Aetna 2013 Annual Report Download - page 77

Annual Report- Page 71
legislative authorities have in recent years discussed or proposed legislation that would restrict outsourcing. A
termination of our agreements with, or disruption in the performance of, one or more of these service providers
could result in service disruption or unavailability, reduced service quality and effectiveness, increased or
duplicative costs, an inability to meet our obligations to our customers or require us to seek alternative service
providers on less favorable contract terms, any of which can adversely affect our business, reputation and/or
operating results. Furthermore, where our arrangements with these service providers are not acceptable to our
customers, we must make alternate arrangements, which may be more costly and difficult to implement.
In particular, we have entered into agreements with our PBM services suppliers to provide us and certain of our
customers and members with certain PBM services. Our operating results would be adversely affected if we cannot
successfully complete the implementation of our PBM agreement with CVS Caremark on a timely basis and/or
achieve projected operating efficiencies from the agreement. If our PBM agreement with CVS Caremark or our
agreements with our other PBM services supplier were to terminate for any reason or one of our PBM services
supplier's ability to perform their respective obligations under their agreements with us 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 our PBM agreement with CVS Caremark or our other
agreements for PBM services (including projected operating efficiencies), 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/or
operating results.
Risks Related to Our Acquisitions
We may fail to successfully combine the business and operations of Aetna and Coventry to realize the anticipated
benefits and cost savings within the anticipated timeframe or at all.
The success of the Coventry acquisition will depend, in part, on our ability to realize the anticipated benefits and
cost savings from combining the businesses and operations of Aetna and Coventry without disrupting critical
activities. The integration of two large, complex organizations, with multiple business lines, numerous information
technology systems, many locations and thousands of employees is a significant challenge. It is possible that the
Coventry integration process will result in unexpected integration issues, higher than expected integration costs and/
or an overall integration process that takes longer than originally anticipated. Our ability to realize the anticipated
benefits and cost savings of the Coventry transaction is subject to certain risks including, among other things, the
risks that we may not be able to:
• Combine the employees of Aetna and Coventry in a manner that retains key talent, forges a strong common
corporate culture and maintains employee morale and performance despite differences in business
backgrounds and management philosophies;
• Harmonize the companies' operating practices, employee development and compensation programs,
internal controls and other policies, procedures and processes while maintaining Coventry's lower cost
structure and achieving anticipated cost savings;
• Manage the movement of certain employee positions to different locations and coordinate a geographically
dispersed organization without reducing employee morale, service levels, management effectiveness and
oversight or employee productivity and performance;
• Combine and harmonize the companies' sales, claims and call operations, and compliance and other
corporate and administrative functions in a manner that achieves anticipated cost savings without reducing
service levels, compromising growth, increasing compliance risk or increasing complexity;
• Coordinate and manage each company’s provider network in a manner that maintains provider
relationships, supports Aetna’s future strategy and achieves anticipated cost savings;
• Coordinate the companies’ sales, distribution and marketing efforts in a manner that avoids customer
confusion, presents a consistent brand image, and achieves membership growth;
• Integrate the companies’ systems and technologies in a manner that retains necessary functionality
(including security, access and data integrity), achieves anticipated cost savings, and is appropriate to
support the future growth and strategy of the combined company;