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• Aetna May Expand Access to Check-Ups
• Aetna Posted $406.3 Million Loss Reflecting Restructuring Charges
• Aetna Appoints Popik as Top Medical Officer
• Aetna Tries to Improve Bedside Manner
• Florida Judge Grants Dismissal of Lawsuits Against HMOs
• Humana Returns Profitability Exceeds Fourth-Quarter Estimates
• Cigna Shares Fall After Cigna Warns About Economic Downturns
• Wellpoint CEO: Hasn't Seen Employment Slowdown

• Conn. Doctors Society Swing Six HMOs Over Coverage
• CNBC's Faber Report: Cigna UNH Added to Florida Probe
• HMO Stocks Fall After Cigna Warns About Economic Downturns
• PacifiCare Says Calif. Did Issue Cease & Desist Order

1. Geyelin, Milo.  "Aetna May Expand Access to Check-Ups," Wall Street Journal, January 22, 2001: B12 

2.  Martinez, Barbara. "Aetna Posted $406.3 Million Loss Reflecting Restructuring Charges," Wall Street Journal, January 31, 2001: B15 - Good

Aetna hit a loss in the fourth quarter because of "charges relating to its recent restructuring."  Another factor was higher than expected medical costs. Aetna reported a net loss of $406.3 million on "charges of 556 million.  These charges were mostly from the write down of good will related to leaving some Medicare HMO businesses," and costs associated with Aetna's sales of financial services.  Excluding the charges for the most recent quarter,  Aetna reported earning 28.7 million down from 81 million.

Aetna officials report that the have already started several charges that will help control costs.  These changes include expanding programs to provide more preventive services for members with chronic disease.  Aetna claims that fourth quarter costs rose because more clients visited the emergency rooms, saw more specialists, and received more medical procedures than originally anticipated.

3.  Staff Reporter.  "Aetna Appoints Popik as Top Medical Officer, Looks to Fill Other Post,"  Wall Street Journal, February 16, 2001: B2 - Fair

William C. Popik, 55, was named Chief Medical Officer of Aetna Insurance.  Popik is taking the place of former officer, Arthur Leibowitz who left last fall to join Medical Logic/Medscape, which provides electronic medical records services and online clinical and informational services.  Popik former Cigna vice-president and national medical director, finally filled the vacant position for Aetna.

4.  byrt, Frank. "Conn. Doctors Society Swing Six HMOs Over Coverage,"  Dow Jones, February 14, 2001 - Excellent
The six largest health maintenance organizations including Aetna are being sued by Connecticut's leading medical society.  The allegations propose that HMOs have refused to cover "medically necessary" care.  The suit is being brought because "physicians and patients are systematically harmed by illegal policies and practices that the health maintenance organizations engage in."  Some policies include  denial for care without explanation and failing to properly staff medical facilities.  According to Dr. Donald Timmerman, president of the medical society "These law suits take direct aim at health plan policies and practices that place critical medical care decisions in the hands of insurance company bureaucrats instead of professional judgment and expertise of physicians."

Aetna has stated that even though they have not seen the suit as of yet, "it appears that it is similar to claims made in purported class action suits filed around the country since late 1999.  These complaints  seek to engage in a policy quarrel with the managed care system."  At a meeting the previous week Aetna and Connecticut's State Medical Society the concerns of the society were addressed and nothing was said about the law suit.  Aetna has stated that they are happy with their evolving relationship and are looking forward to working with them in the future. In Aetna's press release they also said, "We are surprised and disappointed that the parties have chosen to use litigation." 

5.  Martinez, Barbara.  "In Bid to Help Bottom Line Aetna Tries to Improve Bedside Manner,"  Wall Street Journal, February 23, 2001- Good

John W. Rowe, who accepted the Chief Executive job last September at Aetna Inc., is trying to save Aetna after it suffered huge losses.  Dr. Rowe is convinced that Aetna's problems can be fixed.  In the past five years Aetna has come to Insure one out of every ten insure Americans.  The company has enraged doctors and patients.  According to Aetna's members the company is "stingy, slow to pay, and prone to second-guess medical decisions."  Hospitals have also experienced similar problems and threatened to drop Aetna's networks.

These approaches were supposed to help the company financially, but has seemed to do just the opposite. Aetna's profit margin is approximately 2.5% compared with their major competitors who are at 5 percent.  Dr. Rowe is now trying to fix Aetna's problems with a high risk campaign and make amends with doctors and patients.  By using this campaign he hope to win back customers and increase company earnings.

6.  No Author Given.  "Florida Judge Grants Dismissal of Several Lawsuits Against HMOs," Wall Street Journal  March 2, 2001- Average

Florida federal judge, Federico Moreno, granted motions to dismiss lawsuits brought by health care providers against publicly traded managed care companies.  The order was given without prejudice. 

According to plaintiffs managed care companies have violated racketeering laws by conspiring to mislead consumers about the quality of health care.  They are also accused of violation their fiduciary responsibilities under the Employees Retirement Income Security Act.  The lawsuit named most of the nation's health insurers, including Aetna, Humana, Cigna, Health Bet, PacifiCare Health Systems, United Health Group, and Wellpoint Health Networks.  The industry is working together to improve its relations with physicians and increasing public understanding of HMO policies and procedures.

