AETNA: CEO Makes Final Changes in Health Division
Aetna's outgoing health care chief William Donaldson has implemented major changes in the way Aetna's regional offices operate, the Wall Street Journal reports. The changes became more urgent after Aetna warned two weeks ago that its second quarter earnings would be much lower than expected due to "unusually high" medical costs. "[A]bandoning its one-size-fits-all national strategy," Aetna will give regional directors more power and flexibility to respond to local health care trends. For example, regional directors will no longer be restricted by national hiring guidelines; instead, directors will operate under their own budgets to increase staff if necessary and will be free to review cases. Aetna spokesperson Joyce Oberdorf said the firm has come to the realization that "what works in California is not necessarily going to work in Georgia." Donaldson also has revamped Aetna's salesperson compensation policies. Employees also will be rewarded for account retention, not just new sales. In addition, they will be rewarded for selling a variety of different health plan products, rather than receiving larger incentives for selling HMO plans, which are typically the most profitable but have been upstaged by PPOs in recent years as consumers demand more flexibility in health care decisions. Aetna has been slow to acknowledge this trend, the Wall Street Journal notes.
Rowe to the Rescue?
In the search for Donaldson's replacement, Aetna has looked to "industry veterans" such as Dr. John Rowe, president and CEO of the recently merged Mt. Sinai and NYU Health. Although a Mt. Sinai spokesperson said that Aetna has given "no indication" that Rowe is being considered for the position, sources "familiar with the matter" said he is among a group of "promising candidates." Rowe has earned a reputation as a "tough executive who, among other things, has cut management layers." And Rowe's selection would indicate that "Donaldson is earnest about improving the leadership and credibility of the beleaguered health plan." Whoever fills Donaldson's position will face intimidating challenges -- trying to keep costs down while offering patients and doctors more freedom. Aetna is scheduled to report its final second quarter results tomorrow (Martinez/Lagnado, 8/3).