Aetna 2013 Annual Report Download - page 74

Annual Report- Page 68
to compete successfully on Public Exchanges or Private Exchanges or that we will be able to benefit from any
opportunities presented by Public Exchanges or Private Exchanges. If we are not competitive on these exchanges or
are unsuccessful in reducing our cost structure, our future growth and profitability may be adversely impacted.
If we fail to develop new products, differentiate our products from those of our competitors or demonstrate the
value of our products to our customers, our ability to retain or grow profitable membership may be adversely
affected.
We operate in a quickly evolving industry. Our customers generally, and our larger customers in particular, are well-
informed and organized and, along with our individual customers, can easily move between us and our competitors.
This requires us to differentiate our products and solutions, anticipate changes in customer preferences and innovate
and deliver new and existing products and solutions that demonstrate value to our customers, particularly in
response to marketplace changes from public policy. Any failure to do so may adversely affect our ability to retain
or grow profitable membership, which can adversely affect our operating results.
Our reputation is one of our most important assets; negative public perception of the health and related benefits
industry, or of the industry’s or our practices, can adversely affect our operating results.
The health and related benefits industry regularly is subject to negative publicity, including as a result of the
ongoing public debate over Health Care Reform, actual or perceived shortfalls regarding the industry's or our own
products and/or business practices (including social media activities). This risk will increase further as we raise
premium rates by more than we have in recent years to price for the expanded benefits required by, and the fees,
assessments and taxes imposed by, Health Care Reform and any acceleration in medical cost inflation. This risk
may be increased as states and the federal government implement and continue to debate Health Care Reform, as
we continue to offer products (including products for people who are eligible for Medicaid or dually eligible for
Medicare and Medicaid), beyond those in our core Commercial business and as our business model becomes more
focused on consumers and direct-to-consumer sales, including as a result of us competing for sales on Insurance
Exchanges. Negative publicity of the health and related benefits industry in general, or Aetna or its key vendors in
particular, can further increase our costs of doing business and adversely affect our operating results and our stock
price by:
• Adversely affecting the Aetna brand;
• Adversely affecting our ability to market and sell our products and/or services and/or retain our existing
customers and members;
• Requiring us to change our products and/or services; and/or
• Increasing the regulatory and legislative requirements with which we must comply.
If we or our vendors fail to provide our customers with quality service that meets their expectations, our ability to
retain and grow our membership will be adversely affected.
Our ability to attract and retain membership is dependent upon providing quality customer service operations (such
as call center operations, claim processing, outsourced PBM functions, mail order pharmacy prescription delivery,
specialty pharmacy prescription delivery, customer case installation and on-line access and tools) that meet or
exceed our customers' and members' expectations. As we seek to reduce general and administrative expenses, we
must balance the potential impact of cost-savings measures on our customer and other service and performance. If
we misjudge the effects of such measures, customer and other service may be adversely impacted. We depend on
third parties for certain of our customer service, PBM and prescription delivery operations. For example, CVS
Caremark provides us with certain PBM services. If we or our vendors fail to provide service that meets our
customers' and members' expectations, we may have difficulty retaining or growing profitable membership, which
can adversely affect our operating results.