Aetna Tries to Recover from Recent Woes
While over the past five years Aetna Inc. has "grown into a behemoth," providing health coverage for one in 10 insured Americans, the company has also become "one of the most vilified" managed care firms, and the Wall Street Journal reports that CEO Dr. John Rowe may face "the toughest task in the $1.3 trillion health care industry" in his effort to "save" the company. "Aetna is like a patient with a lot of problems," Rowe said. The Journal reports that the insurer has "enraged" doctors, who call Aetna "stingy, slow to pay and prone to second-guess medical decisions," while hospitals have "threatened to bolt" from Aetna's networks. In addition, many Aetna-insured patients report "recurring problems" with receiving "timely reimbursements" for medical claims or "easy referrals" to specialists. Although Aetna officials hoped that their "hard-ball approach" would "pay off financially," the company remains only half as profitable as most health insurers. In addition, Aetna has spent about $10 billion on acquisitions since 1996, but the company's stock market value has "shrunk" to $5 billion. Rowe hopes to "cure" Aetna with a "high-risk" campaign to "make amends" with doctors and patients, "win back" customers and boost the company's earnings. At the same time, however, he faces an economic downturn and rising health care costs -- which have prompted employers to "put even more pressure" on insurers to "hold down" medical costs.
To address some of the problems facing Aetna, Rowe plans to reduce the number of procedures that require precertification and change the company's policy for handling medical claims complaints, urging employees to "treat every customer as if they were [their] mother." He also plans to reduce the "hassles, the phone in referrals and other paperwork rules" that force doctors to hire more office employees. By allowing more physicians to submit claims electronically, which costs about $4 to $14 less than manual processing, Aetna could decrease doctors' overhead and cut the company's costs. Aetna also hopes to cut the "tab" that it spends on heart disease patients -- about $100 million per year -- by having company nurses "more closely monitor" those patients' weight, blood pressure and "diligence in taking medication." Aetna also has "shed" 5,000 jobs, about 12.5% of the company's employees, to reduce costs. Still, the Journal asks, "Can Dr. Rowe's patient recover?" James Winkler, a senior consultant at Hewitt Associates, said that Aetna has "got four-plus years of bad blood" to overcome, adding, "It's going to take more than a new CEO and some new products to change that." While Winkler called the company's recent steps "encouraging," he warned that Aetna may spend "the next six to nine months figuring out how to play by the rules of today's game and at the end of that period, the game itself may have changed" (Martinez, Wall Street Journal, 2/23).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.