Assignment Stakeholder Management in OrganizationsTo prepare fo.docx

Assignment: Stakeholder Management in Organizations
To prepare for this assignment read the case study “Aetna Inc.:
Managing Inherent Enterprise Risks Through Stakeholder
Management.” Prepare a 2- full pages paper that addresses
these items:
· Describe the stakeholder management approach of the
organization before the issues arose.
· Which of the three concepts of stakeholder management was
most closely aligned with that approach?
· Describe the stakeholder management strategy that was
devised to combat the negative perceptions of the organization.
In what ways did the approach change?
· Do you think the new stakeholder management strategy of the
organization better supports its responsibility to its
constituents? Why? How?
Response includes three ways in which the stakeholder
management approach supports the strategic objectives of the
company.
Support your assignment with specific references to all
resources used in its preparation. Use correct APA formatting
for all resources. The Walden Writing Center provides
preformatted templates with APA-compliant pagination,
margins, and spacing.
ICT285 Databases
TSA 2018
Assignment 2
Worth: 20% of your final grade.

Due: Sunday 25 November 2018 11:55PM
Submit to: LMS, via the Assignments tool. Submit Parts 1 and
2, Part 3 sample data and
Part 4 CREATE VIEW statements as a SINGLE Word
document. Parts 3 and 4
should be completed in Oracle on arion.
Ensure you complete the declaration that is part of the
submission process.
You do not need to include a separate cover sheet but you
should include
your name and student number as part of your document
filename. Your
name and student number should also be included within in the
assignment
document.
Late assignments that do not have an extension will be
penalised at the rate of 5% per day.
This is an INDIVIDUAL assignment.
This assignment requires you to implement the database you
designed to address some of
the requirements of the GardenSwap case study in Assignment
1. You will need to
incorporate any changes to your original design required as a
result of the feedback on
Assignment 1 both individually and as a class (e.g. on the
online forum), and to address the
additional/amended requirements listed in this document.

The assignment addresses the following learning outcomes for
the unit:
3. Demonstrate practical skills in using SQL
5. Demonstrate practical skills in normalisation and convert a
conceptual database
design to a logical design in 3NF
6. Create a database from a given design using a DBMS and
implement specified
constraints using appropriate tools and approaches
7. Explain and implement security as it applies in the database
environment.
Marks are distributed as follows:
Part 1: Revised ERD and schema 10
Part 2: Data dictionary 20
Part 3: Implementation 30
Part 4: Views 40
Total 100
Case study
Re-read the description of the GardenSwap case study in
Assignment 1 Q5 if you need to refresh your
memory. Also view any additional material that has been posted

about hints and partial solutions.
Astrid Winterblossom is pleased with your work so far and has
asked you to go on to implement
your design. However, like so many clients, she wants to make
some changes to the requirements.
As it turns out, people were not very keen on formalising the
swapping part of their activities,
although they would still like to view the various skills that
other members have and are prepared to
help others with. The swaps themselves will probably continue
informally, but will NOT be recorded
as part of the database at this stage.
However, the event advertising part of Astrid’s garden
community has proved to be very popular,
and she would like you to develop this part as a priority, with
the resultant system renamed
GardenFriends. She has a revised set of requirements based on
feedback from the community.
Astrid’s revised requirements are as follows:
registered on the GardenFriends
database, with the same requirements for registration
information as stated previously. This

includes a list of the services/skills they are prepared to offer.
attendees are taken round a
member’s garden where features of particular interest are
pointed out; Skills and
Techniques, where attendees learn skills such as composting or
chainsaw maintenance; and
Know Your Plants, which focuses on the cultivation of a
particular species or group, such as
roses or Banksias.
presents the event on the day
(these may or may not be the same person). Some events also
include additional helpers
who assist in providing 1:1 assistance to attendees. These
helpers come from the pool of
registered members and each helper may volunteer to assist in
many different events.
description, date, location, and
number of places available), but additional information has also
proved useful and is to be
included in the final system. In particular, Astrid would like to
ensure the postcode of the

