Company posts revenue and net income gain despite an uncertain health care environment
PHILADELPHIA — Independence Health Group, Inc., (Independence) the parent company of Independence Blue Cross, LLC, experienced continued year-over-year topline financial growth for 2016, reporting record total revenue of $16.7 billion, an increase of 21 percent, and net income of $67 million, or 0.4 percent of total revenue.
While Independence ended 2016 in a favorable position, the company continued to face significant challenges in the health care industry – most notably market volatility tied to the individual market as well as rising medical costs, and taxes that are uniquely targeted at health insurers. Special Enrollment Period (SEP) membership has been an ongoing challenge as these members generally drive medical care cost ratios 25 percent higher than the company’s members who enroll outside of SEP. Additionally, in 2016 Independence paid $802 million in federal, state, and local nonpayroll taxes, including $236 million in Affordable Care Act related taxes and fees, $285 million in gross receipts tax, and $100 million in state premium taxes.
“Despite on-going uncertainties in health care, we successfully executed our multi-year strategy of growth and diversification — allowing us to pursue opportunities that positively impact our members, customers, and our community,” said Independence President and CEO Daniel J. Hilferty. “Through our Facilitated Health Networks model, we are changing the marketplace by collaborating – on behalf of our members – with health systems, doctors, and other health care professionals to better coordinate patient care, exchange critical data, and share accountability for both quality and cost of care.”
“There were two significant drivers of our financial success in 2016 — improvement in operating earnings driven by strong results in our Medicare and other key segments, as well as execution of management actions within our pharmacy benefits management contract and our physician-centric accountable care organization,” said Gregory E. Deavens, Independence executive vice president, chief financial officer, and treasurer. “Our financial foundation ensures that we are prepared to weather the ever-changing health care environment.”
Hilferty continued: “As we look ahead, we continue to drive innovations that support our members’ health and well-being, grow our business, and build the health care company of the future.”
Driving innovation on behalf of our members
- Digitization: Through innovative products like telemedicine coverage and IBX Wire, Independence delivers choice and convenience, and — in some cases — helps to lower costs. For example, members who were sent an IBX Wire message about generic drug alternatives are 64 percent more likely to switch from a brand name drug to a generic.
- Engagement: At the company’s dynamic corporate campus in downtown Philadelphia, Independence is actively engaging with both members and associates at Independence LIVE — a community hub for in-person member assistance, as well as fitness, cooking, and financial literacy classes.
- Partnerships: Partnering to help grow technology-driven, early-stage health care startups, Independence joined Ben Franklin Technology Partners and Safeguard Scientifics to develop the incredible talent in our region through a $6 million funding initiative – which includes the recently announced grant to VitalTrax, the first startup to receive money from this initiative. And through the Healthshare Exchange, the company joined nearly 20 health systems and hospitals in a formal agreement to share data across the region’s health care entities.
In 2016, Independence employed more than 10,000 people throughout the United States.
The company ended 2016 with $2.4 billion in surplus, which is in the “efficient” range, as defined by the Pennsylvania Insurance Department, and ensures that the company has the resources to pay claims and keep customers secure.
About Independence Health Group
Independence Health Group, together with its subsidiaries, serves more than 8.5 million people in 25 states and the District of Columbia, including 2.5 million in southeastern Pennsylvania. In addition to a growing consumer business, Independence serves employer groups ranging from small businesses to national corporations. Headquartered in Philadelphia, Independence Health Group is a diversified company offering a wide range of services including commercial, Medicare and Medicaid medical coverage, third-party benefits administration, pharmacy benefits management, and workers’ compensation. Independence Health Group and Independence Blue Cross are independent licensees of the Blue Cross and Blue Shield Association.