American College of Physicians: Internal Medicine — Doctors for Adults ®

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Trouble at Aetna U.S. Healthcare: good or bad news for doctors?

From the April 2000 ACP-ASIM Observer, copyright 2000 by the American College of Physicians-American Society of Internal Medicine.

By Phyllis Maguire

Physicians have been reacting to news of trouble within the nation's largest HMO with a mixture of exhilaration and apprehension.

In late February, Aetna U.S. Healthcare announced that it was replacing its controversial chairman, Richard L. Huber, with a turnaround team. The HMO had been plagued by plunging stock prices, mounting lawsuits and bad press.

Doctors greeted the news with relief, hopeful that the change signaled a new direction for the health care giant. Physicians nationwide have long been angered by what they say are Aetna's lowball reimbursements and strong-arm tactics. Physicians have complained that the HMO, which has 21 million members, uses its market share to try to saddle physicians with onerous gag clauses and all-products requirements.

Word of Aetna's troubles may have delighted many physicians, but the euphoria did not last long. Only a week after the HMO announced its restructuring, the California-based insurer WellPoint Health Networks Inc. announced that it and a Dutch financial group had offered to buy Aetna, including its non-health care business, for $10 billion. While the news sent Aetna's stock price surging, physicians—particularly in California, where 5 million of WellPoint's 7.3 million members live—voiced concern.

Physicians reacted to the news warily for several reasons. Doctors in states like California, where WellPoint does most of its business, complained that the plan has consistently earned low satisfaction ratings from both patients and physicians. The plan has also been involved with several lawsuits over physician reimbursement with the California Medical Association.

Physicians were also concerned that if Aetna became part of an even bigger insurance company, their problems would escalate. As big insurers consolidate, said Alan L. Hillman, FACP, professor of medicine and health care systems at the University of Pennsylvania, physicians find it increasingly tough to negotiate good deals. "As a provider," he said, "you can't threaten to go to a different place or to opt out of their network."

At press time, however, Aetna's board rejected WellPoint's bid, sending the health plan's stock into another slump—and giving physicians new reason for optimism. Aetna's new chairman, William H. Donaldson, said that the company will split its financial services off from its health care division, which will then be overhauled. Aetna is now considering exiting certain markets, dumping the all-products clauses that have infuriated physicians and shifting HMO products to less restrictive preferred provider organization plans.

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