WSJ.com – Behind Aetna’s Turnaround: Small Steps to Pare Cost of Care:
When patients run up six-figure medical bills, health insurers shudder. A few years ago, Aetna Inc. was notorious for playing tough in such situations. It haggled with doctors and hospitals about discounts, while telling its clerks to see if some charges should be disallowed as medically unnecessary.Aetna still keeps a close eye on costs, but it is trying to make allies out of former enemies. Aetna’s chief medical officer, William Popik, cites a case last year when his department tracked down three hemophilia experts, seeking advice about treating a hemophiliac boy whose care was costing $500,000 a month. The three doctors spent hours reviewing the case. Then they recommended adjusting the boy’s care so he wouldn’t need such large doses of a blood factor meant to help clotting.
The boy’s own physician embraced the changes. Within months, treatment costs dropped 75% and the child’s health improved, Aetna says.
Such expert coaching on tough, costly cases is becoming an important part of Aetna’s strategic plan. Health insurers have been berated in recent years for alleged interference by non-health professionals in treatment decisions. But Aetna officials believe that by turning to medical experts, they can save costs and improve care simultaneously. The company has impressed Wall Street analysts by recovering from a period of operating losses, while establishing one of the slowest rates of medical-cost increases in its industry.
Aetna owes a lot to its new information systems:
The insurer recently completed an overhaul of its computer systems, which had become snarled by a series of rapid-fire acquisitions in the 1990s, including the $8 billion purchase of U.S. Healthcare Inc. in 1996.A few years ago, Aetna’s information systems were a messy patchwork of technologies. Aetna at times paid bills of people who were no longer customers or paid the same claim twice. Because Aetna had incomplete information about its medical costs, company officials say, it unwittingly underpriced its premiums, leading to losses and embarrassingly incorrect financial projections.
Aetna President Ronald Williams, who joined the company in 2001, ordered a $20 million revamp of data systems. What emerged was the “Executive Management Information System,” which Joshua Raskin, a health-care analyst at Lehman Brothers, last year called “the single largest driver of the Aetna turnaround.” That system, known as EMIS, helped Aetna identify and dump unprofitable corporate accounts.
Frankly, insurance is all about data. You’d think all insurance companies would stay on top of their information systems.