Insight, analysis & opinion from Joe Paduda

< Back to Home

Jan
16

Aetna raises minimum wage, then cuts work comp staff

Monday, Aetna announced it will be increasing the company’s minimum wage to $16/hour.  In the internal memorandum provided to managers, the company said “We will not be funding this program through job eliminations…

According to a source, during a company-wide webcast earlier this week, CEO Mark Bertolini said “We do NOT anticipate any lay offs. There is plenty of room for employment within the company.  That would of happened in December if we were going to do anything like that.  We are past that.”  

Wednesday, 11 employees in Coventry Workers’ Comp Services Franklin, TN office were fired.  Sources indicate layoffs have happened in several other CWCS locations as well.

While it may well be that the giant healthplan’s financial plan doesn’t directly link the firings to funding the higher wages, the timing and the details provided to this reporter show a rather unfortunate lack of planning and coordination.

Telling low-wage workers they’re getting a big raise, then, after they’ve gone home, told their spouses and kids, perhaps planned on a celebratory dinner with chuck roast instead of the usual hamburger, bought that winter coat they’d been unable to afford, and maybe even paid a couple bills, they get the “just kidding! you’re fired!” notice is, if not intentionally cruel, certainly unintentionally so.

And pretty dumb.  The company got lots of (well-deserved) positive press and supportive comments from around the country for the wage and benefits upgrade.  Then, they turn around and fire some of those same low-wage workers they’re saying they want to help.

What’s more troubling is why.

Sources indicate the jobs lost are in Coventry Work Comp Services unit, primarily handling administrative tasks including preparing network panel postings for the Hartford’s workers’ comp customers, scheduling claimant appointments, and Quality Assurance.  But they aren’t going away, rather Aetna is off-shoring them to the Philippines.  Several management staff remain on payroll for now, but their positions are also going to be eliminated after they train their Filipino replacements.

By most accounts Aetna CEO Mark Bertolini is a good guy.  He’s aware of and quite concerned about income inequality.  He asked his execs to read Thomas Piketty’s treatise on the subject.  Aetna is also significantly improving benefits for the company’s lower-wage workers. In a statement, Bertolini said:

“Since I became CEO, one of my goals has been to help re-establish the credibility of corporate America…I firmly believe that companies can ‘do well by doing good.’ With these investments, we are leaning into the recovering economy and working to bring everyone along instead of just a few.”

My read on this is Aetna is not a bad company and its execs are not bad people. There’s no intentional cruelty here, this isn’t a heartless oligarch playing God without any regard for the little gal.

While Bertolini is a good guy, some of his underlings are not.  This is a dumb decision made by a tiny division executed by crappy managers with no regard for how it affects folks making low wages doing important work for years.

My characterization of the managers is based on the timing and their petty. small-minded, and just plain stupid cost-cutting moves which included no Christmas bonuses, no holiday celebration of any kind (not even the traditional dinner), paying laid-off workers only 50% for their unused vacation time, and a paltry 4 weeks of severance for workers with more than 2 years at CWCS.

One wonders if those managers at least handed out “Merry Christmas, now get the hell out of here” cards.

What does this mean for you?

A pretty awful winter for folks who thought they were going to get a nice raise.

note- I reached out to Aetna several times, delayed this post in an effort to get their side of the story. After waiting all day, i informed them I had to go to press.

If I hear from Aetna I will let you know…

 

 


15 thoughts on “Aetna raises minimum wage, then cuts work comp staff”

  1. Regardless of the good intentions by Aetna, this sure looks like an effort to put a great spin on really bad managerial decisions that are scarily similar to the things we have seen in the past by Enron, Worldcom, and a few others. Did Aetna execs misuse the press here? Is there something more here that we don’t know? Clearly, using off-shore labor from the Phillipines shows that Aetna had plenty of advanced knowledge of these actions at a very high level. Is this really a company that people with good moral and ethical character want to work for?

