Building the health care company of the future

This transformative time in health care plays to our strengths. We have always put our members first. We are giving them more control over their care and working with providers to improve that care and its cost. We know the power of innovation, and we are developing innovative solutions that will fuel a sustainable system. We continue to be one of the nation’s leading health care partners, and that spirit of collaboration has an impact on every member we serve. By putting the member at the center of all we do, we have positioned ourselves for BUILDING THE HEALTH CARE COMPANY OF THE FUTURE.

A message from the Board Chairman and the CEO

American health care looks very different now than it did a decade ago, and it continues to transform before our eyes. A health care leader must focus not just on today’s world but on tomorrow’s. Fortunately, we’re good at that. We are up for the challenge of building the health care company of the future.

A Message from the Board Chairman and the CEO

American health care looks very different now than it did a decade ago, and it continues to transform before our eyes. A health care leader must focus not just on today’s world but on tomorrow’s. Fortunately, we’re good at that. We are up for the challenge of building the health care company of the future.

We continued to transform health care delivery in 2016 so our members could receive quality, affordable care. This includes our important work with health systems and doctors to improve access, quality, and the cost of clinical care. This year we established our Facilitated Health Networks model, which we believe will set the standard for how insurers and providers collaborate and create value in the future.

As members expect more control over their own health care and well-being, we built tools and connections to help them. These new tools are being rolled out in 2017. We want to empower people to access information when, where, and how they want it, so they can make informed choices and we can provide a personalized health care experience.

This past year offered significant opportunities for Independence to lead on the national stage. We made strong connections with our fellow independent Blue plans nationwide through the chairmanship of the Blue Cross Blue Shield Association. That platform also provided our organization with a voice on the most pressing health care issues for our members and every American.

As the next generation of health care reform takes shape, we are committed to the collaboration required — among government, insurers, physicians, health systems, and American families — to stabilize insurance markets and ensure a sustainable health care system for years to come.

Planning for the long term started with one of our most important 2016 priorities — the development of a multiyear, member-focused strategic plan. IHG 2020 positions the company for success in the face of external forces including evolving consumer expectations and changing regulations. We are excited to begin implementing our plan, a process that will involve re-imagining our business and our industry to stay out in front of change.

The real payoff for that work is years, or even decades, down the line. When we execute with vision and discipline — and our members’ health and well-being at the center of our plans — the result will be outstanding: the health care company of the future.

As the next generation of health care reform takes shape, we are committed to the collaboration required to stabilize insurance markets and ensure a sustainable health care system for years to come.

Daniel J. Hilferty

Daniel J. Hilferty

President and Chief Executive Officer

M. Walter D'Alessio

M. Walter D'Alessio

Chairman

National Scope

Independence Health Group and its subsidiaries serve more than 8.5 million people in 29 states and the District of Columbia — a national footprint that gives us a strong foundation for building the health care company of the future.

Medical, service, and ancillary
Medical and service
Medical and ancillary
Service and ancillary
Medical
Service
Ancillary
*As of December 31, 2016

Independence At-a-Glance

Putting the member at the center of all we do

Consumers deserve and expect to be in the driver’s seat when it comes to their health care, and we’re making that happen. We’re developing new capabilities and connections. We’re spurring the ongoing transformation of clinical care. And our members are at the center of it all.

Independence LIVE 1919 Market Street, Philadelphia, Pennsylvania.

Putting the member at the center of all we do

Consumers deserve and expect to be in the driver’s seat when it comes to their health care, and we’re making that happen. We’re developing new capabilities and connections. We’re spurring the ongoing transformation of clinical care. And our members are at the center of it all.

A New Place to Connect

Building the health care company of the future starts with a vision for a Philadelphia campus that serves our members and our community. We are doing more of our work than ever before based around our longtime home at 19th and Market streets. And we’ve turned outward to welcome customers and neighbors to this nexus.

Independence LIVE is where we’re re-imagining how people interact with the health care system, through experiences that are personalized, engaging, and relevant. LIVE is our new customer and community health and well-being experience center, and its opening in September 2016 sent a clear signal to our members. They are at the center of everything we do.

