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Transcript - Rowe Town Meeting Q&A Highlights
The following is a transcript of the edited video covering the
question-and-answer portions of the employee town meetings with Dr. Jack Rowe.
The meetings were held in Hartford, Sept. 18; Middletown, Sept. 19; and Blue
Bell, Sept. 26.
Middletown
Question: Welcome, Dr. Rowe, my name is Allan Polak. It was exciting to hear
you talk about your future focus a few minutes ago. Can you share with us one
or two of your thoughts about what you think is on the health care horizon?
Dr. Rowe: Sure.
Question: That we haven't addressed and also that you don't think our
competitors are thinking about either.
Dr. Rowe: Sure. I can't tell you what our competitors are not thinking about.
And even if I could, I might not. Because then they would be thinking about it
tomorrow.
(laughter)
But, I think that obviously we're going into, I think it's an overstatement to
call it the post-managed care mode, but I'm not sure we ever really managed
care any way. We managed cost to some extent and tried to manage care. I think
that we're obviously going into a mode which is much more flexible. Much more
PPO-like -- many different layers of kinds of products. We're going to go into
a mode where, I believe, there is going to be a public-private partnership to
deal with the uninsured. I think that if some insurance regulations get
loosened up a bit, there's going to be insurance for individuals with certain
disorders. I think there's a remarkable increase in interest of care at the end
of life. Some people think defined contribution is the wave of the future. I
have some questions about that from an economics point of view. But if it is,
in fact, the way of the future, then relationships on the Web to reach out and
maintain, use our brand name and this great franchise to, to stay stuck to
those customers who now have a voucher rather than a policy and to help them
work with us to find the right care. That's a very challenging and interesting
area. So, I think there's a long menu of exciting things, and many of these are
not current products in the marketplace that our
<PAGE>
competitors have either. So I think this is a very interesting time for us.
Very interesting.
Middletown
Question: First of all, welcome.
Dr. Rowe: Thank you.
Question: I happen to be very focused on members, so to hear you talk about
member-centric is just, warms my heart. I'm just curious if maybe you have some
immediate thoughts on how we do move the organization to be much more
member-centric and think through things from an end-to-end perspective, the
impact on members.
Dr. Rowe: I think that, I think I have a lot of ideas about this. I don't know
how many of them can be effectively implemented in this large organization. I
would like to wait until my listening tour is over. One of the things that I
believe in is that health care, like politics, is local. That the relationships
with members are very much influenced by the relationships with providers in
individual locales. And that is very much influenced by our market share in
individual locales. And so I think that we're going to have to have not a
one-size-fits-all kind of campaign, if you will, to improve these relations. I
would also say that I believe that regardless of what we have to say about how
much we care about members, if we don't improve the quality of the service,
that our situation is going to get worse, not better. And I think the real
answer to your question is how good is our service a year from now. So I think
that that's where our focus should be.
Blue Bell
Question: I'm Mary Kay Trail. My question is, we're in the middle of 2001
planning now, and I'm wondering how we're going to start on a strategic plan
and yet plan for 2001.
Dr. Rowe: We're not going to turn this company around on a dime. It's going to
take awhile. I don't want you to think about me as the new CEO of Aetna. I want
you to think about me as the CEO of the new Aetna. And the new Aetna is going
to arrive next year. It's not going to arrive next month so we can fit it into
the planning for next year. Because when we announce this new company after we
sell
<PAGE>
the wealth piece, and we do whatever reorganizations we have to do, we have to
have some meat inside the wrapping. We have to have the new products. We have
to have the new service capacities to deliver. We can't go on TV and say we're
a kinder, gentler, more effective Aetna and still only 6 percent of our members
get an ID card within 90 days of signing up. You know, we have to do some stuff
better than we've been doing it. So we're going to roll some products out.
We're going to make some administrative changes, but most of what you're going
to see is really not something that you're going see until well into next year.
Hartford
Question: What are your plans for helping us regain our credibility with the
Street?
Dr. Rowe: My plans for helping us regain our credibility with the Street are
here. (Pats Donaldson on the shoulder.) I think that much of the message that
I've shared with you today is also a message which the thinking analysts on
Wall Street are susceptible to. Are in tune to. But if you take the reports
from the Street about my appointment, and I recognize that I've never run a
large for-profit company before, while every analyst said that to start with,
most of them, a couple of them were just sort of favorable based on whatever,
some were skeptical because that's the way they are. But most of them said
let's wait and see. And my approach to restoring relationships with Wall Street
is to improve the profitability of this company. And I think all the rest is
commentary. That's what it's about.
(applause)
Hartford
Question: I was wondering if you could comment as well as our impression on the
Street, our impression with the public in general. It seems to me that we've
done a not-very-good job of getting out to the public the good things that this
company does.
