Minnetonka-based Medica said Thursday that longtime chief executive David Tilford is retiring after 16 years leading one of the state’s largest health insurers.

Tilford’s tenure goes back to the tumultuous period in 2001 when former Minnesota Attorney General Mike Hatch pushed for a split between Medica and Allina Health System, the large network of hospitals and clinics that was the insurer’s parent company at the time.

He was officially named CEO in 2003. Tilford, 61, will be replaced by John Naylor, who currently is senior vice president of Medica’s commercial markets division.

“I want to thank David for the 16 years of leadership he has provided Medica,” said John Buck, chairman of the board at Medica, in a statement. “Under his guidance, Medica grew from a newly independent organization in 2001 to one of the leading health plans in the region today.”

Naylor, 53, will become CEO immediately, with Tilford available to assist this month during the transition. Naylor takes over at a time when Medica, like many other health insurers, is struggling with changes under the federal Affordable Care Act.

Medica has lost millions in the individual market, where the health law in 2014 abolished preexisting condition exclusions that insurers previously used to control costs. As a result, Medica for 2017 was one of several health plans granted enrollment caps to limit the potential for further financial losses in the individual market.

Carriers have generally profited thanks to health law expansions of the state-federal Medicaid program, but Medica late last year said it would surrender a major contract in Minnesota’s Medicaid program after suffering significant losses last year.

Naylor joined Medica in April 2010. He has more than 30 years of industry experience, including work with Willis Towers Watson (formerly Towers Perrin) for 21 years.

“I am delighted to take over the reins from David and am confident that he leaves the organization positioned well for success in the constantly changing health care industry,” Naylor said in a statement.

In the face of an investigation and pressure from Hatch, Allina Health System’s board in 2001 voted to separate the Medica health plan from its hospitals and clinics. Hatch had recommended a breakup because of allegations that Allina had wasted millions of dollars on executive perks and consultants and used Medica members’ premiums improperly.

As an independent nonprofit, Medica went on to develop its own infrastructure, including information technology capabilities, human resources and other business functions, the insurer said Thursday in a news release. In 2001, Medica provided coverage only in Minnesota and western Wisconsin, the insurer said, but has since expanded into Iowa, Kansas, Nebraska, North Dakota, South Dakota and farther into Wisconsin.

“I have had a remarkable career at Medica and I have great leadership teams and fellow employees to thank for all the tremendous support we have provided to our customers,” Tilford said in a statement. “Now is the right time for me to retire.”

In 2015, Medica posted revenue of $5.14 billion and employed about 1,600 people.

 

Twitter: @chrissnowbeck