Floridian of the Year
Pat Geraghty, Florida Blue CEO, is Floridian of the Year
A Colgate graduate, he spent 18 years with Prudential, then nine with the Blue affiliate in New Jersey before being hired In 2008 as CEO at the Minnesota Blue. He was there when Robert Lufrano, the Florida Blue leader, decided to retire in 2011 and called Geraghty, a friend, to let him know the position would be available. It’s rare for the CEO of one Blue to jump to another, but Geraghty says the Florida opportunity and “size, scope, complexity of the assignment” drew him.
Geraghty says he’s trying to craft a new company that keeps its core insurance business but pursues other health-related business. “Take some risks, be open to innovating, be open to taking a leading position in an evolving health and health care marketplace, understanding that in a reformed environment we were going to have to be different,” he says.
Among other moves, Geraghty has led a round of acquisitions [“Strategy and Tactics,” page 62] and expanded the number of Florida Blue retail centers that the company first opened in 2006.
Most notably, he led a reorganization last year that shifted $1.6 billion of Florida Blue’s $2.8-billion surplus to a new entity that can deploy the money in acquisitions Of for-profit, higher-margin businesses and entrepreneurial ventures. One example: Florida Blue, through its wholly owned Navigy Holdings, last year led a $20-million funding round for Audax Health Solutions, a Washington, D.C., developer of a game-like health social network called Zensey as well as a runners app called “Battle by the Bay” and a tabletbased employee health assessment.
In the course of getting state approval for Florida Blue to reorganize, Geraghty’s 2012 $6.8-million compensation (including $1.3 million in relocation expenses) came to light. Geraghty says Florida Blue’s board, comprised entirely of independent directors, sets his compensation with advice from consultants. He says $975,000 is base salary and the rest depends on whether he achieves company goals.
It is in Medicaid that Geraghty’s influence is most evident beyond Florida Blue’s campus. As originally passed, the law forced states to expand Medicaid, but the U.S. Supreme Court rejected that mandate. Gov. Rick Scott initially refused to voluntarily expand Medicaid, foregoing An estimated $51 billion in federal dollars over 10 years.
Geraghty argued to Scott and business leaders that Florida should take the money — otherwise, Florida tax dollars go to fund coverage in other states, 900,000 Floridians don’t get coverage and the cost of their uncompensated treatment shifts to businesses and consumers with insurance.
Geraghty says Florida can use the 10- year funding to transform health care coverage from the traditional fee-forservice model to a “value” model that rewards efficiency and results. Today, Florida Blue pays just over 20% of its payments on a value model. “I think to move the whole state there would be significant,” Geraghty says. “It would set us up to have a more fiscally sound health financing apparatus in our state for decades to come.”
Florida Blue, which hasn’t been a player in the Medicaid market, stands to gain billions in added revenue if it is as successful at capturing a share of the expansion as it has been in the private market. Florida Blue says Medicaid isn’t profitable but fits its mission. “Would we get some of that expansion population? Yeah, we absolutely would, but I think the reasons to do this are much bigger than Florida Blue’s own interest,” Geraghty says.
After meeting with Geraghty and Others Scott reversed himself on the Medicaid issue. He said he would seek the Medicaid expansion money for three years, once the federal government promised Florida the freedom to use managed-care to run the program. Florida Blue donated $1 million since 2010 to Scott’s Let’s Get To Work political committee, which makes the company one of the committee’s biggest backers, according to contribution information listed on the committee’s site.