Our neighbors from across Greater Philadelphia are invited to LIVE for classes ranging from fitness to financial well-being and health. There’s a kitchen for healthy cooking demonstrations, and a tech arcade to learn about health and well-being apps. LIVE offers free health screenings and community meeting spaces. And LIVE’s “Super Agents” can answer claim questions and take payments, or enroll new customers in coverage.

LIVE and our headquarters at 1901 Market share a new public plaza that serves as our front door to Center City. The plaza’s seating and green design make it a beautiful gathering space on the West Market corridor.

And across the street, we welcomed AmeriHealth Administrators (AHA) downtown to 1900 Market in 2016. AHA, which provides business process outsourcing and administration services for self-funded health plans, consolidated two suburban locations into its new offices.

A New Digital Experience

Building the health care company of the future means committing to digitization. We’ve built new technology platforms that help our members manage their health and well-being as well as their insurance. We spent 2016 growing our digital capabilities and using them to engage members.

Independence LIVE sends a clear signal to our members. They are at the center of everything we do.

We’re giving members more control — from managing a chronic condition to better understanding their health plan — so they can focus on what they want to achieve. That’s why we’ve branded our engagement tools Achieve with Independence.

Our new tools let members take charge of their benefits and finances, make decisions about their care, and live a healthier lifestyle. There’s a new Find a Doctor tool, Health Trackers that compile data from wearable devices like Fitbit®, and a Health Navigator that helps identify health problems.

Our new well-being offerings use behavioral science research to increase the likelihood that members follow through on recommendations. The result is personalized assessments, plans, and motivational strategies that more effectively engage members in improving their health.

All of our technology advances are backed by our best-in-class enterprise operating platforms. The transformation of our digital infrastructure passed several important milestones in 2016, and we continue to make critical investments in cybersecurity so that member information stays safe.

We also made process and technology improvements to our customer service delivery model, resulting in an increase in calls resolved at the first interaction to 61.3 percent, up from 56.8 percent.

A Transformation in Care Delivery

We’re building ways to help physicians provide the right care at the right place and time to our members. Our goals are an improved care experience, better health outcomes for populations, and lower costs across the system.

In 2016, we launched a wide-ranging program called Clinical Care Transformation (CCT) to drive high-quality, cost-efficient care to members through deep collaboration with doctors. CCT aligns with the core principles of the Independence Facilitated Health Networks model: to engage, enable, and empower providers. It’s about creating more health care value for our members and our region.

We engage doctors by aligning incentives for the best outcomes. We enable them with data that can inform care decisions — from drug prescribing patterns to specialist utilization to preventing unnecessary emergency room visits. And we empower them with a multidisciplinary internal support team — clinical services, informatics, actuarial, and more — based on their needs and opportunities.

The CCT toolkit has already had a positive impact on the quality and cost of care. The rate of generic prescriptions provided in lieu of high-cost brand medications climbed by three percent in less than a year for our commercial members, and one percent for our Medicare members. The number of HMO patients who have not seen their doctor in more than year fell by 30 percent in six months. And the second half of 2016 saw increases in surgical procedures performed appropriately in ambulatory centers rather than higher-cost hospitals: 18 percent for general surgeries, 5 percent for ophthalmology procedures, and 20 percent for podiatry procedures compared with 2015.

BUILDING BLOCK: IBX Wire®

Our one-to-one mobile communications channel known as IBX Wire is helping us reach our members where and how they want to be reached. In 2016, we expanded our relationship with independent technology partner Relay Networks through a strategic investment.

We’ve evolved IBX Wire to provide highly personalized messages about gaps in care, such as missed tests or unfilled prescriptions, and we can send links to members taking them directly to additional digital tools. For example, if a member goes to an emergency room for a non-emergent issue, we can link them to a tool showing them urgent care centers and retail clinics in their area.

Early evidence shows that this flexible, powerful technology may have helped us close care gaps by as much as 57 percent, contributed to a 45 percent increase in utilization of health coaches, and made it 64 percent more likely a member will switch to a cost-effective generic from a brand-name drug.

Engaging and innovating at a critical time

Independence Health Group is working consistently for our members and community during this transformative era in health care. This includes taking our seat at the stakeholders’ table to discuss shared goals and the collaboration it will take to reach them. But it also means constant innovation to make people healthier and the health care system stronger.

