Driving positive results via business enhancements, increased efficiencies, and financial discipline
Philadelphia, PA – Independence Blue Cross (IBC) today reported positive financial results in 2011 with a net profit margin of 3.4 percent and a net after-tax income of $314.8 million, achieved by offering new capabilities and services to customers, attracting new customers, reducing operating costs, and working collaboratively with hospitals and physicians to enhance health care delivery.
IBC returned to positive financials in 2010 after two years of losses. A second year of positive results in 2011 demonstrates the company’s financial stability and stems from sound investments in better serving customers, preparing for health care reform’s changes, and fulfilling IBC’s mission: Enhancing the health and wellness of the people and communities we serve.
“We are establishing our company as an industry leader in health care,” said Independence Blue Cross president and CEO, Daniel J. Hilferty. “This is a time of remarkable transformation in health care, and we are identifying new ways of doing business to anticipate the demands of consumers in a rapidly changing environment.”
“A few years ago when the overall economy was weakened and health care reform was creating uncertainty, IBC experienced financial hardship. It was critical that we regain financial stability so we could invest in the capabilities our customers expect from us and prepare for the future,” said Hilferty. “Our positive 2010 results were a catalyst for our successful 2011. Today, we are proudly heading in the right direction and making great progress. However, we won’t rest – we know there’s more to be done in the health care system in our region.”
IBC’s successful 2011 was attributed to multiple factors. By developing new, more flexible, lower cost health plans, the company attracted more than 45,000 new members. Overall, IBC and its affiliated companies had 3.1 million members nationwide in 2011, a 1.4 percent increase above 2010.
To reward physicians and hospitals for providing excellent, cost-effective care, IBC enhanced its nationally-recognized physician and hospital incentive programs. At the same time the company deepened its commitment to a remarkable new patient care model, called patient-centered medical homes, that now delivers care to 500,000 members in southeastern Pennsylvania.
To expand IBC’s capabilities, the company pursued relationships with like-minded organizations also focused on transforming the health care system. In August 2011, the company entered into an agreement with Blue Cross Blue Shield of Michigan to acquire the AmeriHealth Mercy Family of Companies, a top-tier Medicaid managed care organization headquartered in Philadelphia, with the goal of further expanding services to Medicaid beneficiaries across the country. The expansion of Medicaid eligibility under the Affordable Care Act is expected to increase the number of people eligible for Medicaid by 16 million by 2019.
“Unlike publicly traded companies that have to reward shareholders, we invest our net income in strengthening our products and services to exceed our customers’ expectations,” said Alan Krigstein, IBC’s executive vice president and CFO. “For example, we’re using innovative technology to streamline transactions and improve operational efficiencies. One result is that our customer service has markedly improved – by focusing on improving our customers’ experience and providing accurate, complete responses the first time they called, we were able to reduce repeat calls and increase overall member satisfaction.”
Krigstein pointed out that in 2011, IBC was recognized by the Philadelphia Business Journal at its 2011 Corporate Philanthropy Awards as the top regional company in charitable giving and one of the leading extra-large companies in its service to the community. In 2011, the company contributed $59 million towards the health and well-being of southeastern Pennsylvania.
In addition, he said, in October 2011, the company launched the Independence Blue Cross Foundation with a total investment to date of $45 million. The foundation is committed to transforming health care through innovation in the Philadelphia region. As part of its focus on caring for the most vulnerable, the foundation supports 34 private, nonprofit clinics that provide high-quality preventive care to 145,000 uninsured and underinsured men, women, and children in the five-county Philadelphia area. And as part of its commitment to enhance the delivery of care, the foundation invests in the next generation of nurses by funding scholarships at 22 area nursing schools to increase the supply of qualified nurses in the region.
Said Krigstein, “In 2011, we also controlled our administrative expenses, just as all our customers have had to do in this challenging economy.”
Total 2011 revenues were $9.2 billion, compared to $9.6 billion in 2010. Net income after taxes was $314.8 million, compared to $211.2 million in 2010. Investment and other income was $138 million in 2011, compared to investment and other income of $127.4 million in 2010.
In 2011, IBC paid $210.4 million in federal, state, and local nonpayroll taxes.
The company’s surplus for 2011 was $2.1 billion, which is in the sufficient range, according to the Pennsylvania Insurance Department’s guidelines, which means that IBC maintains a surplus level that is appropriate to ensure its long-term stability.