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Three ways healthcare association executives can grow non-dues revenue 

Revenue growth and sustainability are often top-of-mind for society and association CEOs. In order to assist executives with their strategic decision making process, we analyzed the most complete, publicly available financial data from 2010–2014 and established a set of industry metrics, which societies can compare themselves against.  

We found that, on average, the society industry is seeing positive revenue growth, at 6 per cent Compound Annual Growth Rate (CAGR). Yet we see cause for concern across many areas: 

  • Dues revenue growth is decelerating
    As of 2014, the latest year of actual data, membership was at 19.3 per cent of society revenues. But we estimate that by 2020 the industry average will fall to below 16 per cent of total revenues. This does not take into account industry trends, such as the decline in medical school graduation rates and the changing consumer perception of a society. The next generation of physicians see less value in a society membership as their employers (groups and hospitals) provide many of the services doctors turned to the society for. 
  • Investment income has grown at an unprecedented rate
    Investment income increased from 4.9 per cent of revenues in 2010 to 8.3 per cent of revenues in 2014, a result of record-setting performances by the major stock market indices. Such dramatic growth is unlikely to be sustainable and it seems imprudent to continue to rely on investment growth alone to drive future revenue growth for Societies.
  • Salary expenses are outpacing revenue growth
    Salary expenses grew at a compounded annual growth rate of 7 per cent between 2010 and 2014. While overall headcount growth is part of this, one cannot understate the impact of skyrocketing benefits costs. 
  • Lack of investment in information technology
    Societies are only spending one to two per cent of revenue on IT. While traditional benchmarks call for three to four per cent of revenue spent on IT, we expect an even larger percentage for organizations the size of most societies. This lack of investment results in inefficient processes and an inevitable need for capital commitment to refresh legacy IT hardware and software.

Society Revenue Components

PA analysis of publicly available financial data

Taking all of this into account, and given the size and scale of medical societies, the best solution for executives is to grow non-dues revenue. This will enable societies to diversify their revenue streams and target new customers, thereby reducing the dependence on traditional sources, such as dues revenue. It will also offset the unreliable nature of investment income. 

Below we outline three options for executives to grow non-dues revenue; however, no society is limited to these levers. 

  1. Launch digital versions of existing products
    This can include converting current in-person classes to online courses, adding digital components to existing classes, or launching a data registry. We see clients actively pursuing digital initiatives with success. Many society education courses are strong candidates for cutting edge technology solutions, such as augmented reality, increasing the quality of education and scale at which societies offer courses. 
  2. Explore opportunities to add value to members and the broader ecosystem
    Several levers exist for societies to add value in their respective markets. These range from leveraging the data in a registry to drive research that improves the quality of care, to offering an insurance product to members. With such a wide array of options, having a formal product development methodology in place – from vetting the idea through implementation – is critical to ensure that only the most viable products or services are released and done so in a consistent manner.
  3. Expand internationally
    Many societies see international expansion as the logical next place for growth, with The Gulf as the most common location of interest. While international expansion can grow both dues and non-dues revenue, we see greater opportunity on the non-dues side. For example, expanding course offerings to new geographies is an easy first step to international growth. Course content tends to be geographically agnostic and requires significantly less initial investment from the society as offering a course electronically or in existing facilities are practical options.

Ensuring sustainability requires proactive planning and execution by society executives. Focusing on growing non-dues revenue is only one lever, but it is the one executives can best control while garnering the largest upside benefit.  Societies are not in immediate danger, but taking proactive steps now to build non-dues revenue positions a society for continued growth, relevancy, and sustainability.

Contact the author

  • Noah Lidman

    Noah Lidman

    PA strategy and operations expert

    Noah helps clients enter new markets, generate incremental revenue, and improve existing operations.

    Insights by Noah Lidman

Contact the healthcare team