Aetna 2011 Annual Report Download - page 55

Annual Report- Page 49
and the health and related benefits industry in general over the next several years, including significant information
technology investments, changes in business processes and documentation and extensive employee education and
training. If we and/or the health and related benefits industry fail to adequately implement ICD-10 or if the
implementation date of ICD-10 is postponed significantly beyond October 2013, we may suffer a significant loss in
the resources invested and in productivity, and/or fluctuations in our cash flows.
We also have several significant multi-year strategic information technology projects in process in addition to
preparing for ICD-10. System development and other information technology projects are long-term in nature and
may take longer to complete and cost more than we expect and may not deliver the benefits we project once they
are complete. If we do not effectively and efficiently manage and upgrade our technology portfolio, we could,
among other things, have problems determining health care cost and other benefit cost estimates and/or establishing
appropriate pricing, meeting the needs of providers, employer plan sponsors and members, or keeping pace with
industry and regulatory standards, and our operating results may be adversely affected.
In order to remain competitive, we must further integrate our businesses and processes; significant
acquisitions, strategic alliances, joint ventures and/or our ability to manage multiple multi-year strategic
projects could make this integration more challenging; we expect to continue to pursue acquisitions as well as
develop other inorganic growth strategies.
Ineffective integration of our businesses and processes may adversely affect our ability to compete by, among other
things, increasing our costs relative to competitors. This integration task may be made more complex by significant
acquisitions, strategic alliances, joint ventures, multi-year strategic projects, our existing business partnership
relationships and a limited budget of human resources and capital, particularly if we pursue multiple transactions or
other initiatives designed to diversify our sources of revenue and earnings simultaneously. For example, we
completed four significant acquisitions during 2011. As a result of these and our previous acquisitions, we have
acquired a number of information technology systems that we must effectively and efficiently consolidate with our
own systems. Our strategy includes effectively investing our capital in appropriate strategic projects, current
operations and acquisitions in addition to paying dividends and repurchasing our shares. If we are unable to
successfully integrate acquired businesses and other processes to realize anticipated economic and other benefits on
a timely basis, it could result in substantial costs or delays or other operational or financial problems.
Our strategic projects include, among other things, addressing rising health care and other benefit costs, achieving
profitable membership growth, further improving the efficiency of our operations, managing certain significant
technology projects, further improving relations with health care providers, negotiating contract changes with
customers and providers, and implementing other business process improvements. The future performance of our
businesses will depend in large part on our ability to design and implement these initiatives, some of which will
occur over several years. If these initiatives result in increased health care or other benefit costs or do not achieve
their objectives, our operating results could be adversely affected.
We completed four significant acquisitions during 2011 and a number of other acquisitions and strategic alliances
over the last several years. We expect to continue to pursue acquisitions and other inorganic growth opportunities as
part of our growth strategy. See “Our continued business success is dependent on our ability to diversify our
sources of revenue and earnings” beginning on page 45. In addition to integration risks, some additional risks we
face with respect to acquisitions and other inorganic growth strategies include:
• The acquired business may not perform as projected;
• We may assume liabilities that we do not anticipate, including those that were not disclosed to us or which we
underestimated;
• Acquisitions and other inorganic growth strategies could disrupt or compete with our ongoing business,
distract management, divert resources and make it difficult to maintain our current business standards,
controls and procedures;
• We may finance future acquisitions and other inorganic growth strategies by issuing common stock for some
or all of the purchase price, which could dilute the ownership interests of our shareholders;
• We may incur additional debt related to future acquisitions and inorganic growth strategies;
• We frequently compete with other firms, some of which may have greater financial and other resources and a