location is collected, and any instructions to participants
included (“bring your own trowel
and secateurs” or “don’t forget your hat and sunscreen”. She
would also like to record
whether the event meets accessibility guidelines for people in
wheelchairs or with limited
mobility.
events to the general public as
well as registered
GardenFriends members, in the hope that many will be inspired
to join GardenFriends.
Guests sign up on the website with their name, suburb, mobile
phone number and email.
Part 1: Revised ERD and schema (10 marks)
a) Create and submit the ERD for this database that you are
going to use as the basis of your
implementation.
b) Include a one or two paragraph explanation as to the changes
you have made to the ERD on

the basis of your feedback from Assignment 1 and/or as a result
of having to support the
new functionality and views described in this assignment.
c) Show the relational schema in 3NF that will be the basis of
your implemented design. Show
your relations using the following convention:
RELATION_NAME (PrimaryKey, Attribute, Attribute, …
ForeignKey)
Part 2: Data dictionary (20 marks)
Create a data dictionary for your database. This should include:
a) For each table: a definition of each column (attribute),
consisting of the column name, brief
description of what it represents, its data type and size, domain
(allowable values), any
default value, whether it is required, whether unique, and any
constraints (primary key,
foreign key). You can follow the example in Lab 07. Use the
data types available in Oracle.
b) For each of the columns that is a foreign key, give the
appropriate referential integrity rules

(i.e. the “on delete…. ; on update“ etc actions that should apply
when the corresponding
primary key is altered). The appropriate action should be
included whether or not there is a
statement in Oracle to implement it.
c) Any business rules (enterprise constraints) that should apply
to the database that haven’t
already been covered by cardinality or participation constraints.
Note that your data dictionary must be consistent with your
ERD and schema.
Part 3: Implementation (30 marks)
Implement the tables for the GardenFriends database in Oracle
SQLPlus on arion.murdoch.edu.au.
Note the following:
a) All tables should be created as per your ERD and data
dictionary; the marker will check your
ERD against your tables. You do NOT need to include the SQL
CREATE TABLE statements
that you used to create the tables.

b) All entity and referential integrity constraints should be
created and appropriately named.
c) All columns (attributes) should be of an appropriate data
type/size and be set as required,
unique or not as appropriate.
d) All domain constraints should be implemented.
e) All tables should be populated with sample data that will
allow the marker to test that your
database fulfils the application requirements as specified and
supports the transactions and
views listed below. Also provide the same sample data in your
Word document. If you use
a screen dump, it MUST be a size that is readable without
zooming.
Note you do NOT need to include the SQL INSERT statements
that you used to add the data.
f) SELECT, UPDATE, INSERT and DELETE permissions
should be GRANTED on all database
objects (particularly tables and views) to the user MARKERTL.

This is most important. If you
do not grant this permission, the marker will not be able to mark
this part of your
assignment and you will not get any marks for it.
g) Please state in your documentation whether you have used
your V account or H account.
Part 4: Views (40 marks)
Create VIEWS for the following in Oracle (views should be
named as ViewA, ViewB etc). Note that
some of these have changed from Assignment 1 in line with
Astrid’s new requirements.
You should also provide the CREATE VIEW statements you
used to create the views in your Word
document. These should be as text, not screen dumps.
A. All the members represented in the database, and details of
the skills they offer, listed in
alphabetical order of last name.
B. A list of all the equipment available for loan, the contact
details of the member who is loaning
the equipment, and any specific information about the
conditions of loan.
C. A list of attendees (name, phone number, and whether they
are registered members or guests)

who have signed up for Fran Forklift’s workshop on ‘Chainsaw
use and maintenance’.
D. All the events (title, date) that were more popular (i.e. higher
attendance) with guests than with
registered members.
E. All the upcoming events (title, date, location) in a given
postcode (e.g. 6150) for the next month
(i.e. the whole of the next calendar month).
F. Details (title, description, date, location, leader name,
instructions) of all the events that
mention roses.
G. Names of any members who have organised, led or helped in
more events than they have
attended as participants. The result table should also show the
number of events.
H. All the events (title, date, leader) that meet accessibility
guidelines.
I. A list of guests who attended (or are signed up to attend)
events that are not in their home
suburb. The result table should also show their home suburb and
the event suburb.
J. The number of unfilled places in each category of event that
has been held so far.
NOTES:

suburb, gardener etc, you
should ensure that your sample data demonstrates this.
However, it is important that your
query also works for other possible values, without changing
anything apart from the literal
value.
requirement. For example, if
“the previous month” is asked for, the query should not use a
particular month such as
‘November’ in the SQL.
https://docs.oracle.com/cd/B19306_01/server.102/b14225/ch4da
tetime.htm
http://www.akadia.com/services/ora_date_time.html
You can use TO_CHAR to format your output (see e.g.
https://www.techonthenet.com/oracle/functions/to_char.php )
Please note the following about the marking of this assignment:
your documentation to your
implementation. This means for example, that tables, columns
and constraints should be named
in your database as they are in your documentation.
Relationships defined in your ERD should be
defined in your database using foreign keys.

