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January 8, 2024 5 To Watch

New Aetna President Kane embraces insurer’s history and future: ‘There are no plans for Aetna to leave Hartford’

HBJ PHOTO | STEVE LASCHEVER Brian Kane sits in his new office in Aetna’s Farmington Avenue campus in Hartford.

Add Brian Kane to the long list of people struggling to find a home in Connecticut.

“There’s literally nothing on the market,” said Kane, a New York City transplant who, as of early December, temporarily settled in a West Hartford condo near the Bloomfield town line where he lives with his wife, Anna, their nine-month-old son, and mini-Dachshund dog Mallomar, named after the chocolate marshmallow cookie.

Kane isn’t your average homebuyer. In September, he started a new job as president of Hartford-based Aetna, the iconic 170-year-old health insurer and one of the city’s largest employers and taxpayers.

At a time when executives don’t always live near their company’s headquarters, Kane’s decision to put down roots in Greater Hartford is significant. Many have wondered what Aetna’s future in Hartford would be following CVS Health’s 2018 purchase of the company.

Recent layoffs at Aetna – part of a broader nationwide cost-cutting effort by CVS Health – created further unease.

But Kane, 50, said he’s bullish on Hartford and wants to reignite Aetna’s role in the city, starting with getting more people back to the office on a consistent basis and bringing back to life the company’s sprawling 1.7-million-square-foot corporate headquarters campus on Farmington Avenue.

“There are no plans for Aetna to leave Hartford,” Kane said during a recent sit-down interview at the company’s Hartford campus. “I’ve moved my family here. We’re committed. Our history and legacy are here, and so I don’t think you can minimize that. We play an important role in the community. We have thousands of employees in Connecticut, many of whom are going to come back to the office, who haven’t already, but we’re going to see more and more come back to the office.”

He added: “I mean, it’s hard to believe we’ve been here for 170 years, and getting people to focus on that and restoring the luster and pride of Aetna, is very important to me and the company.”

A history buff, Kane said he’s taken time in his first few months on the job to learn about Hartford’s history and Aetna’s longtime role in it. During a two-day retreat with his senior executive team at Aetna’s headquarters, he brought in a historian from the Connecticut Museum of Culture and History, who showed off artifacts and discussed the city’s and Aetna’s past.

In mid-December, he had lunch with former Aetna CEO Jack Rowe, who led the company from 2000 to 2006. They broke bread in the eighth-floor dining room of Aetna’s headquarters, where Rowe used to host board meetings.

“I want my executive team to be very tied into Hartford, to participate in the Hartford community, and you’re going to see us be much more active in the community, whether it’s joining not-for-profit boards, doing volunteer events, hosting more things at our campus,” Kane said.

He’s a big believer of employees being in the office, arguing it helps build company culture and spurs collaboration and innovation. When he’s not traveling, Kane said he’s on the Hartford campus five days a week.

Aetna in January 2023 implemented a two-day, in-office requirement for most employees. That changed to three days in office in September.

Kane said he also wants to bring back many of the office amenities that went dark in recent years. That includes small things like a popcorn machine that was popular among employees.

He also wants to restore a historic Austin Quadruplex organ that sits in Aetna’s auditorium and have it played during company events. It was built by Hartford-based Austin Organs Inc. and purchased by Aetna about a century ago.

“A lot of the amenities in the building got shut down for COVID and even before that, and we want to bring all those back in,” Kane said. “It’s hard to believe it was several years when people were out of the office, and so we are really focusing on bringing people back to Hartford and developing a regular cadence around business meetings in person. And then really focusing a lot on what we have to do, which includes, importantly, the integration with CVS.”

Growing the business

Kane in early December spent close to an hour with the Hartford Business Journal outlining his priorities for 2024 and beyond.

Approachable and genial, Kane wore a gray suit paired with a baby blue tie, and a white dress shirt with sleeves bookended by cufflinks.

He brings a notable resume to his new role. The Harvard MBA graduate spent 17 years at Goldman, Sachs & Co., including time as a managing director in the investment banking division.

