How Aetna's decision to raise minimum wages reflects insurer's strategic focus
For several decades, Aetna has been gradually shifting its strategic focus from being a financially oriented payer to becoming more of a healthcare solutions provider, CEO Mark Bertolini said in an interview with Strategy&Business.
The most recent example of this came in January, when Bertolini announced Aetna's plan to increase the incomes of its lowest-paid employees by as much as 33 percent, to a minimum of $16 an hour.
When Bertolini took the CEO job in 2010, he had three key objectives: "One was to set Aetna on a course for the next 160 years. Our purpose should be to become a consumer company. The second was to make healthcare reform actually work. The third was to reestablish the credibility of corporate leadership in the eyes of the American public," Bertolini said in the interview.
Thanks to the Affordable Care Act, the health insurance industry eventually will turn into a retail- and consumer-centric business. Insurers have two options, Bertolini noted: Either cut costs and see what happens or focus on specific aspects of the business that have the most value. Aetna chose the latter, focusing on all parties who rely on the insurer, whether they are customers, employees or long-term shareholders.
While part of the decision to raise employees' wages resulted from strategic motivations, such as an attempt to recruit top prospects and reduce turnover, the other part of the decision came from Bertolini's wish to be considered among the ethical leaders of American companies. "Here we are a Fortune 50 company and we're about to put these people into poverty, and I just didn't think it was fair," he said during a "Squawk Box" interview, FierceHealthPayer previously reported.
Bertolini told Stretegy&Business that he relies on social media to actively engage the Aetna community. He reached out to employees via the insurer's internal network, Aetna Connect, and made a point to stop by every cubicle in an Aetna office during his visit.
"One of my goals was cultural impact," he said in the interview. "I'm going to go out there and speak truthfully, and talk about how to move forward. That approach has served me well."
- here's the interview