er will view the sample data in your tables.
above.
privileges on all relevant objects (tables
and views) to the user MARKERTL. If you do not do this, the
marker will not be able to mark part
of your assignment (and you may be awarded 0 for this section).
https://docs.oracle.com/cd/B19306_01/server.102/b14225/ch4da
tetime.htm
http://www.akadia.com/services/ora_date_time.html
https://www.techonthenet.com/oracle/functions/to_char.php
UV3935
November 27, 2009
This case was prepared by Barbie Carmichael, Batten Fellow
and Senior Counselor, APCO Worldwide, and
Assistant Professor James Rubin. It was written as a basis for
class discussion rather than to illustrate effective or
2009 by the University of Virginia Darden School
Foundation, Charlottesville, VA. All rights reserved. To order
copies, send an e-mail to

[email protected] No part of this publication may be
reproduced, stored in a retrieval system,
used in a spreadsheet, or transmitted in any form or by any
means—electronic, mechanical, photocopying,
recording, or otherwise—without the permission of the Darden
School Foundation.
AETNA INC.: MANAGING INHERENT ENTERPRISE RISKS
THROUGH STAKEHOULDER MANAGEMENT (A)
Prologue
In the spring of 2003, Roger Bolton, Aetna Inc.’s senior vice
president of
communications, and David Carter, Aetna’s vice president of
corporate public relations,
compared notes as they walked back to their offices following
discussions with Aetna’s
attorneys, with whom they had been working for the past four
years. Together, they had been
managing the continuous communications challenges
surrounding class action litigation that
physicians had brought against managed care companies and
had watched Aetna’s position
erode, both in its financial results and its reputation among key
stakeholders—patients,
physicians, corporate benefits customers, employees, and
investors.
It had not been a fun ride.

The company had been cast in news reports as a typical
corporate stereotype: Aetna was
scripted as the leading villain in the saga of managed health
care insurance, callously inflicting
onerous policies on patients and doctors that put profit above
the well-being of their customers.
By 2003, however, the company had reached a turning point.
Employee morale was recovering
under new leadership that had brought a fresh, clearly
communicated strategic vision and
improving relations with physicians. After a series of Wall
Street losses and surprises, the new
strategy was beginning to translate into improved bottom line
results. Aetna was now showing a
profit, but its progress was still fragile.
Now, Bolton and Carter faced their next challenge. Aetna had
just concluded confidential
negotiations with the plaintiffs in the class action suit. Within
the week, Aetna would break from
the eight managed care insurers named in the lawsuits and
announce a settlement. Both
executives knew that the positioning of this settlement would be
a significant strategic issue
needing debate at the management group level, Aetna’s most
senior executive council.
This document is authorized for use only in ANGELA
MONTGOMERY's Stakeholder Management and Organizational
Behavior - MSPM 6160 at Laureate Education - Baltimore from
Feb
2018 to Apr 2019.

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Their announcement options covered a wide range, from low-
key to high-visibility. Their
proposal for the management group needed to include the
business case for their recommended
announcement strategy as well as a draft press release and the
media headlines they would be
seeking so that the management group could see how the
strategy would be carried out in terms
of the identified spokespeople and supporting messages.
As they entered the working conference room that had become
ground zero for managing
the communications on this issue, they reflected on the
enormous changes that had taken place at
Aetna. They knew that persuasive arguments could be made for
any of the potential
communications strategies before them. In fact, members of the
management group could
reasonably and thoughtfully champion opposite ends of the
spectrum, from a low-key
announcement to a high-visibility strategy.
As they began to formulate a strategy, they reflected on the
roller-coaster ride the
company had experienced, which would form the context for
any announcement strategy they

