Aetna Inc. (NYSE:AET) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 08:00 am ET

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Aetna Inc. (NYSE:AET) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mark Bertolini

to our participation in multiple dual eligible demonstration projects.

We grew premium revenue by over 60% and operating earnings exceeded our initial projections, driven by better underwriting margins in several of our key geographies and a strong prior year development.Looking forward despite the previously disclosed exit from our Delaware Medicaid contract, we project 2015 to be another strong year of topline growth for our Medicaid franchise, driven primarily by growth from serving dual eligible and other high acuity populations.

Shifting to public exchanges, we are pleased with our first year execution, particularly in light of the well-publicized challenges with the initial launch of the public exchanges. We ended the year with approximately 560,000 on exchange members, modestly ahead of our most recent projections.

Executive
Mark Bertolini

Additionally, while the open enrollment period is still ongoing, we are on track to exceed our initial enrollment projections for 2015. Further, we have successfully transitioned the vast majority of our Off Exchange membership to ACA compliant plans consistent with our previous projections.

As we look at our total individual business, we now project that we will end the first quarter with approximately 1.1 million members, including up to 800,000 on exchange members. We believe these strong results validate our strategy of focusing on geographies where we have a competitive cost structure and could provide the greatest value to potential customers.

As we enter the second year of this emerging marketplace, we are cautiously optimistic on the potential for public exchanges to develop into an attractive growth opportunity, where we continue to offer value to our customers and generate a reasonable return for our shareholders.

Let me now spend a few moments discussing our provider transformation efforts. We continue to advance our strategy of collaborating with providers to build a simpler, more integrated healthcare system. And we continue to make great strides as we signed contracts with 28 new ACO partners since year-end 2013, launched multiple new products backed by ACO contracts, doubled our membership covered by value-based contracts to more than 3 million members, and increased the percent of our medical costs that run through value-based contracts to 28% of total spend.

As we continue to focus incentives around improving the health of our members and lowering overall costs, we are moving closer to our healthcare system that rewards providers for keeping people healthy and ultimately more productive. Finally, in 2014, we continue to advance our strategy to become a more consumer-oriented company. For example, in the fourth quarter, we closed the bSwift acquisition.

This transaction was an important step forward as it accelerates our efforts to create the leading front-end by sharpened enroll capabilities necessary to drive the change to a more consumer-oriented marketplace. Additionally, bSwift adds backend eligibility and benefits of administration, an important element for our employer customers as they look to make the transition to divine contribution in private exchange models.

Combined with the other investments, we have been making including our efforts to transform the provider network models for our health