Aetna 2009 Annual Report Download - page 46

Annual Report – Page 40
Our profitability may be adversely affected if we are unable to contract with providers on competitive terms
and otherwise maintain favorable provider relationships.
Our profitability is dependent in part upon our ability to contract competitively while maintaining favorable
relationships with hospitals, physicians, pharmaceutical benefit service providers, pharmaceutical manufacturers and
other health benefits providers. That ability is affected by the rates we pay providers for services rendered to our
members, by our business practices and processes and by our provider payment and other provider relations practices,
as well as factors not associated with us that impact these providers, such as merger and acquisition activity and other
consolidations among providers. The breadth and quality of our networks of available providers is also an important
factor when customers consider our products and services. Our contracts with providers generally may be terminated
by either party without cause on short notice. The failure to maintain or to secure new cost-effective health care
provider contracts may result in a loss in membership, higher health care costs, less desirable products for our
customers and/or difficulty in meeting regulatory or accreditation requirements, any of which could adversely affect
our operating results.
In addition, some providers that render services to our members do not have contracts with us. In those cases, we do
not have a pre-established understanding with these providers about the amount of compensation that is due to these
providers for services rendered to our members. In some states, the amount of compensation due to these non-
participating providers is defined by law or regulation, but in most instances it is either not defined or it is established
by a standard that is not clearly translatable into dollar terms. In such instances providers may believe that they are
underpaid for their services and may either litigate or arbitrate their dispute with us or try to recover from our members
the difference between what we have paid them and the amount they charged us.
For example, we are currently involved in litigation with non-participating providers, and during 2009, we recently
settled a matter with the New York Attorney General that will change the source of information we use to determine
the amount we pay non-participating providers. These matters are described in more detail in Litigation and
Regulatory Proceedings in Note 18 of Notes to Consolidated Financial Statements beginning on page 78.
We must demonstrate that our products and processes lead to access by our members to quality care by their
providers, or delivery of care by us.
Failure to demonstrate that our products and processes (such as disease management and patient safety programs,
provider credentialing and other quality of care and information management initiatives) lead to access by our
members to quality care by providers or delivery of quality care by us would adversely affect our ability to
differentiate our product and/or service offerings from those of competitors and could adversely affect our operating
results.
We face a wide range of risks, and our success depends on our ability to identify, prioritize and appropriately
manage our enterprise risk exposures.
As a large company operating in a complex industry, we encounter a variety of risks. The risks we face include, among
other matters, the range of industry, competitive, regulatory, financial, operational or external risks identified in this
Risk Factors discussion. We continue to devote resources to further develop and integrate our enterprise-wide risk
management processes. Failure to identify, prioritize and appropriately manage or mitigate these risks, including risk
concentrations across different industries, segments and geographies, can adversely affect our profitability, our ability
to retain or grow business, or, in the event of extreme circumstances, our financial condition or business operations.
Sales of our products and services are dependent on our ability to attract, retain and provide support to a
network of internal sales personnel and third party brokers, consultants and agents.
Our products are sold primarily through our sales personnel, who frequently work with independent brokers,
consultants and agents who assist in the production and servicing of business. The independent brokers, consultants
and agents generally are not dedicated to us exclusively and may frequently also recommend and/or market health
benefits products of our competitors, and we must compete intensely for their services and allegiance. Our sales could
be adversely affected if we are unable to attract or retain sales personnel and third party brokers, consultants and agents
or if we do not adequately provide support, training and education to this sales network regarding our product
portfolio, which is complex, or if our sales strategy is not appropriately aligned across distribution channels.