Word: aetna
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CONSUMERS AND INVESTORS OFTEN get nervous stomachs when they hear talk of synergy, that snaggle-toothed harbinger of bad mergers. So Aetna Life & Casualty Co. chairman Ronald Compton was administering verbal sedatives last week when he talked about the proposed merger between Aetna and U.S. Healthcare Inc. that will create the country's largest medical-benefits corporation. "The two companies are in fact complementary," said Compton. "They are yin and yang...
Feel better now? If the deal is approved by stockholders, as expected, the combined entity, to be known as Aetna Inc., will provide health care for 23 million people, or 1 in every 12 Americans. The $8.9 billion merger, which mirrors a recent batch of smaller consolidations in the managed-care field, is a clear signal that big medicine is here to stay, whether you like its bedside manner or not. "The main effect of the huge merger is that it will be replicated by insurers across the country," says Kenneth Abramowitz, a health-care analyst for Sanford C. Bernstein...
...proposed Aetna Inc. will undoubtedly play a leading role in determining which perception prevails. For staid and paternalistic Aetna, a longstanding leader in traditional indemnity plans (you pick the doctors; they pick up the bills), the consolidation catapults the 143-year-old company smack into the center of the brave new world of managed care, where consumers must choose from a company-approved network of doctors, who agree to fixed charges for most services. Or consumers can join health-maintenance organizations, which directly employ doctors and nurses. "We are going into the managed-care business because that's what people...
Actually, Aetna is already well entrenched in managed care, serving 7.5 million of its 11.3 million clients through such operations. But U.S. Healthcare has proved far more aggressive and agile in establishing footholds and driving down managed-care costs, through a combination of shrewd salesmanship, sophisticated computer tracking and tough bargaining. Last year, while Aetna earned $474 million on $13 billion in revenues, a net profit of 3.64%, U.S. Healthcare's profitability was far greater. With just 2.8 million clients, it racked up $380 million in earnings on $3.6 billion in revenues, or a 10.55% net profit...
HARTFORD, Connecticut: Aetna Life & Casualty Co. today announced that it is acquiring U.S. Healthcare in an $8.9 million transaction that will create the nation's largest health insurance provider. Company officers said that the merged company would cover some 23 million and earn $300 million in profits within 18 months by creating revenue and reducing expenses. Some jobs would be cut, but Aetna refused to say how many. "It would be irresponsible to throw out a lost jobs estimate before we do all our homework," said Aetna spokesman Fred Laberge. The merger is the latest in a series of moves...