    Thanks for warning us with this post, it was very enlightening, hopefully Aetna can correct this huge mistake.

  2. As a former CVTY employee with many friends still at the company, I have heard and seen the results of the heartless, demoralizing action of management and the outsourcing to the Phillipines. A friend felt forced into retirement because of the increasing work load as the people in the Phillipines could not keep up so that she had her work and what ever they did not complete and upper management screaming about not meeting productivity levels. Second round of layoff are expected in mid Feb or early March. It is just sad how the Coventry workers are being treated.

  3. If Aetna can offshore work comp jobs, msybe it’s high time we offshore expensive surgeries in work comp. What Aetna did ruins some hard working people’s and the children’s futures. Offshoring expensive surgeries only ruins some wealthy doctors who won’t have one morenew toy to play with.

  4. I don’t believe this. Aetna or Mark Bertolini where is your brains!, you must be sitting on them…one day you tell your employee ..your getting a raise..then the next day you tell them …you are being replaced by someone outside of this country.. Outside of this country yet. Don’t ever think you are a Good American company. From now on whenever I hear the name Aetna I will be telling what a great company you are NOT to work for or have Any type of insurance with. If you do this to your employee I can just imagine what you do for your customers.

  5. I’ve seen many good individuals pack there things on 1 day notices to leave and never return. I myself, have struggled with the Nashville-Franklin hiring, speaking of which explains since I have lived here..I have not only assisted in the transfer of the Diabetes Care Club “overseas” but also watched CVTY wash away in the ruins of whatever happened ..somebody dropped the ball…somewhere. Especially to have to sell your organization to another and then Aetna says publicly it was the worst purchase ever. Now the only way to rid the ruins of this buyout mess is to move it International. Sadly enough there are some very good workers in there who thought they had job security. There’s things in a work environment when spoken of you by superiors,we just brush under the rug without thought but the hiring process of individuals overseas began in January by telephone interviews and nobody took note of that but myself apparently. Advanced notice and not a “pump me up” meeting about giving me better health care coverage and pay: a day before terminating jobs …that would be an ethical thing to do as a business owner. 9/10 a time when a crumbled department goes overseas…it always makes its way back. The problems they’ll endure will end you being more costly…dealing with a while new issue of language barriers and there in network facilities will drop their services.

  6. Shame on you Aetna! Outsourcing of any job that can and should be done here in America is a slap in the face to all of us, whether or not we are employed with you! The cruel, heartless way you pumped them up with a raise (wages they should have been making all along!) and them chop them off at the knees the next day is the most awful thing I have ever heard of from an employer.
    This will leave a permanent bad taste in the mouths of us who need insurance, be it Workers’ Comp or health insurance. It isn’t too late to reverse your Un-American decision. How does it feel to be viewed in a lower light than Obama Care?

  7. Wow….this is ridiculous!!! How can they tell their employees they are giving them raised then give them termination letters? They had the news cover their story about how they are helping their workers but that was just a cover. Sending the work overseas to cut cost…that don’t seem like they r helping their workers. No holiday celebration!!! What kind of company does that? I will def remember this story when I’m looking for Insurance. Thanks for informing us

  8. To all those commenting about how unethical it is for Aetna (or any company) to outsources jobs overseas and forgo an employee Christmas party or bonuses… I suppose you all wouldn’t mind paying more for your insurance premium then? After all, the money to fund a company holiday party and bonuses for around 45,000 employees has to come from somewhere. I can understand the emotional and sympathetic response… at least initially. Obviously, nobody wants to see another person suffer through the hardship of losing their job. But if you take a few minutes to think about this, you must understand that insurance companies are businesses. Any responsible business must make sure their costs are lower than their revenue (or income- the money they bring in) just like any household. This ensures that the company makes a profit. Guess what happens when a company cannot make a profit? They go out of business. So unless you are looking forward to a single payer government run system, you’d better hope that some of the private insurers can make a modest profit and stay in business.