would recommend.
A New Era for Aetna: 1995–99
In 1995, just eight years before its 150th anniversary, Aetna had
begun to embark on a
new strategic course, breaking away from its long history as a
traditional multiline insurance
company that, as recently as 1990, Fortune had ranked as the
nation’s fifth-most-admired
financial services company. Then named Aetna Life and
Casualty, the company had recorded an
enviable, sustained track record, successfully navigating
multiple natural and financial crises—
such as the Great Depression and the San Francisco
earthquake—that had tripped up lesser
competitors. Following a board-level strategic business review
conducted in 1994–95, however,
Aetna had concluded the best fit for its long-term growth was in
health care and financial
services, according to Ed Shaw, who served as the company’s
general counsel from 1999 to
2004.1
Completing the sale of Aetna’s property and casualty business
to the Travelers Insurance
Group in April 1996, Aetna CEO Ronald Compton said the
transaction represented a “major
phase in Aetna’s transformation from a traditional multiline
insurer to a growth company
focused on leading edge health care and retirement services”
(Exhibit 1).2 Three months later,

Aetna completed its acquisition of U.S. Healthcare, giving
Aetna, according to Compton, “the
scale and expertise necessary to thrive in the dynamic health
care industry” and positioning the
1 Case writer interview with Ed Shaw, December 22, 2005;
unless otherwise noted, all subsequent Shaw
quotations and attributions derive from this interview.
2 “Aetna Completes Previously Announced Sale of
Property/Casualty Operations to Travelers,” Aetna press
release, April 2, 1996.
Feb
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company “to deliver superior long-term value to shareholders”
(Exhibit 2).3 Now renamed Aetna
Inc., the company saw its future as bright. Compton said:
The health care industry, and managed care in particular,
continues to be a
business with excellent current and future prospects. Our unique
ability to provide

access to affordable, high-quality health care on a national level
will be the key to
our future success, allowing us to create the first truly national
managed care
company.4
The newly named Aetna Inc. soon found, however, that
capturing the financial synergies
anticipated from integrating U.S. Healthcare would be more
difficult than expected, an all too
common scenario in many mergers and acquisitions. In 1997,
Aetna announced it would take a
$108 million charge attributed to problems integrating the two
companies. The news surprised
shareholders, who had relied on Aetna officials’ earlier upbeat
statements on the company’s
financial condition. Aetna later agreed to pay $82.5 million to
settle a class action shareholder
lawsuit emerging from this dispute.
Despite this initial hiccup, Aetna stayed on its new strategic
course. Under the leadership
of CEO Richard Huber, who had assumed that role following
Compton’s retirement in 1998, the
company continued to grow its position in the health care
industry, acquiring NYLCare Health
Plans (in 1998) for $1.05 billion and Prudential Healthcare (in
1999) for $1 billion. Both newly
acquired businesses were transitioning from old-line indemnity
insurers to the managed care
model. With the Prudential acquisition, Aetna had become the
largest U.S. provider of health
benefits.

The Health Care Industry Consolidates
The health care service industry that Aetna was strategically
targeting had always been
distinguished by its complexity. It was composed of multiple
stakeholders—patients, physicians,
hospitals, pharmaceutical companies, regulatory agencies, and
health insurers—each focused on
preserving individual interests while also being inexorably
dependent on one another. Beginning
in 1990, however, the complex web of services that comprised
the delivery of health care in the
United States began a spiral of activities that fed upon each
other, spinning off some of the
players, consolidating others, and converging sources of power
among stakeholders that would
culminate in a High Noon confrontation.
Prior to 1990, the traditional business model for physicians had
largely been a small or
solo private practice. Consumer awareness of, or use of, the
Internet had not yet begun to gain
traction. As a result, patients’ primary sources for medical
information specific to themselves or
3 “Aetna and U.S. Healthcare Complete Merger,” Aetna press
release, July 19, 1996.
4 Aetna press release, July 19, 1996.

