Aetna Archives - Recon Strategy

Shifting lines in the mobile health competitive battlefield: Aetna makes a strategic retreat while United digs in?

Tory Wolff November 24, 2014

The battle to own healthcare’s consumer relationship is being nowhere fought more intensely than in the mobile arena. Tea leaves suggest that Aetna has pulled back from trying to own this relationship in favor of a more collaborative “ecosystem” strategy, but United appears determined to lead. The thinking is speculative but I let me point out the emerging evidence and offer some guesses on what will come next. Strategy environment for consumer mobile health At the risk of oversimplification, let me offer six hypotheses regarding the strategic context for consumer

Aetna not conceding the private exchange space to the benefits consultants

Tory Wolff May 16, 2014

Summary Aetna is stitching its inventory of ACO deals into a national ACO network and will offer them on its proprietary private exchange (PHIX) Linking ACOs and PHIXs is smart because PHIX’s defined contribution feature creates a strong consumer reward for picking a tighter network product Promising a national network of ACOs is bold: ACO deals depend on willing providers and opportunity in local care patterns; in many geographies, the delivery system isn’t ready or interested. If Aetna can create a national network, it should be attractive to major employers

Cigna and Samsung: assembling a “global account”-based business model for mobile

Tory Wolff November 30, 2013

Samsung and Cigna have agreed to a multi-year development alliance for health applications for the Samsung smartphone. The partners will initially focus on content (access to the health-related tips and articles Cigna already offers its customer base). Ultimately, the partnership will “connect individuals with caregivers, doctors and hospitals to improve health and wellness globally.” So far, the announcements have been silent on any exclusivity. In our view, the content deal is a sideshow: health and wellness tips are highly commoditized and an insurer an undifferentiated supplier for this content. I

Heartland Health: Marching towards Kansas City with Mayo on its shoulder

Tory Wolff May 31, 2012

Earlier this month, Heartland Health signed a deal with the Mayo Clinic for its doctors to virtually consult cases with Mayo physicians in return for an undisclosed fee. Heartland Health is a regional medical system in northwest Missouri and includes a ~350 bed acute care hospital (Heartland Regional Medical Center) with 200+ medical staff physicians, and the Heartland Clinic with 100 providers in 23 locations. Heartland is now the fifth hospital system to join the Mayo Clinic Care Network (MCCN), a structure launched by Mayo in September 2011. The deal substantially

Big box retail as health insurance channel: thoughts on the Aetna-Costco deal

Tory Wolff April 27, 2012

Summary Aetna has struck a deal to sell individual health insurance with Costco, the #6 retailer. The deal targets 9 populous states first with more to follow in 2012 While the deal lacks some of the levers of the very successful Walmart-Humana Part D deal, there is real potential for this channel to attract consumers if employers opt-out on a large scale Given that Aetna has some arrangements with Best Buy (the #9 retailer) and an established alliance with CVS (the #7 retailer), it looks like Aetna is building out

Compete by creating more competitors: the Heartland Health deal and Aetna’s strategic jiu jitsu

Tory Wolff January 21, 2012

Yesterday, Aetna announced a deal with Heartland Health (an integrated delivery system serving northwest Missouri, northeast Kansas and southeast Nebraska) to create a new health plan for the small group market (2-50 employees) for 2 counties in Missouri and 1 county in Kansas. Heartland Health has a ~350 bed acute care hospital (Heartland Regional Medical Center) with 200+ medical staff physicians, and the Heartland Clinic with 100 providers in 23 locations. Most important, recent financial evaluations have given Heartland Health a startling 82% market share in primary service area (!).

Aetna and Best Buy: a new twist on retail in healthcare

Tory Wolff January 12, 2012

Aetna has struck a deal with Best Buy to sell four online coaching programs (fitness, weight management, smoking cessation and stress management) in new 1,200 sq. ft. “health technology departments” in 3 suburban Chicago locations. In these departments, Best Buy is selling a broad range of technologies and tools for fitness, sleep, nutrition and beauty alongside the Aetna programs. The strategy: target Best Buy’s tech savvy customers when they are thinking about health and when they have an expectation to buy (vs. for example being on-line when there is more

XL Health in play: what do the three suitors see?

Tory Wolff November 18, 2011

UPDATE: United buys XL Health! Here’s what we surmised in the original post on this topic: “That leaves United. A leadership position in C-SNPs would fit well with United’s leading position in Medicare Advantage overall, #1 position in D-SNPs and #2 position in I-SNPs. The capabilities would also seem to be readily applicable to the broader Medicare population (given, for example, the potential transfers back and forth across between C-SNP and regular Medicare Advantage). The curious thing is that United dramatically reduced its C-SNP business last year (went from about

The CIGNA-Healthspring deal: local share key to top-line synergies but still missing from the equation

Tory Wolff November 10, 2011

Summary Provider discounts are a key priority for national accounts – which puts CIGNA (CI) and Aetna at a disadvantage; CI responding in part by trying to get closer to providers A provider collaboration strategy requires a critical mass of patients and provider mindshare. CI does not have it; nor will the Healthspring (HS) acquisition provide it given the limited geographic overlap between the two companies CI must therefore grow share in key markets to capture the deal’s potential provider collaboration synergies (though other synergies are certainly accessible) If CI

Consumerism bulk-up: Quick thoughts on Aetna’s acquisition of PayFlex

Tory Wolff July 20, 2011

Payflex is an administrator of account-based benefits including HSAs, HRAs, FSAs and COBRA benefits. The company has $58M in revenues, 1M individual consumer accounts and 3,300 employer customers. On Monday, Aetna accounced plans to acquire the company for $202M. The acquisition pricing looks rich relative to the other benchmark out there: Wageworks is a competitor about 2x the size of Payflex and which recently filed an IPO to sell 23% of the company for $75M (in the works at least since April and described in detail in the registration statement

Rise of self-insurance in smaller groups: opportunity and threat

Tory Wolff May 26, 2011

Summary Self-insurance is growing among smaller groups (including those sized 50-250) From a competitive point of view, it will be hard for insurers holding attractive groups in risk products to respond given the enormous profit cannibalization of converting from risk to an ASO offering But they will need to find some solution: risk products today are expensive for many groups given continuing low levels of utilization; “peanut-butter” share nationals at the forefront of these products (Cigna and now Aetna) won’t have cannibalization worries to stop them from pushing the model

Major health plan Q1 earnings: Profit surprise in commercial risk; multiple reasons why business prospects look good

Tory Wolff May 21, 2011

Public health insurers startled the market with earnings ~25% above consensus expectations. A key driver was lower-than-expected utilization (particularly in the under 65 commercial lives) which kept medical costs down. Management teams offered two theories in the analyst calls: bad weather and the beginning-of-the-year reset of consumer directed (CD) deductibles; neither is compelling: A lot of discretionary care has already been squeezed out of the system by the bad economy; it is hard to imagine that bad weather would drive out a lot more. Also the utilization decline was concentrated

Revolution in Roanoke? Perspectives on the Aetna-Carilion deal

Tory Wolff March 19, 2011

Summary The line between health plan and provider continues to evolve: the Aetna-Carilion deal exemplifies providers backward integrating into insurance (and contrasts with other providers exiting commercial insurance business e.g. art part of last year’s Coventry deals) The Aetna-Carilion alliance appears to have compelling, multi-layered business logic and there will surely be more of these sorts of couplings in markets where there is a strong provider brand and a health plan with low share but deep capabilities and ambition. Using the provider brand to sell insurance creates challenges for health

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Recon takes an analytical look behind select developments in healthcare