🔒Lynch heals in 2019 as she guides Aetna through year of growth, change

Aetna President Karen Lynch literally limped into 2019 after a bicycle accident last year left her with a broken hip and hands and injured ribs.

She nearly limped out of the year as well. In August, Lynch had a full hip replacement after an initial surgery, which included the insertion of titanium screws, wasn’t effective.

“Now I’m like the new bionic woman,” Lynch joked in a recent interview with the Hartford Business Journal, adding she is feeling much better and hoping to get back to her running routine soon.

Lynch is also the woman who helped lead one of the largest and most-watched mergers in U.S. healthcare history. A year ago, she took over as Aetna’s top executive, following the health insurer’s $69 billion tie-up with Rhode Island-based CVS Health.

The deal actually didn’t receive final court approval until this past September, but the integration started more than a year ago.

The merger in many ways has promised to reshape the healthcare landscape by pairing a large drug store/pharmacy-benefit manager with the third-largest U.S. health insurer.

A year ago, Lynch said the combined company’s mandate included being local, simplifying the healthcare process, driving consumer engagement and improving customer health.

In 2019, she said the company has made significant strides toward that goal.

“I feel quite good about what we were able to accomplish despite the fact that my health wasn’t all that great and I’d been in a lot of pain all year long,” she said. “The integration has gone quite well. We delivered on the initiatives we said we were going to deliver on.”

Highlights from the year included the initial rollout of CVS’ HealthHubs, which Lynch describes as a new “front door” to health care, offering alternative or complementary services to a primary care doctor. The hubs, mainly being built within existing CVS stores that also have MinuteClinics, offer individuals advice from nurse practitioners and a care concierge team, lab services as well as on-site treatment for chronic conditions such as diabetes and asthma.

CVS will have 50 HealthHubs operating by the end of 2019 and 1,500 in place by the end of 2021.

The Hubs, including one that will open in Hartford next year, also aim to improve care coordination and keep people healthier and more attentive to their own well-being, Lynch said.

In 2019, Aetna also realized its greatest level of medical membership growth in several years, achieved above-average industry growth in its Medicare Advantage business and grew its Medicaid business by landing major contracts with the states of Kansas, Florida, Texas and West Virginia.

Overall, Aetna had 22.8 million medical members at the end of the third quarter, up 3.2 percent from the end of 2018.

Lynch said the combination with CVS allowed Aetna to offer customers more products and services, including new programs related to chronic kidney and oncology care.

Financial health

Financially, CVS reported $4.9 billion in profits through the first nine months of this year vs. a $175-million loss in the year-ago period.

Total revenues were up significantly to $189.9 billion vs. $140.2 billion a year earlier. Meantime, CVS’ stock price is down from $80.27 when the Aetna deal closed Nov. 28, 2018. Its stock was trading at around $64 to start 2019 but has rebounded somewhat to around $70.

Michael Cherny, a healthcare analyst for Bank of America Merrill Lynch, said CVS has done an effective job growing its business while also managing unpredictable headwinds, including lower prices for generic drugs and a decline in medication reimbursement rates from state and federal government healthcare plans.

Front-end-of-the-store sales — think personal-care items and snacks — have also been challenged by low-cost competitors.

There was some disappointment early on from investors about how CVS was managing those challenges, Cherny said, but since the company provided its guidance in February “they’ve outperformed consensus expectations by a pretty healthy clip.”

Lynch said CVS was able to achieve $400 million in cost savings post-merger and expects that number to reach $800 million by the end of next year. She said Aetna has also lived up to its promise of maintaining a Hartford workforce of 5,291 employees, which it agreed to as a condition of Connecticut approving the CVS deal.

“We are committed to Hartford and the employees are here and happy,” she said.

In terms of future headwinds, there was lots of talk in 2019 about a single-payer healthcare system on the federal level and adoption of a public insurance option in Connecticut, which raised objections from the state’s health insurance industry.

Lynch wouldn’t comment much about either prospect.

“We believe in access, quality and affordability and that’s our position and we are working very closely with the government, with our state to ensure that we can continue to provide products and services to Americans across the U.S.,” she said.