Aetna Likely to Continue Online Plans

FRAMINGHAM (03/15/2000) - Despite Sunday's announcement that it plans to its split up its health care and financial services business into two publicly traded companies, Aetna Inc.'s Internet-based health care initiatives are likely to move forward, company spokesmen and analysts said.

Aetna Chairman and CEO William Donaldson said the split would "unleash the great potential of each company."

As part of the split, Aetna will continue with its plans to use the Internet to leverage its health care information technology assets.

On Sunday, Aetna's board also voted to reject a $70-per-share offer from ING America Insurance Holdings and WellPoint Health Networks Inc.

Aetna is worth more than $70 a share, said Donaldson, adding that the rejection of the offer wasn't a ploy on the part of the company to drive up the stock price.

There are areas in which Aetna would cut costs, but the company's IT assets are not on the table, said Donaldson.

And it would be a bad move to even think of cutting into Aetna's technology base, analysts said.

"It's a crucial investment for the company," said Joseph France, an analyst at Credit Suisse First Boston Corp. in New York. France pointed to Aetna's e-Pay initiative - in which physicians are directly linked to the insurance company for real-time payment - as an example of a program that Aetna needs to build on.

"This is an area in which they are going to be spending a lot of resources in the future," said France.

"I think that's why they rejected the offer from WellPoint," he added. "It would have introduced disruptions, and they need to stay focused on integrating and continuing to press forward with their Internet and electronic objectives."

However, splitting up the company's health care and financial services arms isn't going to help Aetna with its IT integration problems, said analyst Ira Zuckerman at Nutmeg Securities Ltd. in Westport, Conn. Although Aetna won't have to worry about IT compatibility problems between its health care and financial services arms if the split goes through, the company will continue to face integration challenges within its health care area, he said.

Aetna spokesman David Carter said it's too early to give any specifics about Aetna's IT plans. However, he said the company's board unanimously confirmed a plan that specifically included "finalizing (its) strategic Internet opportunities."

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