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medical information in general were their personal physicians,
and patients’ preferences for
specific doctors were not yet restricted through health care
plans requiring the selection of
“primary care physicians.” In that context, physicians had
grown accustomed to running the
show, with access to their own medical records on each patient
and largely unchallenged
judgment on individual medical treatments.
But fundamental changes were emerging in the 1990s that
would inevitably reconfigure
the business model for delivering health care. Computer-based
business management had spread
beyond the early adopters of government and large corporations,
profoundly changing computer
hardware (the emergence of personal computers), software
(increasingly sophisticated and
accessible business management and database management
programs), and networks (the U.S.
Defense Department’s ARPANET’s evolving into the World
Wide Web). These changes
combined to provide the foundation that would later enable
broad access to health care

information on both individual patients and broad populations
of patients, displacing the role of
the individual physician practitioner as the primary hub for
medical information.
In parallel with these changes, corporate buyers of health
insurance were observing an
unending escalation of health care costs, with no mitigating
solution on the horizon. As
employers began adopting so-called cafeteria-style health care
plans, those rising costs became
more directly visible to employees. With each annual benefit
enrollment cycle, employees would
evaluate the cost–benefits tradeoffs in their various options,
making the rising costs much more
visible and personally relevant.
In addition, by 1990, the discipline of fact-based quality
process management had
demonstrated its ability to make material improvements in
corporate productivity, particularly in
the manufacturing sector, with 1988 Baldridge Award winners
such as Motorola becoming the
role models for improved profitability through efficiency gains
in manufacturing. The next
frontier was applying the discipline of quality process
management to nonmanufacturing
business processes and to the service industry as a whole. Re-
engineering and the adoption of
best practices had become the hallmarks of a well-managed
enterprise, offering win-wins to all
stakeholders through quality products or services at lower costs

with increased profitability.
One potential solution to visibly spiraling health care costs
came from combining the
advanced capability in computing with the discipline of quality
process management. More
powerful and sophisticated information-processing systems
allowed insurers to access
consolidated health care data, providing them with the fact-
based information they would need to
effectively apply quality process management to health care
services. Identifying and delivering
“best practices” in health care promised to deliver quality care
while at least stemming the rate of
escalating costs, if not lowering costs.
Health maintenance organizations (HMOs) provided insurers
with a logical business
model for delivering cost-effective best practices in health care.
Prepaid care fees sought to
deliver preventative medicine by encouraging patients to seek
regular care through a predefined
Feb
2018 to Apr 2019.
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group of physicians who could coordinate among a network of
specialists. The physicians, in
turn, were controlled through tightly managed processes and
procedures optimized for delivering
medically necessary treatment and eliminating or discouraging
unnecessary costs. Although they
had existed for decades in the United States, HMOs had not
begun to gain broader acceptance
until the late 1970s with the passage of the Health Maintenance
Organization Act of 1973. The
act allowed HMOs to access the employer-based market from
which they had been previously
barred, requiring employers with 25 or more employees to offer
federally certified HMO options.
By 1977, once the federal government’s pace quickened in
issuing supporting regulations and
certifying plans, HMOs had begun to grow rapidly.5 By 1993,
as employees sought to contain the
increasing bite of their income that the cost of health care was
consuming, 51% had opted for
managed care programs. By 1995, employee adoption of these
programs had risen to 73%.6
With their patients increasingly consolidating into managed care
plans affiliated with
multiphysician clinics or multiphysician networks, the sole
practitioner business model to which
physicians had become accustomed faced a fundamental change
in the balance of power. No
longer at the hub of the health care system, doctors began to
consolidate. In 1991, just over one-

third of all physicians were solo practitioners. By 1995, that
number had shrunk to just over a
quarter, with nearly 30% having instead opted to become
employees of hospitals or HMOs.
Alternatively, many opted to join independent practice
associations (IPAs), providing them with
a means to contract collectively with managed care plans as
they became part of a plan’s
provider network. In stark contrast to the sole practitioner
business model, by August 1996,
approximately 4,000 IPAs were in operation, with an average of
300 physicians each.7 To level
the playing field in dealing with managed care organizations,
these physician practices
increasingly sought the expertise of a new player in the market,
the private physician
management firm (PPM), which would negotiate and market
physician practices with managed
care firms. In just two years (1994 to 1996), the number of
physicians affiliated with the three
largest PPMs had grown nearly 700%, from 3,787 to 25,763.8
During this same decade, hospital ownership also underwent
dramatic change. In the
same two-year period, nearly half (41%) of all nonfederal U.S.
hospitals saw changes in their
asset ownership. At the decade’s end, Lori Mitchell, then
chairman of the Healthcare Financial
Management Association, summarized the roller-coaster rides
the nation’s hospitals experienced:
Hospital consolidations are continuing in many areas…Hospital
profitability is
declining in many parts of the country, and some hospitals have

