Blue Cross CEO heads to Florida

In a surprise move, Blue Cross and Blue Shield of Minnesota CEO Patrick Geraghty said Thursday that he is heading south to take the helm of Blue Cross and Blue Shield of Florida.

Geraghty, who has been running the health insurance plan since 2008, will take the top spot of the Jacksonville-based insurer on Sept. 1, according to a statement released in Florida. He replaces Dr. Robert Lufrano, who announced his retirement earlier this year.

Pam Wheelock, chairwoman of the board of trustees for Blue Cross and Blue Shield of Minnesota, will take over as interim CEO. Wheelock is a vice president of the Bush Foundation and served as state finance commissioner under Gov. Jesse Ventura.

Blue Cross and Blue Shield is Minnesota's largest nonprofit organization as well as the state's largest insurance company, with nearly $9.1 billion in revenue in 2010 and enrollment of about 4 million. The Florida affiliate, also a nonprofit, covers about 7.7 million people and reported revenue last year of $8 billion.

Geraghty said that the opening in Florida was unexpected. Discussions about moving there arose at a key time in his personal life, as he and his wife were confronting health issues with aging parents who live on the East Coast.

"I thought I would be here a long time," said Geraghty, whose last day is Aug. 1. "But having seen the Florida market, the size of the opportunity in terms of the population, and the complexity of issues in that marketplace, it was a great health care leadership opportunity. It's not something I had gone out soliciting."

Julie Brunner, executive director of the Minnesota Council of Health Plans, said the news caught her and many others off guard. Geraghty serves as the organization's board chairman.

"Pat was a very energetic leader and committed to the nonprofit system we have in Minnesota and to our community," Brunner said. "I always admired that Pat absolutely 'got' prevention. That's something that should be front and center in health care, and Pat gave it a lot of thought. He wanted to look ahead and figure out things that impact our workforce and our workplace to prevent problems. That's a legacy."

Geraghty took over Blue Cross amid economic recession and the push for health care reform.

Blue Cross had a $15.7 million loss in 2008 when Geraghty arrived, resulting in layoffs of about 300 employees over 18 months in 2008 and 2009. The company was back in the black in 2009, and last year posted net income of $271 million, according to company filings. Geraghty was rewarded as the highest-paid Minnesota nonprofit leader, earning $1.5 million in compensation last year.

Geraghty was noted for promoted an incentive payment system to reward health providers that achieved cost savings and hit quality-of-care measures. Allina and Fairview signed up first, and seven care systems followed.

This year, Blue Cross and other plans have been battered by Gov. Mark Dayton and lawmakers for earning large margins on taxpayer-funded plans. In April, Blue Cross and three other plans agreed to cap next year's profits at 1 percent.

Geraghty, who has championed health coverage for all regardless of existing conditions, moves to a state where the political and competitive landscape is much different. Large for-profit operators such as Humana, UnitedHealth Group and Aetna are dominant players. Blue Cross and Blue Shield of Florida is a large player in the commercial market, he said, but there are opportunities to expand Medicaid coverage.

Florida's Republican majority is hostile to federal health care reforms, and Geraghty is concerned that the state may fail to set up a health insurance exchange by 2014 as the law requires, meaning the federal government will create one.

Jackie Crosby • 612-673-7335