Independence Blue Cross (IBC) provides health insurance and related services to some 2.2 million members in southeastern Pennsylvania and, through its subsidiaries, to more than 3 million people nationwide. The company's plans include Personal Choice (PPO), Keystone Health Plan East (HMO and POS), and traditional indemnity options for groups, families, and individuals. It also offers supplemental Medicare, dental, vision, life, and disability insurance. Through subsidiary AmeriHealth Administrators, IBC provides third-party administration (TPA) services. IBC was founded as the Associated Hospital Service of Philadelphia in 1938 and is an independent licensee of the Blue Cross and Blue Shield Association.
Subsidiary AmeriHealth provides HMO, PPO, and other plan options to customers in Delaware, New Jersey, and Pennsylvania. Another unit, AmeriHealth Casualty Services, offers workers' compensation policies. Most of the company's supplemental plans are provided through partnerships with United Concordia, Davis Vision, and Fort Dearborn Life.
Through AmeriHealth, IBC is also the main shareholder in the AmeriHealth Mercy Family of Companies, which includes Medicaid insurers AmeriHealth Mercy Health Plan and Keystone Mercy Health Plan. The AmeriHealth Mercy group was formerly a 50/50 joint venture with Mercy Health System of Southeastern Pennsylvania; in 2011 IBC joined up with Blue Cross Blue Shield of Michigan (BCBSM) to purchase the former Mercy Health System stake for $170 million, giving IBC majority ownership of the AmeriHealth Mercy organization. IBC and BCBSM plan to expand the group's Medicaid services into new territories, as Medicaid enrollment levels are expected to rise under new health reform laws.
An earlier effort to expand fell flat when IBC and its Pittsburgh-based neighbor Highmark canceled plans to merge in early 2009 after nearly two years of planning. The companies' merger agreement had sparked major competitive concerns among state regulators and politicians, and after much wrangling, the two companies became convinced that the plan would never receive regulatory approval. Regardless, IBC and Highmark continue to co-market Blue-branded insurance products in southeastern Pennsylvania.
Late in 2009 the company, struggling to cut costs in the wake of membership declines, offered early-retirement to more than 800 employees. About 500 of them accepted, upping the company's decline in employment to about 10% since the previous December. Shortly thereafter, when the company realized it would miss annual revenue targets, another 200 workers were cut from the rolls, bringing IBC's total job losses for 2009 to 855.
In 2010 IBC moved to further reduce expenditures and simplify its operations by selling its FutureScripts business, which provides pharmacy benefits management (PBM) services to some 1 million members, to fellow PBM Catalyst Health Solutions for some $225 million in cash. As part of the deal, Catalyst entered a 10-year service contract to manage IBC's pharmacy benefits. The sale, along with lowered administrative costs, helped IBC maintain financial stability and post a modest profit margin of 2.2% for 2010, a significant year in the industry due to health care reforms and the still anemic recovery of the economy.
The company's decision to sell FutureScripts was not its first effort to shed noncore businesses. IBC sold its NewSeasons assisted living operations to Five Star Quality Care in 2007, and in 2009 it sold its Puerto Rican Blue Cross licensee, La Cruz Azul de Puerto Rico, to Blue Shield provider Triple-S Management.
IBC's board approved a new Independence Blue Cross Foundation to identify and develop ways to deliver health care in the region in 2010. Funding of $10 million to establish the foundation was provided.
Addressing issues of improving quality of care, lowering costs, and increasing communications and collaboration between clinicians and patients, IBC and fellow Blues brothers Highmark and Horizon Blue Cross Blue Shield of New Jersey partnered with health information technology provider Lumeris in 2012 and acquired NaviNet and its real-time communication network for physicians, hospitals, and health insurers. NaviNet connects 75% of doctors in the US and in 70,000 physicians and hospitals throughout the Blues' service areas. – less