More Good News at Aetna; Is it Embracing Its Own Transformation?

Aetna CEO Ron Williams looked remarkably bullish last week as he outlined the company's prospects at a Reuters conference. Aetna is gaining market share while its competitors retrench, Williams said, despite the grim economy and the possibility that Washington may radically transform the health-insurance industry sometime next year.

For instance, Williams said his company -- the third-largest health insurer in the U.S. -- expects to gain 800,000 members in the first quarter of 2009. He cited enrollment expansions with other huge companies as a big part of Aetna's success -- noting, for instance, that Aetna will gain 250,000 new members at Bank of America. (It wasn't clear if that gain is part of the expected first-quarter growth or not.)

On one level, a lot of this sounds pretty familiar. Aetna has been doing pretty well for at least the last year or so, certainly relative to its beleaguered rivals, largely thanks to its prowess at locking down huge accounts.

That would still leave Aetna in the unenviable position of winning share in a shrinking market were it not for some hints that the health plan may be starting to build an interesting competitive advantage. Williams, for instance, credited the expansion of Aetna's contract with BofA to its "strategy to integrate its products and data" (that's a Reuters paraphrase, by the way, not an actual Williams quote).

Of course, that could mean almost anything, and it seems obvious that the Reuters scribe had no idea what Williams was really getting at. I can't be too sure myself, but I'd hazard a guess that Aetna's recent push into expanded disease management and wellness aimed at helping its healthier members avoid illness, buttressed by an IT strategy that appears to let the insurer draw health conclusions from claims data, are a big part of it.

If so, then Aetna may actually be on the path to transforming its own business, morphing from a transaction-processing model to one in which it plays a much more active role helping its members to embrace disease prevention and navigate the medical system. It's all still a little blue-sky to me at the moment, but it's potentially pretty exciting, as I've long argued that today's health plans are going to have to change radically if they hope to survive both a demanding business environment and the prospect of federal reform that could sharply curtail their business options. If Aetna is in fact headed this direction, then more power to them.