Independence Blue Cross 1901 Market Street, Philadelphia, Pennsylvania.

Engaging and innovating at a critical time

Independence Health Group is working consistently for our members and community during this transformative era in health care. This includes taking our seat at the stakeholders’ table to discuss shared goals and the collaboration it will take to reach them. But it also means constant innovation to make people healthier and the health care system stronger.

A National Conversation on Health Care and Reform

We’ve built a national role in advocating for our members and engaging with the transformation of health care in America. Improving our health care system is a goal for every American — and the answers can only be found by working together. With our fellow independent Blue plans, we take this responsibility to our members to heart. Independence CEO Daniel J. Hilferty has been a key voice for the Blues® and the one in three Americans they cover. As board chair of the national Blue Cross Blue Shield Association (BCBSA), he provides industry perspective on health care reform to legislators and the White House. He and Scott Serota, president and CEO of BCBSA, coauthored an op-ed for Forbes in September 2016 on challenges in the individual insurance market. And Hilferty made national media appearances including Morning Joe on MSNBC and a Washington Post online panel during the Democratic National Convention in Philadelphia in July.

Under the Affordable Care Act (ACA), we have engaged with the health care consumers most affected by the law through changes in the individual consumer market and the expansion of Medicaid. We celebrated the successes, including many millions of Americans newly covered by insurance. And we also tackled the challenges of reform, including the adverse consequences of Special Enrollment Periods, taxes that are uniquely targeted at health insurers, and the departure of other insurers from our markets. Independence is the only health insurance organization in the Philadelphia region in 2017 offering plans on the Federally Facilitated Marketplace, and AmeriHealth New Jersey is one of only two in New Jersey. Paula Sunshine, our chief marketing executive, testified in front of the Pennsylvania Insurance Department on the impact of the changing landscape, saying, “For the market to stabilize we need regulatory predictability, fair competition, and the broadest possible enrollment.”

Our overarching hope for reform is a system that ensures access to affordable, high-quality coverage, empowers our members through choice and responsibility, expands flexibility, and capitalizes on the talent of the health care private sector to drive innovation.

Our overarching hope for reform, as we consider the health care company of the future and the markets in which it will compete, is to build a system that ensures access to affordable, high-quality coverage in a sustainable way, empowers our members through choice and responsibility, expands flexibility, and capitalizes on the talent of the health care private sector to drive innovation.

An Entrepreneurial Spirit of Innovation

As fearless innovators, we’ve built a portfolio of projects focused on issues most important to patients and providers. Along the way, we’re collaborating with best-in-class partners and empowering the next generation of entrepreneurs. We invest in promising ideas — from research partnerships to new models of care to health-related start-ups — that advance Human-Centered InnovationSM.

We have introduced our market to new innovations based on advances in genomics, and helped doctors understand more about how they work. We were also part of the launch of the Philadelphia Coalition for a Cure (PC4C), seeking new personalized treatments for brain tumors alongside the region’s leading academic medical centers.

We are advancing Philadelphia’s digital health ecosystem through our Center for Health Care Innovation. We began a new initiative in 2016 with Ben Franklin Technology Partners of Southeastern Pennsylvania and Safeguard Scientifics to help grow technology-driven, early-stage health care start-ups through a $6 million investment over four years. Together, we are working to identify the best emerging seed-stage companies.

Dreamit Health, our accelerator program with Penn Medicine and Dreamit, helped another new group of start-ups tackle health care’s greatest challenges, particularly in digital health. The program, which has worked with more than 40 start-ups over four years, received a $325,000 Blackstone Innovation Grant from the Blackstone Charitable Foundation earmarked for health organizations that strengthen entrepreneurship.

Another way we build momentum for innovation is through wide-ranging collaboration with other Philadelphia leaders. Independence is one of nine organizations in the Health Care Innovation Collaborative spearheaded by the Chamber of Commerce for Greater of Philadelphia. The Collaborative’s first open call for ideas in 2016 attracted more than 100 individuals and companies working to improve outcomes for chronic diseases.

We are also a founding partner in HealthShare Exchange (HSX), which celebrated its formal launch in 2016. Dozens of Greater Philadelphia health systems, hospitals, and health plans use HSX to share patient information to improve communications and the quality of care.