7.  Carrns, Ann.  "Humana Returns to Profitability, Exceeds Fourth-Quarter Estimates,"  Wall Street Journal, February 8, 2001- Average

Humana, a managed-care company, wrapped up the year exceeding their  expected fourth-quarter earnings by a penny.  The quarterly net income was 27 million, last years quarter earnings were 25 million.  This years revenue was $2.56 billion compared with 2.57 billion a year ago.  Humana continues to charge double-digit premium increases for customers, to keep up with rising costs.  Chief Executive, Michael McCallister stated "We continue to make solid progress in our turnaround."

Average membership for the quarter was 5.3 million down form six million last year.  Their annual revenue rose nearly four percent from a year ago.

8.  Faber, David CNBC reporter. "CNBC's Faber Report: Cigna UNH Added to Florida Probe," Dow Jones Newswires, February 12, 2001- Good

Cigna and United Health Care have been added, by the  Florida Attorney Generals office, to an on going civil investigation of whether HMOs in the state have improperly denied claims of treatment or reduced payments of claims.  The investigation is being pursued under federal racketeering laws.  The investigation was started by Florida in October of 1999 with Humana under attack.  In May 2000 Aetna was added to the investigation, and as of January 26,2001 Cigna and United Health Care were added.  Neither Cigna nor United Health Care  have admitted to being a subject of the investigation. 


HMOs have been a target for criticism nationwide for the past few years.  On allegation claims that the companies did not disclose that treatment decisions were being based of cost and not medical necessity.  Another claim was that patients were being dropped improperly from coverage.

9.  Martinez, Barbara, "Cigna Shares Fall After It Warns Results for Year May Be Hurt by Slow Economy," Wall Street Journal, February 12, 2001- Average

Despite strong fourth-quarter earnings Cigna , based in Philadelphia, shares fell 8.4 percent.  The executives warned that the slowing economy could hurt the company's performance this year.  Other managed care companies were also hit but not as hard.  William McKeever, UBS Warburg analyst said, "For 2001 the fundamentals of the industry are excellent, but there is a question about 2002." Cigna also reported a 5.1 % drop in net income due to unusual gains in the previous year.  Their net income in 1999 was $277 million which includes a $25 million in one-time gains.

Cigna continued its strong performance despite exiting from unfavorable Medicare HMO markets.  Cigna also added one million new members by the end of 2000.  Making its membership totals 14.3 million people.

10.  Bennett, Johanna. "HMO Stocks Fall After Cigna Warns About Economic Downturns,"  Dow Jones Newswires, February 9, 2001- Average
 

During a conference call on February the Third Cigna stated that the economic environment has changed since its third-quarter conference call last year.  The economic downfall and recent drop in the stock market could affect the employee-benefit business.  This statement  caused Cigna's stock price to drop by more than  ten percent during trade on Friday.  UBS Warburg analyst, William McKeever, stated in responce to the fall of most HMO stock  "The stocks are selling off in sympathy to Cigna.  My screen is red.  It is a red letter day in the HMO industry." 

Cigna is more venerable to an economic slump than other companies, because they are more involved in the employee benefit business.  McKeever also speculated that Cigna's stock would be up if they did not have their retirement division.  Chief Executive, H. Edward Hanway, said the company is confident about the upcoming year.

11.  Jones, Steven.  "PacifiCare Says Calif. Did Issue Cease & Desist Order,"  Dow Jones Newswires, March 2, 2001- Good

A December claims audit of PacifiCare found 7,000 unpaid claims older than 45 days, and the found that the managed-health company had not paid interest on those claims (which is required by law).  Dan Yarbrough, company spokesperson, reported that the amount of claims in question was approximately one percent of the total number of claims that PacifiCare handles per year.  He also claims that the audit came when the company was upgrading its claims processing software and implementing other staff and process changes.  The claims are said to be a result of a backlog created when the company was renegotiating contracts with hospital and care providers earlier in the year.  Since the audit PacifiCare has added 72 additional claims processors and completed systems upgrades to meet the 45 day payment order. 

12.  Bennett, Johanna.  "Wellpoint CEO: Hasn't Seen Employment Slowdown in Calif.,"  Wall Street Journal, February 14, 2001- Good

Leonard Schaeffer, Chief Executive of Wellpoint Health Networks Inc. says that he will continue to do business in California even though there is talk of an economic slowdown.  During a conference call with analysts and investors Schaeffer said Wellpoint has not yet seen signs of employment or economic slowdown in California.  Also, according to Schaeffer, if a slump does hit the state the company's diversified business mix will act as a buffer.  Much of Wellpoint's  members come form accounts with larger employers.  The company's small employer group and individual policy businesses are strong and able to pick up membership  in the event that larger companies do begin laying off employees.

Wellpoint expects membership numbers to grow in the mid-single digits as the company comes out with cheaper priced products that are aimed at the uninsured market and retaining customers in the small employer group market. Wellpoint beat estimates despite a higer-than tax rate, and higher-than-expected share count and investment losses.

Aetna's headquarters in Connecticut