IBC net income down, operating profit up for year

Independence Blue Cross said Thursday its net income last year was $191.5 million, down 39 percent from 2011.

Officials at the health insurer, based in Center City, said that the 2012 bottom line was dragged down by a $90 million expense for a new operating platform and that 2011 results were boosted by a one-time $87 million gain from a joint venture.

IBC's 2012 operating profit was $402.6 million, up 12 percent from $361.4 million the year before.

"Despite the uncertain economy and the significant changes ahead in health care, for the third year in a row, we had a solid year," Daniel J. Hilferty, president and chief executive, said on a conference call with reporters.

IBC employs 7,472, including 3,560 in Center City. The total is up from 6,987 the year before.

The number of employer groups served by IBC fell to 34,670 last year from 37,061 the year before, even though the small-group business showed some growth in the last 18 months, according to Alan Krigstein, IBC executive vice president and chief financial officer.

Membership in Southeastern Pennsylvania was up 5 percent in 2012, or by 35,000, to 40,000 people, Krigstein said. Nationwide, IBC grew 10 percent, adding 215,000 people, many of them through its Medicaid subsidiary, AmeriHealth Caritas, formerly AmeriHealth Mercy.

IBC's premium revenue climbed 13 percent, to $10.02 billion from $8.88 billion. The amount IBC paid to doctors, hospitals, and other health-care professionals for care was up less: to $8.4 billion from $7.7 billion, or 9 percent.

The company's surplus, the amount by which assets exceed liabilities that comes from accrued profits, was $2.52 billion at the end of 2012, up from $2.25 billion the year before.

With state and local politicians recently expressing interest in examining tax exemptions for IBC, hospitals, and universities, Hilferty was eager to discuss the issue.

IBC has its tax exemption under a state law that created nonprofit hospital service corporations. The exemption applies to only a small portion of its operations and is worth only $6 million to the company, according to Hilferty.

The company said it paid $250 million in federal, state, and local taxes in 2012, not including payroll taxes for the benefit of its employees. That was up from $210 million in 2011.

"In order to have a level playing field, we're very comfortable being taxed like everyone else," Hilferty said. "It's not an issue. It's not a significant amount of money."