Our many academic collaborations include work with Thomas Jefferson University, including two Health Hacks where more than 400 creative innovators explored ways to improve access to, and delivery of, health care. Through our collaboration with Temple University, we helped develop and teach a master’s-level course on Urban Health Innovation.

BUILDING BLOCK: Tandigm HealthSM

We cofounded Tandigm Health to work with primary care physicians on a new model of coordinated health care, because stronger primary care can improve patient outcomes and reduce hospitalization rates. Tandigm is engaging with physicians to provide a new level of quality and value for patients.

Tandigm continued to make progress in 2016, building on early results that included 800 fewer emergency room visits for its patient population and a $15 million reduction in medical costs. Tandigm now provides population health tools and resources to more than 460 doctors serving 115,000 patients — a 22 percent increase in network size — putting those doctors back at the center of patient care.

We are applying the lessons learned through the Tandigm experience system-wide with our most important provider partners, through Independence’s Facilitated Health Networks model.

Creating community through collaboration

The best way to tackle health challenges is to work together. Philadelphians are finding new ways to support their own health and well-being with help from one of the most trusted names in this region for health care — Independence. We’re proud to bring Greater Philadelphia together in the quest for a healthier community.

Indego bikes for the Philadelphia Bike Share program. Sponsored by Independence Blue Cross. Photo credit: Lora Reehling for lorareehlingphotography.com

Creating community through collaboration

The best way to tackle health challenges is to work together. Philadelphians are finding new ways to support their own health and well-being with help from one of the most trusted names in this region for health care — Independence. We’re proud to bring Greater Philadelphia together in the quest for a healthier community.

A #FearlessFit Approach to Being Healthy

We’ve built awareness throughout our region that Philadelphians can reach health and fitness goals faster when we go after them together. We call that approach #FearlessFit — and we’ve backed it up by sponsoring signature events and activities that encourage a healthy lifestyle.

April 2016 marked the first anniversary of Philadelphia’s Indego bike share. The Independence-sponsored blue bikes have become a fixture in our neighborhoods. Indego’s first 12 months saw a remarkable 500,000 rides, a number that doubled by October when we helped celebrate one million rides with Indego’s “Philly to a Milli” contest. And 16,000 of those rides were taken by people using the discounted Indego Access Pass launched as part of April’s anniversary celebration. The pass is available to anyone who receives need-based benefits through the Pennsylvania Access Program.

The 37th annual Blue Cross® Broad Street Run in May 2016 brought together 34,000 #FearlessFit runners for a trek through the heart of the city. The Blue Cross Broad Street Run is the nation’s largest 10-mile race, and 2016 was our 20th year as presenting sponsor of this signature Philadelphia event.

As a sponsor of National Walk @ Lunch Day, we help employers inspire their workforce to turn a working lunch into a walking lunch. National Walk @ Lunch Day makes the last Wednesday of each April a springboard for increased activity to lower the risk of heart attack and diabetes, improve muscle tone, and reduce stress.

Celebrating its 23rd year in 2016, the Blue Cross RiverRink is Philadelphia’s largest and most-beloved outdoor ice skating rink. This year was also the fourth for the Blue Cross RiverRink Winterfest featuring entertainment, food, and drinks for the whole family, and the second year for the Summerfest, which adds roller skating to the roster of #FearlessFit fun.

When Philadelphians make health decisions with their families, our Blue card is there to help. When they reach out to their doctors for the best possible care, we support those providers. And #FearlessFit brings neighbors together in public settings to improve their health and well-being.

In its first six months, 16,000 Indego rides were taken by people using the discounted Indego Access Pass. The pass is available to anyone who receives need-based benefits through the Pennsylvania Access Program.

A Milestone in Community Partnerships

The Independence Blue Cross Foundation has built an infrastructure to support and mentor organizations that improve the health of communities. The Foundation celebrated its fifth anniversary in 2016 by deepening its commitment to core programs and expanding its focus to critical issues like heart health and opioid addiction.

The nation faces significant challenges in maintaining the nursing workforce, and total Foundation grants around nursing education amounted to more than $1.7 million in 2016. The Nurses for Tomorrow program exceeded $7 million in scholarship grants since 2011 for students at southeastern Pennsylvania nursing schools, while enhancing its internship programs.

