Aetna - MedUnite - WebMD
by: swissglobal
10/25/00 2:52 pm
Msg: 49250 of 49287
In case this particular article has not yet been posted.
WebMD to Be Aetna's 'Preferred Provider' - Financial Times
October 24, 2000
HEALTH FIVE-YEAR CONTRACT FOR ONLINE COMPANY AS
LARGEST INSURANCE GROUP LOOKS TO PROCESS CLAIMS MORE
EFFICIENTLY WebMD to be Aetna's 'preferred provider'
By Adrian Michaels in New York and Betty Liu in Atlanta WebMD yesterday
received a badly-needed vote of confidence when Aetna, the largest health US
insurer, signed a five year contract naming the online health company as a
preferred partner in its efforts to process claims more efficiently.
The news is not all good for WebMD, however, since the "preferred
provider" contract replaces a previous one that was understood to be an
exclusive agreement.
However, WebMD will still have a good chance to sell its products at a time
when the future technological direction of the health insurance market is up for
grabs.
WebMD built itself through a string of multi-billion dollar acquisitions, but
has been in turmoil recently. It is undergoing a restructuring that has already
included the ousting of Jeffrey Arnold, its founder and co-chief executive.
Amid uncertainty over its future, the company's stock price has tumbled more
than 70 per cent this year to about $12. Last year, the shares reached $125.
But the opportunity for the companies that succeed in bringing the healthcare
industry online is enormous. The average cost of processing an insurance
claim in the US is about $7, which by some estimates could drop as low as 35
cents in a more efficient environment.
Cutting the high cost of claim processing has proved difficult since insurers
use a variety of processes, forms and computer programmes with little
standardisation.
Aetna, along with a number of other insurers such as Cigna and WellPoint, is
in a consortium called MedUnite which is looking at ways of improving
claims processing through technology. MedUnite is potentially in direct
competition with WebMD, but has so far had little impact on the industry.
Anthony Vendetti, senior healthcare internet analyst at Gruntal & Company,
said: "MedUnite is more of a smokescreen for the health insurance companies.
It's set up to let WebMD know that they can't take advantage of the insurance
companies. They won't stand by as WebMD acts as the sole source of
healthcare claims andtransactions."
Nonetheless, by moving from exclusive provider to preferred provider, Aetna
is keeping its options open.
William McKeever, analyst at PaineWebber, said many health insurers were
uncertain whether to abandon MedUnite and build their own next generation of
computer systems, perhaps in conjunction with technology partners such as
WebMD.
John Rowe, the new chief executive of Aetna's US healthcare operations, said
yesterday: "Our overall goal is to identify opportunities that will help to
reduce costs, streamline back office administrative functions and speed the
payment of claims."
WebMD said last month it was moving its headquarters from Atlanta to New
York and would shed 1,100 employees about 20 per cent of the workforce.
Aetna has had a turbulent and troubled year. After replacing a number of top
managers, and being put under intense shareholder pressure to transform the
business, it agreed to sell its financial services and international arms to
Dutch group ING. That deal, worth $7.7bn, will be voted on by shareholders
next month. |
