Aetna 2001 Annual Report Download - page 5


On Course for Success
  : In , our first year as an independent health care and related benefits
company, Aetna set out three imperatives: organize for success, improve business operations and set
a new strategic direction. Despite financial results that were extremely disappointing to us and
our shareholders, I am pleased to say that we made notable progress on all three fronts.
We changed Aetna’s leadership and organizational structure, and our entire approach to the mar-
ketplace.We tackled underlying causes of our poor financial performance and laid the groundwork
for improvement. And we crafted a new strategic direction, which will define our company in the
years ahead.
  
The first component of Aetna’s turnaround has been to organize for success. In , we assembled
a new team of senior leaders from inside and outside Aetna. We brought in talented, experienced
and well-regarded executives such as Ron Williams, head of Health Operations; Bill Popik, M.D.,
chief medical officer; Wei-Tih Cheng, chief information officer; and David Kelso, head of
the newly created organization, Strategy & Finance. At the same time, we promoted talented
Aetna veterans — such as Alan Bennett, chief financial officer — who understand deeply Aetna’s
business, its legacy and its proud tradition.
We created new interdisciplinary corporate councils to help Aetna become a more strategic and
high-performance organization. And we realigned our business structure to allow Aetna to serve
better the needs of our customers in our target market segments. Today, I am confident we have
the right team and the right organizational structure in place for our turnaround.
   
Second, we addressed many operational problems in our health business. Faced with financial setbacks
early in the year— resulting from higher-than-anticipated medical costs— we conducted a top-to-
bottom review of our health operations, developed plans to correct the identified deficiencies and
began implementing the necessary actions. Concurrently, we began sharpening our focus on
the health plan membership we can serve best. This led to the difficult, but necessary, exiting of
certain markets, programs and products, and reducing our membership and workforce.
We made, and continue to make, substantial enhancements in many aspects of our business —
service, pricing, underwriting, network contracting and patient management — to serve better
the employers who purchase our plans and the individuals who use them. In the following pages,
several of Aetna’s senior leaders describe these activities in detail.
    
Third, while engaged in the daily work of our turnaround, we also began looking ahead, formulating
a new strategic direction that aims to significantly improve Aetna’s margins and returns on
capital, and reduce our risk exposure and volatility. This new direction leverages our existing
strengths, targets specific product market segments and is aligned with where the market is headed.
The implications for our business are numerous: an increased presence in the midsize employer
market, a more disciplined approach in the small-business market, a shift toward self-insured accounts
and an increased emphasis on our group insurance products.