Nearly 200,000 people in our region have better access to care thanks to nonprofit health centers supported by the Blue Safety Net program. Last year the Foundation awarded more than $2.8 million to more than 40 centers to integrate dental and behavioral health with primary care, advance trauma-informed care models, and address many other significant needs.

The Building Healthier Communities program funds community organizations that help residents improve their health. In 2016, the Foundation provided more than $420,000 to 38 nonprofits that supported the health and well-being needs of vulnerable populations.

In June 2016 we were part of the launch of CPR Ready, Philadelphia’s campaign to train more people to perform CPR and use an automated external defibrillator. Our support is part of our new Healthy Hearts initiative to address cardiovascular disparities in vulnerable and high-risk populations in the region. Healthy Hearts also works with the University of Pennsylvania’s Mobile CPR Project and with Simon’s Fund, which provides free heart screenings to children and advocates for legislation and research.

STOP — Supporting Treatment and Overdose Prevention — is a new Foundation-driven initiative to increase awareness of the public health crisis facing the community and improve access to opioid abuse prevention and treatment through strategic grant-making and cross-sector partnerships. With regional partners and national experts in health and policy, the Foundation aims to break the cycle of addiction.

BUILDING BLOCK: The Blue Crew

Our associates help families get health coverage, help providers improve care delivery, and support community-based health efforts. And there’s another important way they impact quality of life in Greater Philadelphia: through their passionate service in our “Blue Crew” volunteer program.

For 15 years, the Blue Crew has helped fulfill our mission to enhance the health and well-being of the people and communities we serve. And 2016 was the biggest year yet. More than 1,000 Blue Crew volunteers worked with 75 nonprofit organizations on nearly 250 projects, volunteering more than 8,300 hours. As part of its 15th anniversary celebration, the Blue Crew took part in more than 30 service projects in April alone.

Blue Crew activities range from organizing charitable donations of clothing, to preparing home-cooked meals for those in need, to rallying participants at the region’s major fundraising events. Our volunteers build networking, teambuilding, and leadership skills while making Greater Philadelphia a better place to work and live.

Our 2016 financial performance

Independence Health Group experienced strong business momentum in 2016. We achieved year-over-year topline financial growth despite the challenges and uncertainties facing the health insurance industry and the high cost of care in our region. Our growth reflects an ongoing commitment to serving the needs of employers, our members, and their families across various geographic, consumer, and commercial market segments.

Our total revenue increased by 21 percent to a record $16.7 billion. As we closed 2016, we served members in 29 states and the District of Columbia. And we had net income of $67 million, providing a small margin of 0.4 percent. This margin helps provide resources used to invest in new capabilities for the benefit of our members and customers.

The key to our positive results was focused, consistent execution on our multi-year strategy, including effective management actions to offset market volatility and rising medical costs. Other significant factors were product and geographic diversification and growth across Independence Health Group, in keeping with our strategy to build the health care company of the future.

The next steps

We are optimistic that our 2016 business accomplishments and financial results lay an effective foundation for building IHG as the health care company of the future. We remain committed to investing in new capabilities and exciting solutions to empower our members — locally and nationally — and ensure their access to high-quality, affordable health care.

Our way forward is guided by the belief that the market and the dynamics of regulation present unique opportunities for Independence, where we embrace these challenges with a spirit of innovation and collaboration. That same spirit informs our approach to the evolution of consumer requirements, digitization, and new partnerships with health care providers.

Our vision and commitment are to lead the regional transformation of care delivery, working closely with partners on these priorities:

  • Empowering patients to make the decisions that help them get and stay well
  • Enabling physicians and other health professionals with tools and support to provide the most effective care
  • Driving health care and well-being innovations through investments and partnerships

As we grow and diversify, Independence remains focused on serving and inspiring our associates, our members, and our communities served across the nation.

The companies of
Independence Health Group, Inc.

Independence Health Group, Inc., delivers innovative health and well-beings solutions throughout the region and the nation. Through our subsidiaries, we offer a wide range of market-leading health plans and specialty services.

Independence Health Group, Inc., delivers innovative health and well-being solutions throughout the region and the nation. Through our subsidiaries, we offer a wide range of market-leading health plans and specialty services.

