Hilferty, who succeeded Joseph A Frick in the top job at IBC in December 2010, is excited about the future, regardless of whether federal health-care reform withstands Supreme Court scrutiny.
"We have enough income to invest in the technologies, the programs, the partnerships that we need ... to truly transform the way health care is delivered, improve quality, and drive down costs," he said.
He does not foresee a renewed effort to merge with another Blue Cross company. Instead, IBC will team with other Blue Cross firms and other companies, as it did this year to buy software company NaviNet Inc., he said: "That's a little bit of a different strategic vision for the company."
The difficulties IBC has had are evident in its membership numbers, which got a boost from a big customer when Comcast Corp. completed its purchase of NBC Universal in January 2011, contributing to a net gain of 24,000 employees at the cable giant and adding to IBC's membership.
But from 2005 through 2010, total membership fell 9 percent, to 3.1 million from 3.4 million. In the Philadelphia region, the drop-off was bigger, 15 percent, to 2.2 million from 2.6 million. It is not clear how many of IBC's former members lost their insurance and how many now are with other insurance companies.
IBC's Pennsylvania market share fell to 13.39 percent in 2010 from 15.52 percent in 2009, according to Weiss Ratings, a Jupiter, Fla., company paid by subscribers, not by the entities it evaluates financially.
The erosion of market share also shows up in the financial disclosures of some local hospital systems.
For example, the University of Pennsylvania Health System said in bond documents the contract covering IBC's traditional indemnity and managed-care customers accounted for 33 percent of its net patient revenue in the year ended June 30, 2010, down from 35 percent in the year ended June 30, 2009. Aetna's share, by contrast, climbed to 14 percent from 11 percent.
Chuck Maleski, who heads employee-benefits sales in the Philadelphia region for TD Insurance Inc., a subsidiary of TD Bank, said Hilferty, whom he described as a "game changer," had gotten IBC on track to rebound.
"Under Dan, they are not going to be sitting on their hands. They are going to compete," said Maleski, who has 22 years of industry experience in the Philadelphia area. This year or next year, "you're going to start seeing those numbers going the other way," Maleski said of IBC's market share.
M. Walter D'Alessio, a member of IBC's board since 1991 and its current chairman, worked with Hilferty's two predecessors and said each was right for the time. Asked why Hilferty was a good fit now, D'Alessio said: "This point in time is one of incredible change in our industry. You need to broaden your thinking, be flexible in your thinking, and be aggressive."
Across the country, insurers are experimenting, said Lawnton R. Burns, chairman of the health-care management department at the University of Pennsylvania's Wharton School. "Nobody really knows what the right answer is," he said.
A major area of experimentation for IBC involves incentive programs for primary-care physicians to reduce costs. The company said last week that in 2011, it paid nearly $37 million to 3,500 doctors in 950 practices to reward them for improving quality and being more efficient. The payments can be significant. Two-fifths of the doctors received payments that boosted their base pay from IBC by 50 percent, the company said.
Renaissance Medical Management Co., a Wayne group of 230 primary-care physicians that started in 2000 as a partnership with IBC, was among the recipients of incentive payments. Crozer Keystone Health System, which is aggressively exploring new payment systems, said in a publication in the fall the institution was not collecting more than $300,000 that it could have under an IBC incentive plan.
Health-care executives remain cautious. "Right now, in 2012, we're only interested in upside-only arrangements. We are not interested in accepting downside financial risks. We don't have those capabilities here," said David F. Simon, executive vice president at Jefferson Health System, the largest in the region.
A big challenge for IBC, which for generations has sold insurance to employers, is the anticipated shift of individuals from employer plans to plans they buy on state exchanges under the Affordable Care Act.
Hilferty said IBC did not expect traditional employer-based insurance to end, but it has adapted by selling individual insurance policies. IBC is well equipped to attract customers who will buy subsidized insurance on the exchanges, he said, because of its experience managing state Medicaid plans.
Marc Malloy, chief executive of Renaissance Medical, described the current environment as "chaotic," given all the changes.
Hilferty welcomes it. "I wouldn't want to be anywhere else," he said.
Contact Harold Brubaker at 215-854-4651 or firstname.lastname@example.org.