Business

Aetna CEO retires; successor promises continued doctor contact

John Rowe, MD, is credited for turning around the company's bottom line and its dealings with physicians.

By Jonathan G. Bethely — Posted Jan. 30, 2006

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Aetna Chair and Chief Executive Officer John W. Rowe, MD, is stepping down next month, ending a tenure in which he improved the company's finances -- and its strained relations with physicians.

"He approaches things so much more as a physician and patient advocate, it was a breath of fresh air," said AMA President J. Edward Hill, MD. "He left a direction that is going to be much better for patients, and because its going to be better for patients, it's going to be better for physicians."

But physician leaders also have a warning for Dr. Rowe's successor, current Aetna President Ronald A. Williams: Don't let any plans for growth interfere with physician relations. Part of Dr. Rowe's financial turnaround strategy was reducing Aetna's membership by getting out of unprofitable markets. Indications are that Aetna, having completed that task and having fallen from the nation's No. 1 health plan to No. 3, is looking to get bigger through acquisitions or other means.

"Physicians have such little negotiating power now," said Connecticut State Medical Society Executive Director Tim Norbeck. "When a company gets bigger, whatever negotiating power physicians have is eliminated. The doctors' influence gets smaller. That is also true with patients. ... I think Ron will recognize that and continue to value the relationship with physicians, but obviously that will come into conflict if they continue to grow. You can't serve two masters. I think he will try to juggle both, but I think getting larger, whether you intend it or not, will mean a lesser physician relationship."

Norbeck said the relationship between doctors and Aetna still needed work, but that conditions had improved under Dr. Rowe's leadership.

Under Dr. Rowe, who joined Aetna in 2000, the company went from losing $279.6 million on $26.8 billion in revenue in 2001 to earning $2.25 billion on $19.9 billion in revenue in 2004.

Despite the compliments that Dr. Rowe, a geriatrician, is now receiving from some physician leaders, the relationship didn't start off well. Problems began just as Dr. Rowe assumed his role as CEO.

Norbeck said Dr. Rowe had promised the CSMS house of delegates a "sea change" in the way Aetna handled issues such as billing, coding and other practices that had become a source of tension between both sides.

By 2001, physicians complained that sea change never materialized, and the CSMS filed a lawsuit that grew into a multistate class action case against numerous plans. CSMS was one of 27 state and medical associations that signed the settlement agreement. In 2003, Aetna became the first managed care company to settle the case.

"I give him a great deal of credit for stepping up like he did," Norbeck said. "Dr. Rowe showed that he valued the relationship with physicians. It's not perfect. It may never be perfect, but it's better than what it was. I think that will bode very well for future relationships."

Williams joined Aetna as director of health operations in 2001 after serving as group president of the Large Group Division at WellPoint, and its subsidiary, Blue Cross of California. He became Aetna's president in 2002. Williams said in a prepared statement that Aetna would continue to work collaboratively with physicians.

After Williams takes over as CEO on Feb. 14, Dr. Rowe will remain on Aetna's payroll as a consultant.

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