Our portfolio includes coverage for national businesses, large employer groups, small businesses, and individuals; portable benefits for when you travel or live abroad; Medicare supplemental and Medicare Advantage products; Medicaid; and specialty services such as vision and dental coverage.

In addition, our subsidiaries provide specialty services and products including third-party benefits administration and pharmacy benefits management services. Our national health business includes administration of self-funded groups, network access arrangements, claims processing, and other services on behalf of the 35 other independent Blue Cross and Blue Shield plans across the nation.

Independence Health Group subsidiaries include:

  • M. Walter D’Alessio
    Chairman
  • Charles P. Pizzi
    Vice Chairman
  • Daniel J. Hilferty
    President and Chief Executive Officer
  • Robert W. Bogle
  • Debra L. Brady
  • Christopher Butler
  • Edward S. Cooper, M.D.
  • Edward Coryell
  • A. Bruce Crawley
  • M. Walter D’Alessio
  • Nicholas DeBenedictis
  • Valentino F. DiGiorgio III
  • Patrick J. Eiding
  • Joseph A. Frick
  • Dr. Vail P. Garvin, FACHE
  • Patrick B. Gillespie
  • Nicholas A. Giordano
  • John Heenan
  • Daniel J. Hilferty
  • Hon. Renée Cardwell Hughes
  • Anne Kelly King
  • Anthony LaRosa
  • Thomas A. Leonard, Esq.
  • Andrew I. Lewis IV
  • Michael D. Marino, Esq.
  • J. William Mills III
  • Alan Paul Novak, Esq.
  • Denis P. O’Brien
  • Thomas G. Paese, Esq.
  • Charles P. Pizzi
  • Michael V. Puppio Jr., Esq.
  • Pedro A. Ramos. Esq.
  • William R. Sautter
  • James C. Schwartzman, Esq.
  • Robert W. Sorrell
  • Daniel L. Woodall, Jr.
  • Daniel J. Hilferty‡
    President and Chief Executive Officer
  • Yvette D. Bright‡
    Executive Vice President and Chief Operating Officer
  • Anthony V. Coletta, M.D., MBA‡
    Executive Vice President and President,
    Facilitated Health Networks,
    Independence; President and Chief
    Executive Officer, Tandigm Health
  • Alan Krigstein‡
    Executive Vice President, Chief Financial Officer, and Treasurer
  • Richard J. Neeson‡
    Executive Vice President and
    Chief Development and Innovation Officer
  • Paul A. Tufano, Esq.‡
    Executive Vice President, Independence;
    Chairman and Chief Executive Officer,
    AmeriHealth Caritas
  • Stephen P. Fera
    Senior Vice President, Public Affairs
  • Kathryn A. Galarneau, F.S.A.
    Senior Vice President, Finance Operations, and Chief Actuary and Underwriting Officer
  • Regina Heffernan‡
    Senior Vice President and Chief Human Resources Officer
  • Thomas A. Hutton, Esq.‡
    Senior Vice President, General Counsel, and Corporate Secretary
  • John R. Janney, Jr.
    Senior Vice President, Transformation
  • Daphne Klausner
    Senior Vice President, Senior Markets
  • Brian Lobley
    President, Commercial and Consumer Markets
  • Anthony J. Maleno
    Senior Vice President, Operations
  • Lauren C. O’Brien, CPA, CIA
    Senior Vice President and Chief Accounting Officer
  • Marcy F. Rost‡
    Senior Vice President, Office of the President and CEO
  • Richard L. Snyder, M.D.
    Senior Vice President and Chief Medical Officer
  • Mike Sullivan
    President, Diversified Businesses
  • Paula J. Sunshine
    Senior Vice President and Chief Marketing Executive
  • Michael R. Vennera
    Senior Vice President and Chief Information Officer

* As of December 31, 2016

† Independence Health Group, Inc. is the parent company of Independence Blue Cross, LLC, and its subsidiaries and affiliates

‡ The executive team of Independence Health Group, Inc.

Gregory E. Deavens joined Independence as Executive Vice President, Chief Financial Officer, and Treasurer in January 2017 after the retirement of Alan Krigstein