Although much work remains to restore the luster to embattled Aetna's crown, analysts and physicians say CEO William Donaldson has moved toward repairing relationships with doctors. By doing that, analysts say, he has bought the nation's largest insurer time to get its financial house in order.
"Since he's taken over, he's reaching out to various constituencies," says Ed Kroll, senior healthcare analyst with SG Cowen in New York. "Just by reaching out, he's taken some of the pressure off them to settle all of these issues. They do have some time . . . (Changing) an organization of Aetna's size cannot be an overnight process."
But doctors, the very ones Donaldson is courting, are assessing his comments with a large dose of skepticism.
"I think it's a step in the right direction," says Karen Laugel, M.D., a pediatrician in Stratford, Conn., who says she refused to sign the latest round of Aetna contracts. "This is a business. They don't have patient care (as) a No. 1 priority. Their shareholders are their No. 1 priority.
"The proof is in the pudding. We'll see how the new contracts read."
In his first three months on the job, Donaldson has seemed intent on making amends with the physicians who can help him make or break his company. When he took over as chairman and CEO in February, Donaldson pledged that improving relationships with physicians was his top priority.
Aetna has been fighting fires on a number of fronts, including a half-dozen class action lawsuits accusing the insurer of everything from fraud to extortion. The company's stock also has taken a beating, dropping to a 52-week low of 38 1/2 before rebounding earlier this year. By late May, the stock rebounded to 64 9/16.
The problems with physicians have occupied the majority of Donaldson's time.
In a settlement with the Texas attorney general in April, Aetna agreed to drop its all-products clause, pay some physicians on a fee-for-service basis and establish an ombudsman position (see May, page 3). Some have claimed Aetna got a sweetheart deal in the settlement, but Donaldson insists his company is sincere.
Connecticut's attorney general is investigating whether Aetna's all-products clause violates the state's fair trade act. As of press time, it wasn't clear how the attorney general would handle the case in light of Aetna's announcement that it will end its all-products requirement by January.
During his first public appearance, Donaldson told delegates to the Connecticut State Medical Society's annual meeting that while Aetna has helped control medical costs, "there was a price: too many restrictions and too much process that have grown increasingly unpopular. There are those who say the pendulum has swung too far. And I agree with them. I think it's time to bring it back to the center."
He also says that it's time for the bickering between physicians and Aetna to stop.
"The relationship between Connecticut doctors and AetnaUSHealthcare has been contentious, to say the least," Donaldson says. "We simply can't let this continue."
Donaldson says the company will look at each of Aetna's markets--Aetna has PPOs in 47 states and HMOs in 33 states--and determine how to ease restrictions that physicians and patients have come to loathe. Company officials say there's no specific timetable to accomplish this and that all of Aetna's practices will be examined as they hear from various entities.
The company, he says, is "taking a good hard look at the way we do business. It can't be done overnight." He also says the company is determining whether it would make sense to eliminate its preauthorization requirements, just as UnitedHealthcare did in November.
Aetna isn't reacting to what United did, says Arthur Liebowitz, M.D., Aetna's chief medical officer. Rather, the company is responding to changes in the market, to consumers and physicians who want more freedom and to patients who are willing to pay to get it.
Separating Aetna into two independent companies, including one for healthcare, will allow the company to ensure those changes, Donaldson says.
"It is our responsibility to listen to our constituents and recast our business model to better meet their needs. For (the physicians') part, it is your responsibility to focus not only on delivering high-quality care but also on practicing as efficiently as possible. I am confident that we can reconcile those needs by working together.
"You all have a right to earn a living," Donaldson told physicians. "We're a company. We have a right to a return on our investments."
Many of the more than 200 physicians who attended the Connecticut meeting weren't buying Aetna's changes wholesale. In fact, they say, Aetna's desire for a return on investment is at the center of the problem. The majority of physicians at the meeting say the company hasn't come far enough.
"I think it's totally contrived," says John Lewis, M.D., an OB/GYN in Waterbury who attended the meeting. "I don't have anything against (Donaldson) . . . (But) we've never had such a dog and pony show before. Every change that he's planning on making is cosmetic. He's not a bad person. His job is to maximize profits for stockholders. It's not to give good medical care or to treat doctors nicely."
Physicians questioned Aetna's motivation and the company's willingness to follow through on Donaldson's promise to not only eliminate some of the onerous requirements but on the likelihood that the recently exhibited goodwill would last. Some doctors, however, say Donaldson deserves a chance.
"My personal reaction was positive," says Frank Scarpa, M.D., a general surgeon in Greenwich, Conn. "My attitude is this guy is saying the right things, and let's give him a chance. It's not fair to say this is just baloney, that he's sweet-talking us. He went out of his way to appear before us. I think most of us considered it a gesture of goodwill to be there."
Donaldson says class action lawsuits and other pending litigation weren't the motivation behind the changes. However, if the changes "avoid litigation, so much the better."
SG Cowen's Kroll says Aetna's moves are wise. While there are long-term questions that need answers, such as whether relaxing policies will result in higher medical costs, "I think he's doing the right things," Kroll says. "He's not a healthcare guy. He's a Wall Street guy. He has a reputation for integrity and taking action. I think he's off to a good start."