About Aetna Inc.

Life, death, health, or injury -- Aetna's got an insurance policy to cover it. The company, one of the largest health insurers in the US, also offers life and disability insurance, as well as retirement savings products. Its health care division offers HMO, PPO, point of service (POS), health savings account (HSA), and traditional indemnity coverage, along with dental, vision, behavioral health, and Medicare and Medicaid plans, to groups and individuals. The health care segment covers some 23 million medical members. Aetna's group insurance segment (which it is selling to The Hartford) sells life and disability insurance nationwide, and its large case pensions segment offers pensions, annuities, and other retirement savings products. In what would be the largest health insurance deal in history, retail pharmacy giant CVS plans to buy Aetna for $69 billion.

Change in Company Type

In December 2017, CVS struck a deal to acquire Aetna in what might be a move to fend off potential pharmaceutical competitor Amazon. The deal will allow CVS to further expand the health care services it offers, as well as providing it with more leverage in negotiations for drug prices.

Operations

Aetna operates through three primary segments: Health Care, Group Insurance, and Large Case Pensions.

Aetna's Health Care segment accounts for more than 85% of sales. About two-thirds of Aetna's plans are provided on an administrative services contract (ASC) basis, where employer groups take on the medical cost risks, while the remaining third are fully insured contracts. Medical products include HSA's and Aetna HealthFund's consumer-directed health plans.

The company's health care plans include behavioral health and employee assistance; Aetna Health Connections' disease management, and Cofinity, which manages provider networks for other health plans and employer groups. Outside its core medical plan offerings, Aetna is one of the largest dental insurance providers in the country, serving some 14.5 million members. It also provides vision plans, while pharmacy benefit management (PBM) services are provided through a contract with Caremark.

The much smaller Group Insurance segment primarily offers life and disability coverage. Its products include basic and supplemental group term life, group universal life, supplementary or voluntary programs, and accidental death and dismemberment coverage. In 2017 Aetna agreed to sell its domestic group life and disability operations to The Hartford for $1.45 billion.

Finally, the Large Case Pensions segment manages a variety of retirement products, primarily for tax-qualified pension plans.

The company has several accountable care organization (ACO) agreements, serving some 900,000 members through these arrangements. It has collaborations under contract with such companies as Duke Health, Carilion Clinic, Banner Health, Inova Health System, and Memorial Hermann.

Altogether, Aetna estimates that it provides benefits, information, and resources to nearly 45 million individuals.

Geographic Reach

Aetna offers traditional health plans, dental plans, Medicare prescription drug coverage (known as Part D), and Medicare PPO group accounts nationwide, with a care network encompassing more than 1.3 million doctors and some 5,700 hospitals. The company also provides privately administered Medicare Advantage health plans in about 40 states and Washington, DC, and it offers Medicaid services in about 15 states.

Group insurance products are offered in 49 states; Washington, DC; Canada, Puerto Rico, Guam, and the US Virgin Islands. Network-based HMO and/or PPO plans are offered in 40 states and Washington, DC.

Overseas, the firm manages a health plan provider in India and offers coverage for expatriates (Americans working overseas) through Aetna International. Though its international operations currently account for a small fraction of sales, Aetna International has grown to serve more than 700,000 customers worldwide.

The company operates in the greater Hartford, Connecticut, area; Bethesda, Maryland; and Bluebell, Pennsylvania. It also has various field locations throughout the US and in several foreign countries.

Sales and Marketing

Aetna's health plan products are marketed primarily to corporate groups through direct sales representatives and independent brokers, agents, and consultants. The company targets its marketing efforts towards small, midsized, and large (multi-site) national employer groups.

Aetna also provides services to other insurance companies, governmental units, and labor groups, as well as individual customers including college students, part-time workers, and families. Its Medicare and Medicaid plan offerings make the US government Aetna's largest customer, accounting for nearly half of all health premium income.

Financial Performance

Aetna's revenues have been climbing for the past five years. In 2016 it rose 5% to $63.2 billion as health care premiums, fees, and other income increased.

Net income had also been rising but, in 2016, it fell 5% to $2.3 billion; this decline was primarily due to an increase in restructuring expenses related to a voluntary early retirement program. Cash flow from operations followed suit, declining 4% to $3.7 billion that year.

Strategy

Aetna's strategic goals include integrating the recently acquired Coventry business, increasing customer engagement and partnerships, managing technology improvements, and improving its relationships with health care providers. In 2016 it expanded its operations to 1,093 counties in 39 states and Washington, DC. On the other hand, the company has diminished its participation in Affordable Care Act insurance exchanges.