dipped into or
5 Penny Singer, “Health Maintenance Plans: A Growing
Market,” New York Times, March 30, 1986.
6 Martin Gaynor and Deborah Hass-Wilson, “Change,
Consolidation, and Competition in Health Care Markets,”
Journal of Economic Perspectives 13, no. 1 (1999): 141–64.
7 Gaynor and Hass-Wilson.
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depleted their reserves over the past few years…Turnover in
senior leadership
positions continues to be high.9
For the health care insurance market, these fundamental changes
represented both an opportunity
and a threat. Consolidation through mergers and acquisitions
had the potential to provide
economies of scale to achieve increased efficiencies in the
HMO business model. Failure to act,
however, would likely position an insurer on the weaker side of

the power curve, making it an
acquisition target or bloating its competitive cost structure due
to its relatively diminished
bargaining power. In this changed business context, the M&A
action among health care insurers
was fast and furious. Of the 592 HMOs in operation in 1996, 62
either merged or were acquired.
By 1997, the 128 independent Blue Cross/Blue Shield plans that
had been in operation in 1975
had shrunk to only 58.10
Initially, these dramatic changes in the health care system
succeeded in stemming the
double-digit rise in health care costs and, consequently, some
insurance premiums. But by the
end of the decade, what appeared to make sense on paper was
challenged by the difficulties
inherent in consolidating so many disparate players into the
overall system. Lori Mitchell
summarized the scene surrounding insurers in 1999:
After a number of years of premium declines, commercial
insurance premiums
are beginning to rise again in most areas of the country. Rising
health care costs—
especially costs associated with pharmaceuticals—have
necessitated this increase.
Many insurers have found that their own administrative
software is not designed
to support various nontraditional insurance products and
provider agreements. As
a result, extended claim payment delays are common in most
parts of the country.
Consolidation of commercial insurers through merger and

acquisition continues to
occur, though the expected reductions in overhead costs and
strengthening of
market position have not always materialized.11
Patients Lose Patience
Ironically, as Mitchell explained, coexisting with this massive
health care industry
consolidation was a trend moving in the opposite direction: a
proliferation in the number of
differing health care products and provider agreements.
Responding to consumer backlash
against restrained choices in initial HMO plans, insurers had
begun expanding the boundaries of
managed care by offering subscribers more choices, such as
preferred provider organizations
(PPOs). A variation on the earlier managed care models, PPOs
offered subscribers broader
9 Lori Mitchell, FHFMA, CPA, “Chapters of Change on the
Healthcare Delivery Landscape,” Healthcare
Financial Management, April 14, 1999.
11 Mitchell.
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choices in selecting a physician either in-network (at a
negotiated discount rate) or out-of-
network (at a higher price). Competition among the various
provider networks enabled, at least
initially, reduced in-network rates. But the diversity of provider
networks and competing
products also came with the complexity of administering and
processing a wide variety of
differing plans and claims. The result was increased
administrative costs and slow claims
processing.
To control costs among the divergent provider networks, PPOs
adhered to some of the
tightly controlled policies and procedures of HMOs. This
typically included records reviews to
validate that the prescribed treatment was appropriate to the
patient’s condition. In addition to
ensuring that the treatments conformed to proven medical
practices, this records review also
sought to disallow treatments aimed more at increasing
reimbursements than treating patients.
Another common PPO requirement was obtaining an insurer’s
precertification or prior approval
before nonemergency hospitalization.
The negative impacts of all these HMO practices on physician
and patient stakeholders—

increased administrative costs for both insurers and providers,
slower claims processing, and
perceived insurer intervention in the doctor–patient relationship
through insurer-approved
medical treatments—combined to trump the managed care
business model’s promised win-win.
As the HMO model’s market penetration continued to grow, so
did the inherent risks from the
HMO business model as the negative impacts on stakeholders
became more visible. Doctors
came to believe that insurers were second-guessing their
medical judgment, adding significant
administrative overhead costs to their medical practice and
potentially endangering their
patients’ health by prohibiting what they deemed to be
appropriate care. Patients saw their
insurers as blocking access to needed treatments, and patients
without employer-based insurance
found themselves excluded from the in-network medical care
discounts, pricing them out of
the market.
Angry Patients and Physicians Converge with Politicians and
Lawyers
In the early 1990s, health care reform had focused primarily on
cost containment and had
emerged as a political issue, best exemplified by Hillary
Clinton’s 1993 universal health care
plan. In that context, managed care was part of the solution.

