Aetna 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 Aetna annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 50

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50

DIMENSIONS
of Leadership
AETNA ANNUAL REPORT 2005

Table of contents

  • Page 1
    DIMENSIONS of Leadership AETNA ANNUAL REPORT 2005

  • Page 2
    Pictured: Aetna Health Services Support Team, King of Prussia, Pennsylvania Aetna's health services doctors and nurses across the nation reach out to Aetna members and their doctors with information that helps improve the patient experience and the quality of care.

  • Page 3

  • Page 4
    ... and understanding Creating preference through innovation Creating preference by challenging the future Getting What We Pay for in Health Care John W. Rowe, M.D., Executive Chairman Financial and Corporate Information Expansions and Acquisitions in 2005 Key 2005 Awards and Recognitions 28 34 42 44

  • Page 5
    ... of $1.03 billion related to the Congressional Joint Committee on Taxation's approval of a tax refund and the completion of certain Internal Revenue Service audits associated with businesses sold by the Company's former parent company. operating margin (GAAP basis) was 11.3% in 2005 and 9.5% in 2004...

  • Page 6
    We place the people who use our services at the center of everything we do. 2 John W. Rowe, M.D. Executive Chairman (left), and Ronald A. Williams Chief Executive Officer and President (right)

  • Page 7
    3

  • Page 8
    ... deliver top-tier financial performance for our shareholders. We are happy to report that, by almost any measure, 2005 was another successful year for Aetna. ACHIEVING PROFITABLE GROWTH More than 50 percent of January 1, 2006, National Accounts sales included two or more Aetna products. With the...

  • Page 9
    ...-sell opportunities among all of our products - medical, pharmacy, dental, behavioral health, group life, long-term care and disability, and medical management - and across all customer markets. Our rigorous focus on health care quality and costs also contributed significantly to our results. For...

  • Page 10
    ...the stock split we announced in January 2006. RETURNING SIGNIFICANT VALUE TO SHAREHOLDERS Our share price increased by more than 51 percent for the year; outperforming our peers, and the S&P 500 and Morgan Stanley indices. From the beginning of Aetna's turnaround in May 2001 to year-end 2005, Aetna...

  • Page 11
    ... information - such as with our price transparency pilot initiative - so they can make better-informed decisions; How innovative and patented care management tools are being used by Aetna's health services support staff - such as the team pictured on our annual report cover - to help physicians...

  • Page 12
    ... regard, investment in Aetna's business is tied to increasing our ability to innovate on behalf of customers and making a positive impact in health care - whether it's by expanding access or geographic reach, strengthening existing markets or products, or enhancing our medical management or other...

  • Page 13
    ...the grand opening of Aetna's second mail-order pharmacy facility in Pompano Beach, Florida, was a final step in developing Aetna Pharmacy Management's comprehensive suite of products and services to manage pharmacy costs and quality. Finally, the successful acquisition of Strategic Resource Company...

  • Page 14
    ... better decisions about their health care and benefits, and putting the right tools in members' hands to help make their experience simple and easy - from plan selection, to choosing the right physician and knowing prices ahead of time, to checking on the status of a claim. We know we absolutely...

  • Page 15
    ...to thank Aetna employees for all their hard work making the company what it is today and our customers for their support over the years. And thanks to you, our shareholders, for your continued confidence in Aetna. For us, helping to build a stronger, more effective health care system is critically...

  • Page 16
    Aetna's business and public policy solutions are the building blocks for expanding constituent preference. Pictured: Aetna Customer Service Center Fresno, California "A Spirit of Service"...Fresno employees make a difference in the lives of our members and in our community. 12

  • Page 17
    Creating Preference 13

  • Page 18
    ... tools they need to manage their care, and access to quality health care through a variety of products that meet the needs of widely divergent populations. Both business and public policy solutions are the building blocks for expanding constituent preference. We place the people who use our services...