Though Aetna primarily provides insurance through large, employer-sponsored programs, the shifting US health care landscape has also prompted Aetna to step up its marketing efforts to individuals and small businesses in response to increasing product demand in these segments. In addition, Aetna is expanding its Medicare and Medicaid operations by expanding its coverage into new states and regions through organic and acquisitive means.

The company is also working to expand its health plan offerings in ways that mitigate rising health care costs for clients by shifting risk and decision-making responsibility onto patients. For instance, its HealthFund consumer-directed offerings combine high-deductible plans with medical expense funds (such as HSAs). Aetna is also working to grow its health information technology (HIT) operations through its ACS division, which aims to reduce unnecessary medical expenses through IT and patient management systems. The ACS division is focused on partnering with care providers to help them set up accountable care organizations (ACOs) under new government health laws.

To improve its members' overall wellness experience, Aetna partnered with Apple in 2016 to combine its analytics-based wellness and care management programs with Apple's watch, smartphone, and tablet applications.

Aetna is also looking to join a larger industry trend of health insurers heading overseas to create revenue in the face of US health care reform laws. The Aetna International unit is widening coverage of expatriates by creating new plan options and by entering new service territories, especially in emerging markets such as India, China, and Africa. In 2017 the company purchased Bupa Thailand to significantly expand its operations in Asia.

To further hone its focus on health insurance, Aetna has agreed to sell its domestic group life and disability operations to The Hartford for $1.45 billion.

Mergers and Acquisitions

Aetna's planned $34 billion acquisition of smaller rival Humana was torpedoed by a US judge in early 2017 on antitrust grounds. Aetna is slated to pay Humana $1 billion in breakup fees.

Later that year, Aetna acquired Bupa Thailand, broadening its presence in Asia. The purchase aligns with Aetna's plans to go more deeply into local health care markets around the world.

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Aetna Inc.

151 Farmington Ave
Hartford, CT 06156-0001
Phone: 1 (860) 273-0123
Fax: 1 (860) 273-1757

Stats

  • Employer Type: Public
  • Stock Symbol: AET
  • Stock Exchange: NYSE
  • Chairman and CEO: Mark T. Bertolini
  • President: Karen S. Lynch
  • EVP Operations and Technology: Margaret M. McCarthy
  • 2016 Employees: 49,500

Major Office Locations

  • Hartford, CT

Other Locations

  • Fairbanks, AK
  • Scottsdale, AZ
  • Tucson, AZ
  • Rancho Cucamonga, CA
  • San Diego, CA
  • San Francisco, CA
  • West Sacramento, CA
  • Woodland Hills, CA
  • Denver, CO
  • Greenwood Village, CO
  • Norwalk, CT
  • Newark, DE
  • Jacksonville, FL
  • Maitland, FL
  • Plantation, FL
  • Saint Petersburg, FL
  • Sunrise, FL
  • Tampa, FL
  • Alpharetta, GA
  • Atlanta, GA
  • Cairo, GA
  • Des Moines, IA
  • Champaign, IL
  • Downers Grove, IL
  • Rolling Meadows, IL
  • Fort Wayne, IN
  • Indianapolis, IN
  • Wichita, KS
  • Louisville, KY
  • Metairie, LA
  • Shreveport, LA
  • Medford, MA
  • Bethesda, MD
  • Columbia, MD
  • Linthicum Heights, MD
  • Portland, ME
  • Grand Rapids, MI
  • Southfield, MI
  • Minneapolis, MN
  • Gerald, MO
  • Saint Louis, MO
  • Gastonia, NC
  • High Point, NC
  • Bismarck, ND
  • Lincoln, NE
  • Branchville, NJ
  • Iselin, NJ
  • Parsippany, NJ
  • Albany, NY
  • New York, NY
  • New Albany, OH
  • Richfield, OH
  • Oklahoma City, OK
  • Tulsa, OK
  • Blue Bell, PA
  • Coraopolis, PA
  • Cranberry Township, PA
  • Erie, PA
  • Harrisburg, PA
  • Pittsburgh, PA
  • Franklin, TN
  • Memphis, TN
  • Arlington, TX
  • Dallas, TX
  • Garland, TX
  • Houston, TX
  • Lewisville, TX
  • Plano, TX
  • San Antonio, TX
  • Sugar Land, TX
  • Sandy, UT
  • Seattle, WA
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