Aetna (AET) Q1 2016 Earnings

posted in: Earnings Call, Notes | 0

Aetna (AET) CEO Mark Bertolini said they are attempt to transition the health insurance marketplace to one of value based care from one of quantity based care

 
Our strategy to achieve this mission in part involves working to transform the health care system model to one in which hospitals and doctors are rewarded for delivering real value to patients and consumers. Our differentiated approach focuses on meeting providers where they are in terms of their readiness for varying levels of coordinated care and risk. We are applying our proven framework to support the advancement of value-based care models and move providers up the continuum from simple pay-for-performance models to ACOs and even joint ventures.  We’ve made good progress in the first quarter and now have 77 ACO agreements and approximately 40% of our claims payments running through some form of value-based care model. Based on our progress to date, we believe we remain on track to achieve our 2020 goal of 75% of claims in value-based care models and our broad mission of creating a healthier world.”
Strong growth in their government business
“Shifting to our Government business, which continues to be a key source of growth for the company. We grew medical membership by nearly 150,000 members in the quarter, including growth of 81,000 in Medicare Advantage; 46,000 in Medicare Supplement; and 22,000 in Medicaid members. Additionally, we grew Medicare PDP membership sequentially by over 470,000 members. As a result of this strong medical membership growth, we grew our first quarter 2016 Government premiums by over 13% compared to the prior-year period, achieving a record $6.5 billion. Government premiums now represent nearly 50% of our total healthcare premiums.”
Downward trend in facility day usage
 
We’re not seeing an increase on the facility side at all. As a matter of fact, we continue to see a trend downward in facility day usage. And so our view would be that this is probably related to a few instances, most likely related to flu. And maybe leap year. I mean, leap year is always a mystical thing for me. One day actually makes a difference, but it does.”
 
The Southeast is the has seen the strongest growth for their individual ACA insurance exchange marketplace product
 
We are seeing the growth in the markets where we have very good cost structure, particularly in the Southeast. So Florida was a big growth for us, now Georgia and North Carolina as well. We saw about 55% coming in from new business and, generally speaking, we have 75% of our membership in our top five states.”