Stung by extensive criticism, the American Medical Association Thursday tried to back away from its exclusive product endorsement deal with Sunbeam Corp., but Sunbeam said it won’t let go.
“We got a second opinion from the American people,” Lew Crampton, AMA vice president for communications, told a press conference at the Chicago headquarters of the nation’s largest physicians’ group.
The endorsement deal was a mistake hatched by the AMA’s marketing department that didn’t get a complete hearing within the organization before it was signed, said Crampton.
“I learned about it from reading a newspaper,” Crampton told reporters, saying the five-year endorsement deal “got into the realm of large dollars and big money” that would give the AMA a cut of Sunbeam product sales.
Crampton said that Sunbeam approached the AMA seeking product endorsements.
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That was disputed by Albert J. Dunlap, Sunbeam chief executive, who said the AMA approached his company, that Sunbeam had negotiated for several months with top AMA executives in good faith and that his company expects the AMA to honor its contractual obligations to endorse Sunbeam products.
After the AMA press conference, Dunlap issued a statement saying that if the doctors’ group doesn’t endorse his products as agreed, “We will not hesitate to take all necessary actions to ensure that the rights of Sunbeam and its shareholders continue to be protected.”
Despite the prospect of a public fight, the AMA had little choice but to try walking away from the deal, said several national medical experts.
“It was critical for the (AMA) to make a correction,” said Dr. Arnold Relman, editor-in-chief emeritus of the New England Journal of Medicine. “What they did (with Sunbeam) was a terrible mistake that undermined all of their efforts to become a leader in restoring the public’s confidence in the medical profession.”
The AMA’s mess stems from a bureaucracy that runs the group like a money-making business rather than a professional organization, critics say.
“The marketing guys are in there trying to make as much money as they can, and they’ve lost sight of the fact that it’s a health organization representing doctors, not a private enterprise out for a profit no matter what,” said one former AMA employee.
The endorsement deal, announced last week at a hardware trade show in Chicago, would give Sunbeam the right to use the AMA seal on its product packages for five years.
The AMA’s top officials said that won’t happen, but the organization will produce health information for insertion inside product packages. It will accept only small amounts of money from Sunbeam to cover the cost of preparing the inserts rather than a percentage of product sales, AMA officials said, and the deal won’t be exclusive to Sunbeam.
Critics said the decision to endorse one company’s product line exclusively without even doing product testing was nothing less than the sale of the AMA’s name, a move that would destroy the group’s credibility.
“They have put their foot into an awful mess, and I hope they can get it out quickly,” said Dr. John Bailar, chairman of health studies at the University of Chicago. “What you have there is a bureaucracy running far ahead of the organization’s best interests.”
The Sunbeam deal isn’t the AMA’s first fiasco resulting from efforts to make money.
Recently, the AMA was involved in a cable TV show with CNBC in which the organization lost millions of dollars. A magazine venture with Good Housekeeping also failed to make money.
On the other hand, the organization has for years been involved in lucrative buying and selling of real estate in Chicago’s River North area west of Michigan Avenue.
“Everybody at the AMA is encouraged to be entrepreneurial, to try to leverage their revenues and stretch them as far as possible,” said Dr. William Hendee, a former AMA executive who now is a vice president with the Medical College of Wisconsin.
“I suspect the Sunbeam thing sounded like a good deal and people at the AMA just didn’t anticipate the negative reaction.”
The AMA claims to have 300,000 members, although many doubt the actual number of physician members paying full dues is much above 260,000. This is far below the 675,000 medical doctors in the United States eligible for membership.
Most physicians join organizations concerned with their specialty, such as the American College of Surgeons or the American College of Physicians. Getting them to join an umbrella group seeking to represent all doctors isn’t easy.
On one hand, the AMA has to appear to be a powerful voice in Washington, and clout doesn’t come cheap, but on the other hand, it can’t keep raising dues to finance its lobbying and other activities.
“This brouhaha is an example of the AMA overreaching,” said Dr. Quentin Young, chairman of the Health and Medicine Policy Research Group, a Chicago-based advocacy organization.
“They make money in several venues–publications, insurance, senior trips and real estate–but this time they got caught with their hand in the cookie jar. It is just an extension of what they’ve done for years, but they crossed a line without knowing it and did something so blatantly commercial that it looks terrible.”
Despite the embarrassment caused by the Sunbeam deal and the failure to have it properly reviewed, no one will be fired, said AMA spokesman Crampton, although the board of trustees will launch a thorough review of what happened at its meeting next month.
Public health advocate Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group, based in Washington, has called upon the AMA trustees to fire executive vice president Dr. P. John Seward, and vice president for marketing Larry Jellen, the officials most directly responsible for the Sunbeam marketing alliance.
If Sunbeam persists in demanding that the AMA endorse its products, the public may begin to view the doctors’ group as a victim of corporate greed rather than a willing participant in it.
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By admitting openly and quickly that they made a mistake, AMA officials are reaffirming that “ethics matter,” said Uwe Reinhardt, professor of health economics at Princeton University.