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Apr
22

Hartford and Aetna

The Hartford announced this week that they will be using Aetna’s Workers Comp PPO network in Pennsylvania, effective 6/1/05. This is a big step for Aetna, which has been struggling to achieve traction in the WC network business since starting this initiative some two years ago.
On the plus side for Aetna, this is the first large WC payer that has adopted their network, and indications are that Aetna’s analytical capabilities and provider profiling were strong plusses for the Hartford. Also, the press release indicated that Hartford will/may be using the AWCA network in additional states in the future.
On the negative side, after two plus years, and hundreds of thousands of dollars invested, Aetna has one top five carrier accessing their network in one state.
My take is the powers-that-be at Aetna seriously underestimated the amount of effort needed to build a WC network, and overestimated the interest among large payers. As part of their “due diligence” Aetna hired an outside consulting firm (not HSA) to analyze the market, determine key success factors and required capabilities, and estimate the opportunity. The report, which likely cost tens of thousands, was perhaps the weakest, least-informed, and most superficial market assessment I have had the misfortune to read.
Thus, no surprise that success to date is…rather limited.
In addition to the comments on analytics, the press release also notes that AWCA has over 100,000 providers in their currently active states (most of which are actually employer direction states). This reflects a complete lack of understanding of where the WC network business is heading, which is towards smaller networks of expert providers.
While I have a lot of respect for Aetna on the group health side, I wonder what they are thinking re WC.
What does this mean for you?
If you are a group health network contemplating WC, think carefully, study thoroughly, and understand the market before you build a business plan. Yes, there is an opportunity. It simply requires a thorough understanding before making an investment decision.
If you are a WC payer, AWCA’s entry into this space is a good thing; it adds competition from a strong managed care firm, and may actually provide an alternative to First Health et al.


Joe Paduda is the principal of Health Strategy Associates

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A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.

 

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