For a while, Aetna and ING Groep looked like a couple of teenagers standing on the front porch deciding whether or not to hold hands. Like an adolescent romance, it was on again, off again. Then, finally, a $7.7 billion relationship--the sale of Aetna's nonhealthcare units.
The question remains, however, whether the move will allow Aetna to concentrate on improving its healthcare business and bettering its relationships with physicians and patients.
"I think it will free (CEO) Bill Donaldson to focus more on the business at hand," says Tim Norbeck, executive director of the Connecticut State Medical Society. "That could be good or bad."
Back in February, Aetna rejected a purchase offer from ING Groep and WellPoint. ING later returned to the table with another offer. The discussions were back on. A second effort in June also went nowhere.
On July 20, however, Netherlands-based ING and Hartford, Conn.-based Aetna finally announced the sale. The deal will consist of about $5 billion in cash and the assumption of about $2.7 billion in debt. Officials hope to have the sale, which is subject to regulatory and stockholder approval, complete by the end of the year.
Under the agreement, Aetna will spin off to shareholders a new healthcare business, which will include AetnaUSHealthcare, Group Insurance, Large Case Pensions and Aetna Global Benefits. In exchange for each Aetna share, company shareholders will receive one share of the new health company and about $35 a share in cash.
Since taking over the company in February, Donaldson has repeatedly said that selling off the nonhealthcare side of the company was a priority and would allow him to concentrate on what he says is the top priority: improving relationships with physicians and patients. He repeated that goal in his statement July 20.
"With this transaction, we believe we have taken an important step toward our stated goal of delivering value to shareholders while also taking into account the concerns of our customers, employees and constituents," he says.
Besides looking for a suitor for its financial enterprises, Donaldson has been hitting the pavement, meeting with doctors and trying to make nice with providers and patients. Aetna has eliminated the all-products clause in several states, including Connecticut and Texas.
In May, he made his first appearance before physicians when he met with delegates to the Connecticut State Medical Society's annual meeting. There Donaldson announced an end to the all-products clause in that state, elimination of some referral requirements and a pledge to work more closely with physicians.
"Donaldson has said he'll hold himself personally accountable," Norbeck says. "And we intend to hold him personally accountable."
Medical society officials are nominating a representative to serve on Aetna's quality advisory committee, an invitation Donaldson extended during the May meeting.
"We'll see what happens," Norbeck says, noting that Donaldson's honeymoon period may be ending. "We know (Donaldson) and Aetna have been very much involved in the ING (sale). They've also cleared the house of the remnants of USHealthcare . . . That was viewed as very positive by physicians around the country." Norbeck was referring to the departures of Michael Cardillo, president of AetnaUSHealthcare, and USHealthcare founder Leonard Abramson, who served on the board of directors.