Daniel J. Hilferty, a tireless and influential Philadelphia civic leader, on Tuesday announced his retirement as chief executive of Independence Health Group, the region’s largest health insurer.
While leading Independence during a period of growth, including the rollout of the Affordable Care Act, Hilferty, 64, played central roles in raising money for Pope Francis’ visit to Philadelphia in 2015 and the Democratic National Convention the next year.
“I made this decision knowing our organization is well-positioned to succeed now and into the future. Independence has never been stronger,” said Hilferty, who is to leave Dec. 31 but will serve as an adviser for two years.
Hilferty’s successor is Gregory E. Deavens, who joined Independence as its chief financial officer in 2017 after serving in senior positions in the life insurance industry. Deavens, 59, becomes the first African American to take over the Blue Cross insurer. He will lead a company that has seen its revenues more than double in the last decade, from $9.3 billion in 2010 to $19 billion in 2019. Much of the increase came from the growth of its Medicaid subsidiary, AmeriHealth Caritas, providing medical care for low-income people.
Independence employs 4,200 in the Philadelphia area and 11,500 nationally. The health insurer is among the region’s most prominent companies not just because it’s a sponsor of efforts such as the Broad Street Run and Indego, the city’s bike-sharing system, but also because its dominant position in health insurance puts it at the intersection of employers, families, and health-care providers.
As Deavens takes over, challenges loom, with the potential unwinding of the Affordable Care Act at the Supreme Court. Closer to home, there’s the possible arrival of a new insurance competitor if Thomas Jefferson University completes its acquisition of Health Partners Plans Inc., a nonprofit Medicaid insurer, and expands into employer-sponsored commercial insurance with its own network of hospitals and doctors.
And then there’s the ever-surging cost of health care, which has made employer-based health insurance more expensive and led employers to put more costs on their workers. In Pennsylvania, the average annual cost of an employer-sponsored family health plan soared to $20,255 in 2018 from $12,339 in 2008, according to the Commonwealth Fund, a nonprofit that studies health care.
If there are changes in the ACA, Deavens said, Independence is ready to partner with state and federal authorities to make sure its members “continue to have access to affordable quality health care.”
Ed Hanway, a former CEO of Cigna, knows both Hilferty and Deavens, who was head of investor relations at Cigna in the early 2000s, and said he was pleased to hear that Deavens will take over from Hilferty. He described Deavens as unflappable and a great communicator.
As to the possibility of new competition for Independence from Jefferson, Hanway said: “That might make it more interesting, but IBC has tremendous strengths and a lot of great people. Whether they are competing against Aetna, Cigna, or UnitedHealthcare, or Health Partners, they will be successful. They will be very formidable.”
Independence controls more than 50% of the employer-sponsored health insurance market in Southeastern Pennsylvania, with Aetna and UnitedHealthcare the next biggest, according to testimony last week in the Federal Trade Commission’s court fight against Jefferson’s acquisition of Einstein Healthcare Network. Independence also has the largest shares of Medicare Advantage and Medicaid managed care in the region.
Its biggest unit, AmeriHealth Caritas, had $12 billion in revenue last year running Medicaid managed-care plans in 13 states and Washington. Independence owns 61% of that company.
Independence also owns AmeriHealth New Jersey, which sells health insurance in New Jersey, and Tandigm Health, which promotes coordinated care to improve health and cut costs in primary care in Southeastern Pennsylvania. Other businesses include AmeriHealth Administrators, which manages plans for companies that pay directly for their employees’ health care. That unit handled $8 billion in payments last year that are not counted in the company’s annual revenue.
Deavens said he expected Independence to continue as a sort of Switzerland in the Southeastern Pennsylvania health-care market well into the future. “We get along well with just about everyone,” he said. “We partner together on the things that we think we need to partner on to make sure that our members and the providers’ patients have access to care that is as affordable as we can make it.”
That fact that Hilferty’s successor is African American is no surprise to Sharmain Matlock-Turner, president of the Urban Affairs Coalition, who said she and Hilferty have talked about the importance of African American leadership. Those conversations happened long before a Minneapolis police officer killed George Floyd in May, sparking a national discussion of racial issues.
As to the choice of Deavens to succeed Hilferty, she said, Independence has picked someone who reflects Hilferty’s values: “Be committed to the business, make sure it’s successful, make sure it delivers the quality of service to those who are members, and also be engaged with the community because we are ultimately all connected.”
Deavens, who is married with three adult children, has a bachelor of science degree in accounting from Florida A&M University. In the nonprofit world, he is on the boards of the African American Museum in Philadelphia and the Executive Leadership Council, a Washington nonprofit that describes itself as opening “channels of opportunity for Black executives to positively impact business and communities.”
Hilferty has been the CEO of Independence for 10 years. For a long stretch of his career before that, he led AmeriHealth Caritas.
Aside from spending more time with his wife, their children, and their grandchildren, Hilferty said he plans to focus on substance abuse and mental health advocacy. “I have a passion around supporting efforts to get people into recovery, and then making sure we address key mental health issues in society as a whole,” he said.
Beyond his responsibilities at Independence, Hilferty has become an indispensable civic leader, say business community colleagues.
“Dan is absolutely one of the most outstanding business and civic leaders of this generation,” said David L. Cohen, senior executive vice president at Comcast Corp. “You can’t think of an important project that was happening in Philadelphia where the mayor, the governor, the chair of the Chamber of Commerce have not gone to Dan Hilferty and said, ‘Can you help?’ And you can’t think of a situation where Dan has said no.”
Drexel University president John Fry described Hilferty as “an incredibly humane and good guy.”
Fry said that when he was dealing with the closure of Hahnemann University Hospital, which was the main teaching location for the Drexel University College of Medicine, he consulted Hilferty and got more than wise counsel. “I got advice, and I also got solace, commitment, and I got solidarity,” Fry said.