Aetna's Bertolini on the changing payer landscape

BOSTON--As the “least hated insurance company among providers,” Aetna has been able to work with health systems as they take on risk, said Mark Bertolini, CEO and president of the health plan.

Aetna built a model and purchased the necessary technology and then made that technology available to providers. “The whole idea was to build a technology stack with semantic interoperability that we could plug into health systems and allow them to be in our business. We will be an enabler of providers to be in the insurance business.”

Bertolini cited Inova, a five-hospital health system serving northern Virgina, which entered a joint venture with Aetna. Inova has a health plan up and running, including offering services on the healthcare exchange. “It’s growing rather nicely,” he reported, having attracted 100,000 members since its launch.

Banner Health, which was part of the federal government Pioneer grant, also launched a health insurance business. Aetna has set up 40 such businesses, Bertolini said, with another 20 scheduled for 2014. “The goal is to have 45 percent of all of our healthcare spending under these arrangements by 2017.”

All Aetna staff involved in this effort are in a separate company from the 163-year-old mainstay in Hartford, Conn. This upstart has been disrupting the business also by buying excess healthcare delivery capacity and reselling it through a clinical capacity exchange. “We’re finding that for a vast majority of people who use the healthcare system, 75 to 85 percent really want it to be convenient. Their definition of quality is convenience.”

“The leading cause of failure is great management,” Bertolini told his audience. “Great management will always make the decision to keep going as it is now.” He cited Kodak which invented the first digital photography in the 1970s. The company focused on the loss of film revenue so priced their digital camera at $30,000. Once others tool on the technology, Kodak spent its time suing for patent infringement. “Not a great business model.”

Success, he said, begins with developing a strategy that the CEO communicates over and over and over. “Make sure people get it and then it will move from the head to the heart because that’s where the real work gets done. The strategy has to be realistic, intellectually consistent and something people can internalize.”

Aetna is now in 132 exchanges making it the largest participant. When states were rolling out their insurance exchanges, the company took the strategy of enrolling in all of them and departing as they reviewed each exchange. That participation represents less than 3 percent of its $57 billion in revenues. “So far, so good. We crossed 575,000 paid members last week. We’re growing but we’re not expecting to make any money. This is an investment in understanding how retail marketplaces work.”

Bertolini predicts a convergence of public and private in the consumer marketplace for healthcare. The question, he said, is whether or not consumer choice will overcome how employers have been handling health insurance which is over- or underinsuring people. “We believe in creating a real shopping experience.” He sees a process where consumers answer a few questions designed to best tailor their insurance options.

While healthcare costs have flattened, Bertolini said he isn’t ready to accept that as a new normal. “The system itself is not designed to support that which is essential to getting to a new normal.”  The current estimate of an average of 45 percent of healthcare costs paid out-of-pocket is “driving how the system is being used.”

Meanwhile, the definition of work is changing. “It’s less about having a job and more about doing meaningful work. We’re going to see a very different employment environment” which will certainly change how healthcare is paid for. Aetna has 20,000 employees working from home and Bertolini said that group has greater accuracy and productivity and less turnover. “The changing nature of work is going to be freed up by some of things we’re seeing today--people will buy what they need vs. what’s offered to them. That will result in better use of the healthcare system.”