Aetna Expands ACO, Introduces Product

In an effort to provide enhanced service to customers in San Diego County Aetna Inc. (AET) has announced the expansion of its Accountable Care Solution with Sharp HealthCare system. The expansion marks the inclusion of Sharp Rees-Stealy clinics and physicians and the Sharp hospitals and ancillary facilities.

Aetna already had accountable care collaboration with Sharp Community Medical Group since Dec 2011.

With the expanded service the members will be able to receive more coordinated, personalized and accurate services. This will consequently lead to more synchronized, personalized experience for patients; lower co-pays and improve health care outcomes.

Aetna has also reached a new payment agreement with Sharp HealthCare system. As per the new agreement, the physicians will receive reimbursement on the basis of quality of care provided by them. This will be reflected by reduction in emergency room admissions, readmissions, and improved management of chronic diseases.

ACOs or collaborative accountable care is one of the several ways by which President Obama wants to improve the quality of health of all Americans. It is viewed as a tool that would deliver seamless, high quality care for the overall population.

Other health insurers like UnitedHealth Group Inc. (UNH) and Cigna Corp. (CI) are also aggressively forming ACOs.

Aetna also announced the introduction of a product called Aetna Whole Health. It is a commercial health care product which will provide customers with efficient care from a wide network of physicians and facilities from Sharp HealthCare.

Aetna Whole Health is meant for residents of San Diego County. These members should be self-insured and fully insured employers having more than 100 employees. The product will be available from Feb 1, 2014.

This initiative by Aetna is in sync with its long term strategy to develop ACOs. Aetna is looking to generate incremental revenues from ACOs. The company is targeting ACO enrollment of 375K lives in by the end of 2013. If the company reaches its target ACOs could be generating $1.5 billion in revenue in 2013.

Aetna currently retains a Zacks Rank #2 (Buy). Another health care provider under our coverage, WellCare Health Plans Inc. (WCG), is also similarly placed with a Zacks Rank #2.