  • Page 19
    Aetna Executive Chairman John W. Rowe, M.D., was interviewed on CNBC about policy modifications adopted for members in the wake of Hurricane Katrina "to give them peace of mind." September 7, 2005 15

  • Page 20
    ... of the Aetna HealthFund suite of consumer-directed health plans. In 2005, we introduced an innovation that enables employers with our health savings account-compatible, high-deductible health plans to provide first-dollar coverage for preventive drugs used for the treatment of hypertension, high...

  • Page 21
    ...primary care physicians, this new program is designed to help identify and treat depression early - speeding and improving a patient's recovery. We provide physicians with clinical tools and access to support from Aetna nurses and behavioral health specialists, and we provide increased reimbursement...

  • Page 22
    ...area that gives members online access to the physician-specific rates for up to 25 of the most common office-based medical services. As a result, members in Greater Cincinnati can now know the cost of services before they go to the doctor's office. This first-ofits-kind program puts more helpful...

  • Page 23
    "What Aetna calls the 'consumer-directed' approach does have merit, and may well prove the most palatable. We applaud the company's experiment in Cincinnati." The Cincinnati Post August 22, 2005 19

  • Page 24
    ... work in health care benefits. ActiveHealth Management, which became an Aetna company in 2005, is helping to improve health care for millions of Americans. ActiveHealth's patented CareEngine® clinical decision support system is the powerful tool behind MedQuery. It continuously scans claims...

  • Page 25
    ... health issues, which is why Aetna forged a collaborative relationship with Columbia University College of Dental Medicine. Together, our goal is to bring new thinking to these issues to help make more illuminating research and helpful programs possible. Columbia University Medical Center is working...

  • Page 26
    ...and address health care needs with bold proposals and initiatives that chart a new course for the industry. In 2005, Aetna became the first national health insurer to announce support for an individual health insurance requirement, whereby states or the federal government would require individuals...

  • Page 27
    ... to make quality health care coverage more affordable. Our expanding Aetna HealthFund® family of consumer-directed health plans; our student health plans available through our Chickering subsidiary; and our coverage for part-time and hourly workers available through Strategic Resource Company (SRC...

  • Page 28
    ... with impressive gifts of their time and money, earning a 2005 Award for Excellence in Workplace Volunteer programs by the Points of Light Foundation and Volunteer Center National Network. In 2005, with Aetna's matching funds, employees and retirees donated $10.5 million and 155,000 hours of their...

  • Page 29
    "The Aetna grant will help us determine how traditional palliative care can be expanded and applied in the trauma unit setting, helping patients and their families in a very difficult time." - Kimberly Joseph, M.D. John H. Stroger Jr. Hospital of Cook County, Illinois Employees have logged nearly ...

  • Page 30
    There is a business case for quality in health care. 26

  • Page 31
    Getting What We Pay for in Health Care 27

  • Page 32
    ... the American health care system - all designed to make sure we get what we pay for in health care. Concerns regarding health care cost and quality are the substrate for the growing interest in pay for performance. Regarding cost, the year-over-year increase in health care costs, which for 2005 was...

  • Page 33
    ... cost and quality problems, employers, patients and government have called for greater accountability in health care. In this context, America's Health Insurance Plans, a national organization of health plans, has promulgated a set of guiding principles for establishment of pay-for-performance...

  • Page 34
    ... health plans can develop. Aetna's network option featuring Aexcel-designated physicians has attracted national attention for being innovative and effective.9 The program aims to provide access to cost-effective, high-quality care in highcost specialties. This network option includes specialists...

  • Page 35
    ... aims to provide access to cost-effective, high-quality care in high-cost specialties. available in nine major metropolitan regions throughout the country. Where possible, Aexcel-designated physicians are required to have provided 20 episodes of care for Aetna members in the preceding year. With...

  • Page 36
    ... example of making the business case for quality in health care. Early experience with Aexcel: Very high patient/ physician satisfaction Potential for health care savings Strong interest from employers As a reï¬,ection of this effectiveness, our enrollment in Aexcel grew from 79,000 at the end of...

  • Page 37
    ...Health Care before the U.S. House Committee on Education and the Workforce Subcommittee on Employer-Employee Relations. 2005. Centers for Medicare and Medicaid Services Press Release. Fact Sheet: Medicare "Pay for Performance (P4P) Initiatives." 2005. Centers for Medicare and Medicaid Services Press...