Most recently, he served as chief financial officer for Louisville, Kentucky-based Fortune 50 health insurer Humana, which was in the headlines in December, rumored to be in merger talks with Bloomfield-based Cigna.

Kane declined to comment about that potential deal, which won’t move forward after negotiations fell through last month.

Kane was Humana’s CFO when Aetna in 2015 tried to acquire the company for $37 billion. That’s when Kane said he first met current CVS Health CEO Karen Lynch, who was Aetna’s president before being elevated to chief executive of the parent company.

HBJ PHOTO | STEVE LASCHEVER
Karen Lynch is the CEO of CVS Health.

The proposed Aetna-Humana deal fell apart after a U.S. federal judge blocked the marriage on antitrust grounds.

Kane left Humana in 2021.

Build out was still underway in early December on Kane’s new fifth-floor office suite, where he sat down with the HBJ.

It includes a reception area, main office and two conference rooms. A sign on one of the walls warned of wet paint. A large, unattached computer monitor stood on Kane’s desk, several feet away from a stately grandfather clock.

The corner office typically comes with tough decisions. CVS Health made one this past summer, when it announced plans to eliminate 5,000 corporate jobs nationwide as part of a broader cost-cutting effort.

In August, CVS Health notified the state Department of Labor that more than 500 of those job losses would be tied to Aetna, including 336 Connecticut residents.

Kane said there are no plans for future layoffs.

“I want to grow the business,” he said. “But that’s something we feel terrible about. It’s been tough, frankly, for the employee base. But, we’re now past it.”

CVS, which has its corporate headquarters in Woonsocket, Rhode Island, purchased Aetna in November 2018 in a deal valued at $69 billion.

To win over state regulators, CVS pledged to keep Aetna anchored in Hartford for at least a decade and retain staffing levels of roughly 5,300 employees for at least the following four years.

A commitment to maintain Aetna’s headquarters in Hartford is significant. A year before the CVS Health deal in 2017, former Aetna CEO Mark Bertolini, who was a vocal critic of Connecticut’s fiscal instability at the time, planned to relocate the company’s headquarters to New York City.

That plan was scrapped after the CVS deal was announced, and Connecticut’s fiscal outlook since that time has improved.

Aetna declined to disclose its current employee count in Hartford, but said the health insurer and CVS, including pharmacies, employ nearly 9,000 people in Connecticut.

Diversified business

Kane made one of his first big public appearances as Aetna president on Dec. 5, during CVS’ investor day conference in Boston.

CVS made several headlines during the event, announcing plans to change the way it prices prescription drugs by moving away from a complex formula that’s drawn criticism from consumers, policymakers and others.

The new model, to be implemented in 2025, aims to better align prices with the true net cost of prescription drugs, with more transparency around administrative fees, CVS Health said.

The impact on individual drug prices is less clear.

CVS also launched a new Healthspire brand that brings under one roof its healthcare delivery, pharmacy and health services businesses, including CVS Caremark, MinuteClinic, Oak Street Health — a Chicago-based primary care practice with over 200 locations in 25 states — and Signify Health, a home healthcare services company that runs a network of doctors, nurses and physician assistants who provide in-home care.

CVS Health, long known as a drugstore retail chain, has diversified over the years beyond pharmacy services. Its 2023 purchases of Oak Street and Signify, valued at a combined $18.6 billion, expanded CVS’ presence in healthcare delivery, a key focus area.

CVS is now ranked No. 6 on the Fortune 500 list, behind Walmart, Amazon, ExxonMobil, Apple and UnitedHealth Group, a chief competitor.

It reported $263.9 billion in revenue during the first three quarters of 2023, up 10.6% from the year-ago period.

CVS’ biggest recent deal was its Aetna purchase.

Kane said CVS is still in the “early innings” of integrating Aetna into the company, a process that was slowed by the pandemic.

HBJ PHOTO | STEVE LASCHEVER
Brian Kane outside Aetna’s Farmington Avenue campus in Hartford.

