was $2.5M. While there was a positive addition to net asset reserves for the year, there was a $1.3M use of reserves to fund certain non-recurring items. The Board designated net asset reserves be used to fund: $900,000 of start-up costs to design, create and build Regent℠, the first otolaryngology specific data registry; $107,000 for costs to relocate and build-out new space in the headquarters building for the John Adams History Museum; and $305,000 for annual debt service related to the purchase of the headquarters building. As of June 30, 2016, unrestricted net asset reserves were $18.8M, of which approximately $3.5M was designated by the Boards of Directors to be used for specific purposes in future years. Restricted net assets were $6.4M, divided between those that are available for spending as directed by the donor, $1.8M, and those that form the corpus of the Hal Foster, MD Endowment, $4.6M, and are to be retained into perpetuity. Approximately $390,000 of FY16 programing was funded by restricted net assets and endowment earnings. For a copy of the independent audit of AAO-HNS/F’s FY16 financial statements contact CHanlon@entnet.org. The budget for the current fiscal year July 1, 2016 – June 30, 2017 (FY17), was approved by the Boards of Directors in May 2016. Again, a break-even budget is planned, where revenue and expenses both equal approximately $19M. A few significant changes distinguish the current year budget from the prior year: meeting and exhibits revenue is based on an increase in registrants for the Annual Meeting in San Diego, investment interest and dividends are no longer budgeted to be used for operations, and reliance on the use of net asset reserves to fund the start-up of Regent℠ is limited to funding only consulting costs. These changes were made to factor into the budget the expense savings operationalized in FY16, and prior years. They reduce the dependency on net asset reserves and investment activity to fund operations and special projects. As an intended consequence of these changes, the level of year-end positive variances is expected to diminish over time as operating revenues are used for expenses in place of using net asset reserves and investment income. A balanced budget is required to comply with the debt covenants of the headquarters building financing. The budgeting process is integrated with the AAO-HNS/F strategic plan and involves the efforts of elected leadership, the Boards of Directors, Executive Committee, and the Finance and Investment Subcommittee. Leadership and staff continue to be prudent stewards of the organization’s financial resources as decisions and strategies for the organization are developed going forward. Recognizing that without revenue growth, expenses will eventually exceed revenue due to inflation alone, conservative spending, even where a positive variance may be realized, continues to be the approach of management. AMERICAN ACADEMY OF OTOLARYNGOLOGY – HEAD AND NECK SURGERY/FOUNDATION Unaudited (Rounded) Consolidated Statement of Revenue and Expenses For the 12 Months Ended June 30, 2016 DESCRIPTION ACTUAL FY16 % BUDGET FY17 % REVENUE Membership Dues $           6,730,000 35% $           6,850,000 36% Meetings and Exhibits  6,320,000 33%  6,960,000 36% Product and Program Sales  1,580,000 8%  1,693,000 9% Publications  1,179,000 6%  1,225,000 6% Royalties  480,000 2% 335,000 2% Corporate and Individual Support  760,000 4% 825,000 4% Investment Income – Interest and Dividends  380,000 2% – 0% Other Revenue  180,000 1%  128,000 1% Use of Donor Restricted Net Assets  390,000 2%  246,000 1% Use of Board Designated Net Assets 1,330,000 7%  889,000 5% Total Revenue $            19,329,000 100% $          19,151,000 100% EXPENSES Salaries and Benefits $             7,764,000 49% $            8,613,000 45% Occupancy  1,586,000 10%  1,579,000 8% Office Expenses  839,000 5%  866,000 5% Communications and Software  466,000 3%  612,000 3% Travel  352,000 2% 454,000 2% Meetings  1,272,000 8%  2,117,000 11% Printing and Production  483,000 3%  494,000 3% Consultants and Professional Fees  2,490,000 16%  3,913,000 20% Grants  462,000 3%  503,000 3% Total Expenses $           15,714,000 100%  $         19,151,000 100% Change in Unrestricted Net Assets from Operations $             3,615,000 NON-OPERATING ACTIVITIES Realized and Unrealized Net Loss on Investments $            (351,000) Unrealized Loss on Interest Rate Swap Agreement  (1,284,000) Non-operating Other Revenue  560,000 Change in Unrestricted Net Assets from Non-Operating Activities $             (1,075,000) Total Change in Unrestricted Net Assets $             2,540,000