When Jack Rowe became chief of Aetna Inc. (AET) in September, 2000, he walked into a company that had too many unprofitable members, a bullying reputation among doctors, and a bleeding bottom line. Rowe, also a noted geriatrician, has since made the Hartford health insurer a profitable innovator and what many consider to be the physician-friendliest player in the industry.
For Rowe, 60, last year was especially sweet. After 14 straight quarters of reductions in membership, Aetna increased its base by 750,000 members in 2004, to roughly 13.7 million, and expects to exceed that this year. Its stock price was up about 85% through late December and the company is expected to report a 33% jump in profits, to $1.1 billion, for 2004, says analyst John Rex of Bear, Stearns & Co. (BSC).
Rowe's prescription for profits has been bitter medicine for some, with double-digit rate hikes, job cuts, and a pared membership base. But the Aetna chief is also bringing much-needed innovation to health care.