In five years, he said that will likely change significantly, and you’ll see a “really tight ecosystem between payer, provider and pharmacy” — all businesses CVS is in.

Key to making the deal successful will be leveraging CVS Health’s various businesses and technology platforms to improve patient care and lower costs.

There are no plans to get rid of the Aetna brand, Kane said.

“The Aetna brand is loved,” he said. “It is a very well-known brand … that is very, very powerful.”

Jeff Hogan, president of Farmington-based Upside Health Advisors, said all major health carriers are looking to differentiate themselves in the health services delivery space.

A key challenge insurers face is trying to integrate the various service providers they purchase, he said.

“CVS/Aetna in particular will need to figure out how to deploy Oak Street, a primarily Medicare-focused primary care provider, as well as Signify, and they’ll need to make them relevant to the employer marketplace too,” Hogan said. “All of these entities, and particularly CVS/Aetna, will need to attract and retain sparse clinical resources, including pharmacists, primary care physicians and nurses to fill critical roles in their specific model to succeed.”

Business outlook

A major 2024 priority for Aetna, which makes up CVS’ healthcare benefits business, is to hit growth and profitability benchmarks, Kane said.

Aetna, as of early December, was projecting about $104 billion in 2023 revenue, which would be up nearly 14% from a year earlier.

Nearly 70% of Aetna’s revenue now comes from government-related programs, including its Medicare Advantage business, the private sector alternative to the federal government’s insurance program for individuals who are 65 years of age and older.

Medicare generates more than half of Aetna’s revenue and currently serves about 11 million members, including 600,000 added in 2023.

Aetna expects double-digit revenue growth in that business this year, Kane said, and an overall improved bottom-line performance following an increase in its quality and customer satisfaction rankings from the Centers for Medicare & Medicaid Services, which has a direct impact on certain reimbursements.

Aetna has also been expanding its presence in state health insurance exchanges, which were created by the 2010 Affordable Care Act. It’s a business Aetna retreated from last decade — it withdrew from Connecticut’s exchange, Access Health CT, in 2013.

In 2024, Aetna will begin offering coverage through exchanges in five new markets, giving it a presence in 17 states, Kane said.

He wouldn’t say if Aetna has plans to eventually rejoin Connecticut’s exchange.

“We are going to expand it to additional states, although I’d say our bigger focus now is how do we make that business profitable. Because right now, it’s not terribly profitable,” Kane said, adding that exchanges are linked to Aetna’s strategy to grow its Medicaid business.

About 26% of Aetna’s revenue comes from its commercial business, which serves about 50% of Fortune 100 companies and remains essential to the company’s overall strategy, Kane said.

The commercial business is particularly important to providers because it offers higher reimbursement rates than government programs, he said.

Value-based care

Bigger-picture priorities include figuring out how Aetna can work with CVS’ other business units to drive major improvements in health outcomes, Kane said, with a major focus on value-based care.

Value-based care has been a much-talked about goal for the healthcare industry. It aims to move away from the traditional fee-for-service model, and instead pay providers, including physicians and hospitals, based on the health outcomes of their patients and quality of care.

It represents a major potential shift in the industry’s economics, and has led to increasingly tough contract negotiations between insurers and providers, particularly hospitals, as both sides remain skittish about how to balance the financial risks.

“It’s an area where we believe there can be a fundamental change between payers and providers, how they interact with one another, how they engage the patient in our membership, and it’s a much more collaborative relationship than a confrontational relationship between payer and provider,” Kane said.

Value-based care has largely been used in Medicare programs, but Kane thinks it can be implemented more broadly, including with traditional employer customers.

Using technology, including artificial intelligence, to share, organize and analyze large troves of clinical and financial data is critical to successfully implementing value-based care programs, Kane said.

It can improve care quality by helping providers, for example, more quickly understand the next best action to take with a patient, or identify gaps in care or even a disease.

“It’s a whole ecosystem that we’re trying to create and change,” Kane said. “And, you know, I find that very exciting.”

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