  • Page 38
    Consolidated Statements of Income 35 36 37 38 40 Financial and Corporate Information Consolidated Balance Sheets Consolidated Statements of Cash Flows Board of Directors and Management Shareholder Information 34

  • Page 39
    ...common share data) Revenue: Health care premiums Other premiums Fees and other revenue Net investment income Net realized capital gains Total revenue Benefits and expenses: Health care costs... and related notes as presented in Aetna Inc.'s 2005 Annual Report, Financial Report to Shareholders. 35

  • Page 40
    ... taxes Other long-term assets Separate Accounts assets Total assets Liabilities and shareholders' equity Current liabilities: Health care costs payable Future policy benefits Unpaid claims Unearned premiums Policyholders' funds Collateral payable under securities loan agreements Current portion of...

  • Page 41
    ... acquired Net cash (used for) provided by investing activities Cash ï¬,ows from financing activities: Deposits and interest credited for investment contracts Withdrawals of investment contracts Common shares issued under benefit plans Common shares repurchased Dividends paid to shareholders Other...

  • Page 42
    ..., Dickinson and Company Joseph P. Newhouse John D. MacArthur Professor of Health Policy and Management Harvard University John W. Rowe, M.D. Executive Chairman Aetna Inc. Ronald A. Williams Chief Executive Officer and President Aetna Inc. Board of Directors and Management Barbara Hackman Franklin...

  • Page 43
    ... A. Williams Medical Affairs Betsy Z. Cohen Molly J. Coye, M.D. Jeffrey E. Garten Joseph P. Newhouse* John W. Rowe, M.D. Nominating and Corporate Governance Barbara Hackman Franklin* Earl G. Graves Gerald Greenwald Ellen M. Hancock Edward J. Ludwig *Committee Chairman John W. Rowe, M.D. Executive...

  • Page 44
    ... Board of Directors may contact Michael H. Jordan, ANNUAL MEETING The annual meeting of shareholders of Aetna Inc. will be held on Friday, April 28, 2006, at The Conference Center located at Disney's BoardWalk Inn Resort in Lake Buena Vista, Florida. CORPORATE HEADQUARTERS 151 Farmington Avenue...

  • Page 45
    ... SHAREHOLDER SERVICES Computershare Trust Company, N.A. ("Computershare") maintains a telephone response center and a Web site to service registered shareholder accounts. Registered shareholders may contact Computershare to inquire about replacement dividend checks, address changes, stock transfers...

  • Page 46
    ...reduce medical costs... Strategic Resource Company 350 employees January 6, 2005 Columbia, South Carolina Aetna Specialty Pharmacy 265 employees March 1, 2005 - joint venture initiated December 30, 2005 - Aetna purchase of joint venture Orlando, Florida ActiveHealth Management 355 employees May 27...

  • Page 47
    ... behavioral health services... HMS Healthcare 315 employees July 18, 2005 Southfield, Michigan Denver, Colorado Aetna Mail-Order Pharmacy Expansion 225 employees November 29, 2005 Pompano Beach, Florida Aetna Behavioral Health Expansion 520 employees December 30, 2005 Hartford, Connecticut Aetna...

  • Page 48
    ... OF LIGHT FOUNDATION AND VOLUNTEER CENTER NATIONAL NETWORK - Aetna Navigatorâ„¢ won a Silver Award for best interactive site among HMOs, PPOs and other insurers FORTUNE MAGAZINE - Named Aetna one of the Top 50 Companies for Latinas NATIONAL BUSINESS COALITION ON HEALTH - Recognized Aetna with an...

  • Page 49
    ... Reports 2005 Annual Diversity Report http://www.aetna.com/diversity/index.htm An overview of Aetna's diversity-related initiatives and programs (available after April 1, 2006) Design: Aetna design. Photography: Michael O'Brien, Richard Freeda. Printing: Earthcolor. Aetna Corporate Responsibility...

  • Page 50
    31.05.900.1-05