Dr. Rowe: Well, I think that the managed, health plans are not respected by a
very large portion of the American public. We're an industry that's on the
defensive, and the current candidates for national office aren't helping any in
that regard. We're a little bit like the large pharmaceutical firms when Bill
Clinton was after them in the early days when he was running and just after he
got elected. And
<PAGE>
we haven't done much to help ourselves. But beyond that, Aetna is, does seem to
be the national whipping boy and the special target, and in part that's because
we're the largest. I would hope to be able to do two things. One is get us out
of the headlights and get us at least back with the crowd, if you will, rather
than always being the example. And secondly we have to work with industry
leaders from other companies to try to improve the general view of society of
our industry. Try to communicate effectively what it is we really, that we are
a part, a piece of this interlocking set that I talk about of the health
system. And we're essential and important and valuable. And I think the third
thing is that we need to do a much more effective job of communicating.
Middletown
Question: I'm Amy Oldenburg, with National Accounts. What steps are we taking
to prove to the customers that we've actually made some changes in our provider
relationships so that our customers will stop complaining to us or being
concerned about network disruption.
Dr. Rowe: Well, I'm not sure you're going to like this answer. I have been
talking with people in the company now for a couple of weeks, fairly
intensively. And I hear from people in the company about how much we've done to
improve these relations with our customers and with the providers. And it
raises the question of whether or not we have effectively communicated what we
have done and shown people how much better things really are. I believe that
you may have done a lot, but it isn't working yet. It may start working at some
point, but the worst thing that we can do for the future of this company is
think we fixed it.
I think these problems are serious and they're not getting better, but they are
fixable. They are eminently fixable. But the point is that you don't say you
have moved the needle until you have moved the needle. And we have not yet
moved the needle with respect to our customers. And, the providers, and I hope
we're closer than we were a year ago. And we're going to be much closer a year
from now. But this is still uphill. It really is.
Blue Bell
Question: Wayne Edwards from IT. You talked about the belt tightening. And I
think that a lot of people welcome that. What would you see as your priorities
as far as accomplishing that?
<PAGE>
Dr. Rowe: I think that the belt tightening has to be significant, but we have
to do it in such a way that is rational. And I think what we're trying to do
is, is target opportunities where we can be more efficient at the same that we
are reducing some of our costs. We need to maintain the quality and the dent,
and the depth of personnel at the service ends of this company to make sure
that it continues to be effective. We may not have completely taken advantage
of opportunities related to the merger. There are going to be a number of
significant savings associated with the sale of the wealth part of the company.
So we're going through all this trying to find the opportunities. This is never
easy. It's not fun. And it's important to do this in a way that, that keeps our
focus on the members of this company, the customers of this company, so that we
can continue to provide the right service for them.
Blue Bell
Question: Ray Fabius, senior medical director for e-health activities. I know
that we have to do a good job with service, and I know we have to be
profitable. But with the leadership of a clinician, there's also this chance to
do good. To improve health care and I'd love you to comment on that.
Dr. Rowe: Well, I, this is, if there ever was a softball pitch, this is an
underhand. I appreciate your reading the question that my mother sent you.
(laughter)
I think it's important for us not to view ourselves as an insurance company. I
would like you to view yourselves as professionals in a health company. A
health company adds value to the beneficiaries. We are here to provide for the
payment for health services and improve the health status of our beneficiaries.
So the whole point of this is that this company going forward is a health
company, not an insurance company, and we're going to provide financial support
for services for our beneficiaries. We're going to get premiums that support
the medical costs, our administrative costs and a reasonable profit. But the
value-added piece is the exciting piece here. We can develop effective
approaches to providing good service to people who are sick and anxious and
vulnerable, and desire and deserve an effective interaction with their company
and at the same time provide more information for providers and for patients
about their lifestyle and about different choices that they make going forward.
That's really what this is all about, and I
<PAGE>
think the key difference is the difference between an insurance company and a
health company.
Middletown
Question: Jim Bowers. Jack can you give us some insights on your leadership
style. Are you a hands-on type manager? Are you a delegater? How actively
involved do you get in terms of, you know, getting sort of the down and dirty,
in terms of, you know, the way -- the place where the rubber hits the road with
the customer?
Dr. Rowe: Any other questions?
(laughter)
I believe that it is appropriate for me to understand what is going on in the
company and to steer the direction of the strategy and the establishment of the
policies and monitor the data that indicate how they are being implemented, but
I believe it is appropriate for me to limit my actions to executive activities,
not operational activities. So when I was running a large academic health
science center, there were two evidences of that. One was that when people
would come into my office, they would always think there was another office
because there was no paper on my office desk. You know, there was no paper on
the table. I had meetings with people. I made decisions. I read reports. And I
had discussions. Spent most of my time in group meetings with individuals,
chairing meetings and talking about issues, analyzing data, talking about
strategy. And then two months a year I would serve as attending physician at
the hospital. And I would go on rounds six days a week, couple hours every
morning. And I did that for 13 years. It was very, very helpful. And I would
get a real sense of how it worked. How the patients were being treated. How the
nurses and the doctors treated each other. How the tests got done or not. How
clean the floor was. How we were doing. By the end of the month, I really
sensed that I had a sense of how it was operating. And I think that that's very
important for me to do.
