Bloomberg News

Aetna Joins Medical Group as Insurer-Provider Lines Blur

July 26, 2012

Aetna Inc. (AET:US), the third-biggest U.S. health plan, will join with the nation’s 10th-largest doctor’s group to sell coverage in Wisconsin, in the latest collaboration to blur the lines between insurers and providers.

Aetna and Milwaukee-based Aurora Health Care will form an “accountable care network” pitched at small- and mid-sized businesses, said Aetna Chief Executive Officer Mark Bertolini. Aurora, with 1,600 doctors serving 1.2 million patients a year, will get a share of the savings, if the group can cut costs. Further financial details weren’t disclosed.

Insurers from Aetna to Cigna Corp. (CI:US) to UnitedHealth Group Inc. (UNH:US) have been sealing similar pacts with hospitals and doctors across the U.S., reacting to pressure from employers to rein in medical bills. The ventures typically emphasize preventive care, close monitoring of at-risk patients and payments based on quality measures rather than the number of procedures done.

“We think of this as reinventing the business model,” Bertolini said in a telephone interview. “It’s no longer us telling the providers what to do. It’s the providers managing the risk of the population they’re serving and being rewarded for a positive outcome.”

The Aurora-Aetna network, the insurer’s 11th accountable care partner, will begin offering plans in January. Deals are in the works for 180 others, Bertolini said.

The shares of Hartford, Connecticut-based Aetna fell less than 1 percent to $35.30 at the close of New York trading. The stock has dropped 16 percent this year. The insurer is scheduled to report second-quarter earnings on July 31.

UnitedHealth, Cigna

In January, Minnetonka, Minnesota-based UnitedHealth, the largest U.S. plan, said it’s in talks with “dozens” of groups to form ACOs. Cigna plans to have 1 million patients in such arrangements by 2014, CEO David Cordani said in March.

Health plans are competing in “a real estate grab” across the U.S. for partners, Bertolini said. “This is the kind of thing that will be a market-shifter.”

Besides tackling employers’ concerns about runaway medical costs, the arrangements also make it easier for insurers to expand their reach, Bertolini said. Aetna currently covers only about 3 percent of people in the area Aurora serves, far behind market leader UnitedHealth, he said.

Aurora’s not-for-profit medical network also includes 15 hospitals and 160 clinics in eastern Wisconsin and northern Illinois, according to a statement from the companies. Aurora is the 10th biggest multispecialty physicians’ group in the U.S., based on the number of doctors employed, according to the Alexandria, Virginia-based American Medical Group Association.

Care Managers

Employees covered through the Aurora network will get access to care managers who can schedule treatments and follow- up on patients with chronic conditions.

Aurora’s system of electronic medical records and Aetna’s ability to analyze medical claims will further improve care, according to a statement.

Aurora will benefit from Aetna’s marketing muscle as well as its technological capabilities, said Steve Bablitch, the medical system’s chief corporate services officer.

Insurers “track all kinds of illnesses and diseases,” he said by telephone. “They know a lot about our patient base.”

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net


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Companies Mentioned

  • AET
    (Aetna Inc)
    • $84.16 USD
    • -0.38
    • -0.45%
  • CI
    (Cigna Corp)
    • $96.75 USD
    • -0.05
    • -0.05%
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