Aetna 2012 Annual Report Download - page 68

Annual Report- Page 62
affected if we cannot successfully implement the PBM Agreement on a timely basis and in a cost-efficient manner
and/or cannot achieve projected operating efficiencies for the agreement. In addition, if the PBM Agreement were
to terminate for any reason or CVS Caremark's ability to perform its obligations under the PBM Agreement were
impaired, we may not be able to find an alternative supplier in a timely manner or on acceptable financial terms. As
a result, our costs may increase, we would not realize the anticipated benefits of the PBM Agreement, and we may
not be able to meet the full demands of our customers, any of which could have a material adverse effect on our
business, reputation and operating results.
Failure by us or CVS Caremark to adhere to the laws and regulations that apply to our PBM and/or pharmacies'
products could expose our PBM and/or pharmacy subsidiaries to civil and criminal penalties and/or have a material
adverse effect on our business, cash flows, financial condition and operating results.
Our business success and operating results depend in part on effective information technology systems and
on continuing to develop and implement improvements in technology; we have several significant multi-year
strategic information technology projects in process and have increased our commitment to health
information technology products and solutions.
Our businesses depend in large part on our information and other technology systems to adequately price our
products and services; accurately establish reserves, process claims and report financial results; and interact with
providers, employer plan sponsors, members and vendors, including CVS Caremark, in an efficient and
uninterrupted fashion. We have many different information and other technology systems supporting our
businesses, and we will have more systems supporting our businesses following the closing of the proposed
Coventry acquisition.
With our acquisition of Medicity in January 2011 and our current focus on consumer engagement, ACOs and
collaborative provider networks and optimizing our business platforms, we have increased our commitment to HIT
products and solutions, a business that is rapidly changing and highly competitive. There is no assurance that our
technology products or solutions will operate as intended or that we will be able to earn a profit in our HIT
business, successfully adapt to changes to the HIT business or compete effectively in the HIT business or that we
have been or will be able to identify and mitigate the significant risks of pursuing that business, including patent
infringement and other intellectual property litigation against us and protection of our proprietary rights. In
addition, although the HIT industry is not currently subject to significant regulation, as we continue to implement
our HIT initiatives, an uncertain and rapidly evolving federal, state, international and industry legislative and
regulatory framework related to this area, including the potential for FDA regulation of certain of our HIT products
and/or solutions, as well as new legislation and/or regulation may make it difficult to achieve and maintain
compliance and could adversely affect our ability to compete in the HIT business and the operating results of our
HIT business.
Our business strategy involves providing customers with differentiated, easy to use, secure products and solutions
that leverage information to meet the needs of those customers. The marketplace is evolving, and the types of
technology and levels of service that are acceptable to customers and members today will not necessarily be
acceptable in the future. Our success therefore is dependent in large part on modifying existing core and other
technology systems to maintain their effectiveness and security, on anticipating and meeting marketplace demands
for technology, on effectively deploying our ACS, Medicity, Active Health, ACO support and other HIT resources
and on continuing to timely protect, develop, redesign and enhance technology systems that support our business
strategy initiatives and processes in a compliant, secure, and cost and resource efficient manner, including through
acquisitions, strategic alliances, joint ventures, social media and technology outsourcing, within the context of our
existing business partnership relationships and a limited budget of human resources and capital. Certain of our
technology systems (including software) are older, legacy systems that are less efficient and require an ongoing
commitment of significant capital and human resources to maintain, protect and enhance.
We also need to effectively deploy our ACS, Medicity, Active Health, ACO support and other HIT resources,
modify our existing systems or develop new systems to meet current and expected standards and keep pace with
continuing changes in information processing technology, emerging cybersecurity risks and threats, evolving
industry and regulatory standards, including the minimum MLR rebates, Insurance Exchanges, administrative