Floridian of the Year
Pat Geraghty, Florida Blue CEO, is Floridian of the Year
Florida Blue CEO Pat Geraghty has staked out a leadership position that is putting his company —and Florida —at the forefront of health care trends.
In the course of one week in October, Florida Blue CEO Pat Geraghty appeared at a health care entrepreneur event his company sponsored in Orlando, then traveled the next day to the White House to confer with Health and Human Services Secretary Kathleen Sebelius over the catastrophic rollout of the Affordable Care Act.
He was back in Orlando the following day to announce his company would be the anchor tenant at a new lab and business incubator. He then traveled to London, where he participated in a Jacksonville economic development effort tied to the Jacksonville Jaguars’ appearance in the annual NFL game in England. While there, he also appeared on NBC’s “Meet the Press.”
Since taking over the top job at Jacksonville-based Florida Blue in 2011, Geraghty has led the company and Florida down a new road as the economics of the Health insurance marketplace change in dramatic and unforeseeable ways. “Nobody really knows for sure how these things are going to evolve,” says University of Florida health policy professor Paul Duncan. “The expectation that there’s a very clear blueprint we’re marching, or lurching, toward is not correct.”
Since Blue Cross Blue Shield of Florida started in Florida in 1944, it has enjoyed what Duncan describes as “spectacular” leadership. The company has had only four CEOs in the last three decades and has grown into the market leader. The notfor- profit business, one of Florida’s largest employers with 11,500 workers, holds 29% of the private market, the largest share of any insurer. A staid company in a staid industry, it came to count many of Florida’s larger employers and household names among its group plans, built enviable name recognition and has served as a stalwart community donor. It’s also come under increasing pressure.
The federal law caps margins for insurers and imposes such new regulatory constraints that some commentators now Speak of insurers functioning essentially as public utilities. The government, employers and patients all want to squeeze margins. As a not-for-profit, Florida Blue aims for only a 2% to 3% margin — 2012’s $159 million in earnings was 2.4% of $6.6 billion in revenue — but even that is under pressure.
The act poses a particular threat to insurers’ small group business, which is often insurers’ highest-margin venture. Meanwhile, other lines can be unprofitable altogether. Florida Blue lost $28 million on its Medicare business in 2012. Born and raised in New York, Geraghty grew up in a big Irish-Italian Catholic family where he came to appreciate the value of hearing diverse opinions, which he says he’s sought to encourage in his business career. “The dinner table was an exchange of ideas, an exchange of philosophies, an exchange of political points of view. Sometimes it was loud. Sometimes it was really engaged,” he says.