    Shame on you Joe Padua for providing such a one sided and emotional account of a business decision. And by the way… while it is unfortunate for the 11 people who lost their jobs last week, we need to keep this in perspective. The number of employees laid off represents less than one fifth of one percent of the total staff at Aetna. And in fact, the raise that Bertolini announced last week impacts thousands of those employees. So perhaps the focus should be on the 99.9% of the employees who will be able to afford their chuck roast dinners and winter coats this year thanks to Aetna.

    1. Andrea
      First, thanks for the comment.

      Second, I’m quite surprised that you want to “shame” me for a “one-sided and distorted” view. Hardly. It is a matter of fact that the layoff occurred after Bertolini said there wouldn’t be any. And you must not have read the part where I said nice things about Mr Bertolini and gave Aetna kudos for the salary raise.

      Third, management in the Franklin office had hosted a dinner and other holiday events in the past; these were not done this year in what appears to be a cost cutting move. Meanwhile, these events did take place in other Aetna offices around the world.

    2. you all wouldn’t mind paying more for your insurance premium then – Actually its already too expensive and still costly to see the doctor…whats your excuse now?
      I’m guessing its okay for US ran organizations too move overseas as well to beat taxes and payroll as well being the economy isnt the greatest as well. So your either one sided yourself because your an executive or higher leaser or your not a US citizen.

      1. “a modest profit”?? Lori, you might want to google the salaries for the aetna execs – mr. B earned a cool 30+million in 2013. and btw, who made up this rule that any increases in costs need to be paid for by customers?

        all that aside, I think it’s a legitimate question to ask why mr. B said there would be no lay-offs (right before he added that the bonuses were going to be extra-nice this year) only to turn around and lay-off staff? speaking for myself, i’d rather be aware that my job is still in jeopardy rather than be walking around in warm-and-fuzzy la-la land, unaware of everything going on around me.

        final thought – didn’t golden bear v murray make it illegal to not pay employees their earned vacation time? or is that a state-by-state rule?

        1. Which explains why my Aetna plan is over 800 a month for garbage! I don’t sit around studying execs pay..cause it ain’t mine! Just as that of big time pocket rich folks like Madoff…what goes uP will always come back down and the healthcare industry is about to be a bust.

  9. As a former employee, I can attest of the call-center like conditions Aetna has fostered within its comp division. All commercial comp insurers are processed in the Philippines except for federal contracts which are NOT allowed to subcontract outside the U.S which is NO different than most insurers out there. Aetna is making it very clear that Work Comp is more of a burden than it’s worth, as a former employee, it was always inferred it was “business for the sake of having business”

  10. The layoffs continue as Coventry WC/Aetna outsources NURSING positions to the Philippines. It’s a damn shame when you have capable, long-term employees out of a job just to increase the bottom line. I should know, I was recently involved in the latest round and was told it was “strictly a business decision, not a performance issue” as the accounts I worked were outsourced. Completely out of the blue too, after 15 years, hoping to retire in a few. Morale is the lowest I have ever seen, the sweat shop mentality of performance based on quantity not quality, management untouchable, it made for a very stressful work environment. Bitter, you betcha.

  11. Reading this article makes me sad, now 2 years later and Aetna is still sending Coventry Work Comp Services jobs overseas. More and more Americans loosing their jobs and Mark is allowing it. On his behalf though he is not the only one to blame as Mike Liermick is behind the outsourcing and Mark B. goes along with it rather than keeping Americans employed.

Comments are closed.

Joe Paduda is the principal of Health Strategy Associates

SUBSCRIBE BY EMAIL


 

SEARCH THIS SITE

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.

 

DISCLAIMER

© Joe Paduda 2019. We encourage links to any material on this page. Fair use excerpts of material written by Joe Paduda may be used with attribution to Joe Paduda, Managed Care Matters.

Note: Some material on this page may be excerpted from other sources. In such cases, copyright is retained by the respective authors of those sources.

ARCHIVES

Archives