Frick retiring as Independence Blue Cross chief [The Philadelphia Inquirer]

Sept. 01--Joseph A. Frick, president and chief executive of Independence Blue Cross, will retire Dec. 15, the company told employees in an e-mail Tuesday afternoon.

And it's not because his colon cancer has come back, the 58-year-old Frick said in an upbeat interview Tuesday, turning serious as he otherwise joked about his trademark preference for pin-striped suits, his lack of vacations over the years, and his need to chitchat with nearly everyone he meets.

"I think the first thing many people think is: 'Is he sick?,' " Frick said in an interview at his office on the 45th floor of the company's headquarters, at 19th and Market Streets.

Frick's tenure at the company was marked by a personal challenge: Barely two years into the job, he was diagnosed with late-stage colon cancer.

"It has sharpened my focus on making the best of every day," he said. "It has sensitized me to what leadership is all about. There's a much broader calling for me than just one company, just one mission."

Frick said he has no specific plans at the moment.

Frick's cancer also provided an unsettling sense of deja vu for the company.

Independence Blue Cross' previous chief executive, G. Fred DiBona, lost a fierce 18-month battle against kidney cancer on Jan. 11, 2005.

Sixteen days later, the board voted to promote Frick, then senior vice president of human resources, to chief executive and president.

"After the unfortunate circumstances surrounding my accession," Frick said, "I decided that if I had the ability, I would provide a succession plan that was orderly and progressive."

Frick's cancer nearly derailed that goal as friends and business associates watched his very public struggle to best the disease that had killed his predecessor. But, Frick said, he's been cancer-free for three years.

Replacing Frick will be Daniel J. Hilferty, a longtime company executive who built Independence Blue Cross' for-profit AmeriHealth Mercy group of companies into the largest Medicaid managed-care organization in the United States, covering 6.5 million people in 14 states.

"As you can imagine, this is a decision I did not make without careful thought and consultation, given the tremendous respect and fondness I have for all of you and IBC," Frick wrote to employees. "But it is the right time for our organization and right decision for me and my family."

After giving up day-to-day responsibilities and his $2.1 million annual compensation, Frick will become vice chairman of the insurers' board of directors, leading a new committee that will focus on strategic partnerships and initiatives. He will earn about $35,000 in that role.

It's been a tough couple years for the Philadelphia-based insurer.

As the economy soured, Independence Blue Cross lost money, $63.7 million in 2009 and $78.7 million in 2008. Membership -- the number of people covered by the company's plans -- has declined, as employers shed workers and dropped coverage.

Meanwhile, medical costs continued to rise.

In response, Independence Blue Cross reduced its workforce by 17 percent with a combination of layoffs, attrition and a massive retirement buyout program involving 535 people.

"Am I disappointed we weren't growing? Yes, absolutely," he said. But, he said, the insurer is on track to move into the black in 2010.

Professionally, Frick's biggest disappointment was the failure of the proposed merger between Independence Blue Cross and Highmark Inc., the state's largest health insurer.

"I think we made a very compelling and convincing business case, and I think we were all surprised that it didn't happen after two years of public effort," he said. The companies withdrew their bid to merge in January 2009, after meeting stiff opposition from Pennsylvania's insurance commissioner and the state Senate.

The merger, Frick said, would have better positioned both companies to cope with the changes related to the new laws overhauling the nation's health-care system.

Frick and the company say that Frick's decision to leave came at his own initiation. Interviews with several board members confirm that point of view.

Indeed, Frick seems to be stepping down at a natural lull. The biggest changes stemming from the legislation will take place in 2014, but the work and lobbying to shape those changes is gearing up now.

Pennsylvania's political climate is also changing -- a key point in a regulated business. The insurance commissioner who blocked the merger, Joel Ario, had his last day Tuesday, and in January there will be a new Pennsylvania governor.

Last January, in preparation for his new role, Hilferty, 53, was promoted to executive vice president and president of Independence Blue Cross' Health Markets, giving him responsibility for the company's Blue Cross business in the five-county Philadelphia region, including Personal Choice and Keystone.

Contact staff writer Jane M. Von Bergen at 215-854-2769 or [email protected].

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