Middletown
Question: Karen Rutkowski. My question is not so much a question as it is a
statement. If we are the new Aetna, we need a new culture. We are Aetna U.S.
Healthcare, we are Aetna and we are Pru. We have not blended. We do not work
<PAGE>
that way. We do not operate that way. We need a new culture for the new Aetna.
Not for the outside, as much as we need it for the inside.
Dr. Rowe: About two years ago I was at a board meeting and one of my board
members, who Bill [Donaldson] knows, and I may have mentioned this, Bill, at
the end of the board meeting, we were reporting on how the merger was going. It
was going very well. And has since gone very well. And he said to me, well
Jack, you know, you never studied anything in school to do a merger. If you had
it to do over again and you could go back to school to study one thing, what
would it be? And my response to him was just immediate. It was obvious to me.
Anthropology. This was all about cultures. It was all about respecting the
other culture. Not trying to dominate the other culture. Being open to
understanding the other culture and it was about getting the organization to a
point at which it was origin blind. And I don't want to hear whether you're
from U.S. Healthcare or the old Aetna. What we need is an organization that is
origin blind. That's the new Aetna. Thanks very much.
<PAGE>
***********************************************************
Aetna has filed a proxy statement and other relevant documents concerning the
merger with the United States Securities and Exchange Commission (the "SEC").
WE URGE INVESTORS TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC, BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Investors will be able to obtain the documents free of charge at the SEC's Web
site, http://www.sec.gov. In addition, documents filed with the SEC by Aetna
will be available free of charge by calling 1-800-237-4273. Documents filed
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AV. Amsterdam, The Netherlands 31-20-541-5462.
PLEASE READ THE PROXY STATEMENT CAREFULLY BEFORE
MAKING A DECISION CONCERNING THE MERGER.
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directors of any approval or action of its shareholders.
Aetna and its board of directors will be soliciting proxies from Aetna
stockholders in favor of the merger. You can obtain more information about
Aetna's directors and officers and their beneficial interests in Aetna's common
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CAUTIONARY STATEMENT -- Certain information in this document concerning the
transaction with ING is forward-looking, including statements regarding the
amount of cash per share that Aetna's shareholders are projected to receive
from the transaction, the tax-efficient nature of the transaction, and Aetna's
expectation as to the closing date of the ING transaction. Certain information
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including the future business prospects for Aetna's health business and Aetna's
expectations as to the future impact of certain actions and plans Aetna intends
to implement in its health business. Forward-looking information is based on
management's estimates, assumptions and projections, and is subject to
significant uncertainties, many of which are beyond Aetna's control. Important
risk factors could cause the actual future results to differ materially from
those currently estimated by management. Risk factors that could materially
affect statements made concerning the ING transaction include, but are not
limited to: the capitalization of Aetna on the closing date, including the
number of shares outstanding at that time; the timely receipt of necessary
shareholder, regulatory and other consents and approvals needed to complete the
transaction, which could be delayed for a variety of reasons related or not
related to the transaction itself; the fulfillment of all of the closing
conditions specified in the transaction documents; and the results of, and
credit ratings assigned to, Aetna's health business at and prior to the closing
of the ING transaction. Risk factors that could materially affect statements
made concerning the results of Aetna's health business include, but are not
limited to: continued or further unanticipated increases in medical costs
(including increased medical utilization, increased pharmacy costs, increases
resulting from unfavorable changes in contracting or recontracting with
providers, changes in membership mix to lower premium or higher cost products
or membership adverse selection); the ability to successfully integrate the
Prudential HealthCare transaction on a timely basis and in a cost-efficient
manner and to achieve projected operating earnings targets for that acquisition
(which also is affected by the ability to retain acquired membership and the
ability to eliminate duplicative administrative functions and integrate
management information systems); adverse government regulation (including
legislative proposals to eliminate or reduce ERISA pre-emption of state laws
that would increase potential litigation exposure, other proposals that would
increase potential litigation exposure or proposals that would mandate coverage
of certain health benefits); and the outcome of litigation and regulatory
matters, including numerous purported health care actions and ongoing reviews
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Aetna's results and the forward-looking statements herein, please see the risk
factors contained in Aetna's Securities and Exchange Commission filings, which
risk factors are incorporated herein by reference. You also should read those
filings, particularly Aetna's 1999 Report on Form 10-K and Report on Form 10-Q
for the period ended March 31, 2000 filed with the SEC, for a discussion of
Aetna's results of operations and financial condition.
