During the pandemic, Allison Gault, CAE, director of member engagement at the Medical Group Management Association, began to get calls from several of MGMA’s state affiliates.

“They were in financial trouble,” Gault said. “Before the pandemic, we had 49 state affiliates. Now we’re at 44, because five had to close for financial reasons.”

Through internal discussions, MGMA realized that it needed to know how the state affiliates were performing and determine how to step in to support them if needed.

“We decided to create a benchmarking report looking at key performance indicators (KPIs),” Gault said. “We had collected data from affiliates for years, like information on acquisition and retention, but we hadn’t assessed financial stability.”

Just as they measure strategic, financial, and operational targets for associations or even volunteer groups, KPIs can be a useful tool for associations to measure the performance of chapters and affiliates.  

Starting and Gathering

According to Gault, it’s important that financial performance is included along with retention, acquisition, and engagement when it comes to KPIs for affiliate groups.

“If an association can’t continue operating due to a lack of reserve funds where the annual expenses continue to exceed their revenue, membership retention and acquisition don’t matter much,” she said. “Measuring one without the other won’t provide a well-rounded view of the chapter or affiliate.”

To effectively measure affiliate finances, MGMA purchased ASAE’s Operating Ratio Report, which included a financial stability ratio that looked at assets and total expenses. In the event of a disaster that causes a major revenue driver to decline, the association wanted to know if the affiliates could continue operating.

“We also examined financial statements to ensure they made sense,” Gault said. “For example, if total membership count is 200, the cost per membership is $125, but the revenue on the profit and loss statement is $2,000, that would be a discrepancy, and we’d follow up.”

Gathering the data wasn’t easy. Not only was it sensitive, but there was also some concern over what the national association would do with the data.

“Our state affiliates aren’t chapters,” Gault said. “They’re separate entities with their own tax IDs, bylaws, and articles of incorporation. We understood their concern, so we reminded them that the report is in their and their members’ best interests. We also expressed the value they provide to members on the local level that we could never replicate.”

Sharing and Helping

After collecting the data in February and March 2023, MGMA released the report in June. The final report measured four key areas: member retention, financial stability, member acquisition, and meeting the requirements for being an MGMA affiliate.

The report card was out of 100 points, and MGMA allotted points as a percentage based on what the affiliate achieved. For the financial metric, affiliate could be given up to 40 points. If the affiliate met or exceeded the ratio, they got the full 40 points. Membership retention also had 40 points, while the membership acquisition KPI and the engagement KPI were each 10 points.

“We want affiliates to see that these benchmarks are appropriate not just to measure success but also viability.”

Each KPI was given a color rating—red, yellow, or green. Red indicated a concern or issue that needs to be addressed immediately, a yellow rating meant there could be an issue that needed to be monitored, and green indicated that the affiliate met or was exceeding the benchmarks. In addition, MGMA assigned a color rating to the total points, red (scores lower than 65), yellow (scores between 65 and 84), and green (scores 85 and above).

“We offered to set up calls to help affiliates, especially for those who received a red in any KPI,” Gault said. “MGMA has over 100 staff members who can help manage these areas, whether it’s negotiating contracts with hotels, planning retention campaigns, or navigating member acquisition.”

Since releasing the reports, affiliates are using the benchmarks to improve. According to Gault, several have let MGMA know that they’re making progress and have asked to have their financial ratios recalculated.

“That’s exactly what we want them to do,” Gault said. “We want affiliates to see that these benchmarks are appropriate not just to measure success but also viability.”

MGMA hopes that with this knowledge, affiliates will continue reviewing their data to determine whether they’re improving or if they need to make necessary strategic changes.

“Like any business, there must be a balance between evaluating the essentials of what an association provides and its financial health, and our KPI report measures that,” Gault said.

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