By the end of the decade, voters had directly experienced what
they saw as the negative
consequences inherent to the current managed care “solution.”
Choice had replaced cost as the
driving issue in health care reform, and the Patients’ Bill of
Rights had replaced universal health
care as the legislative solution. Positioned as a statement of the
rights to which patients were
entitled as recipients of medical care, a key component of the
1999 Patients’ Bill of Rights
passed by the House of Representatives gave patients a broad
new ability to sue their HMOs in
state court. In contrast, the Senate version restricted patients’
ability to sue for punitive damages
Feb
2018 to Apr 2019.
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in cases where coverage of medical procedures was delayed or
denied.12 Competing bills
continued to be debated, with Congress still arguing about the
best legislative solution in 2001,
ultimately ending in a stalemate.
What Congress failed to enact through legislation, plaintiffs’

attorneys sought to achieve
through litigation.
Flush from collecting $243 billion from the tobacco industry
and $10.4 billion in fees for
themselves, plaintiffs’ attorneys had learned the formula for
“Litigation Incorporated” as means
to achieve policy changes through litigation rather than
regulation.13 With the courtroom
proceedings staged as mere background scenery, their core
formula for action involved first
softening up the political environment through high-profile
media coverage of consumer victims
harmed through the onerous actions of greedy corporations.
These ready-made news stories were
too appealing for the media to ignore and would occur well
before any trial and often even
before the initial filing of the suit itself. With that context in
place, federal and state legislators
could then be easily recruited to stage hearings and
investigations, scoring political points if not
enacting legislation. From there, states’ attorneys general could
be dispatched to the rescue,
staging more lawsuits and inquiries on multiple fronts.
Observing the financial risks from this
sustained run of negative exposure, all well in advance of any
actual trial on the merits of the
cases, nervous investors by now had driven down stock prices to
the point that corporate
executives and their boards were forced to consider settlements.
High Noon

In this highly dynamic context, Aetna had expanded its base of
subscribers to more than
21 million with its 1999 acquisition of Prudential Healthcare.
But in this context, bigger was not
necessarily better.
Aetna had taken steps to eliminate redundancies from its
acquisitions, for example,
eliminating 4,000 positions and closing half its claims
processing centers following the U.S.
Healthcare acquisition. But many analysts believed the company
had overpaid for these
acquisitions, leaving it with an uncompetitive cost structure. In
addition, while competitors had
responded to consumer backlash by offering more choices for
subscribers, Aetna continued to
adhere to a more stringently controlled business model as a
means of controlling costs. In fact,
U.S. Healthcare, Aetna’s first acquisition, had been perceived
as being one of the most hard-
nosed of all the HMOs, limiting doctors’ fees and requiring
doctors to take all patients,
regardless of what kind of Aetna health plan they had selected,
prompting many doctors to stop
working with Aetna.14
12 Dena Bunis, “Patients’ Bill of Rights Goes to Committee,”
Salon, November 5, 1999, http://www.salon.com/
health/log/1000/11/05/patients_rights/ (accessed November 2,
2009).
13 John Helyar and Soo-Min Oh, “They’re Ba-a-ack!” Fortune,
June 26, 2009.

14 Pamela Moore, “Aetna: A Long Way to the Recovery Room,”
BusinessWeek, July 16, 2001.
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The net result was that being the biggest, with more than 21
million subscribers, simply
multiplied the collective negative impact of its restrictive
policies and procedures. As
BusinessWeek summarized it, Aetna’s situation was bleak:
Having overpaid for its acquisitions and managed them badly,
the Hartford
insurer expects to trail the industry in profitability for years to
come. Its costs are
far higher than those of rivals, its premiums often far cheaper,
and it faces
increasing employer resistance to raising them. And healing the
company’s image
may be hardest of all: Aetna alienated consumers and doctors by
sticking with the
unsavory cost-control tactics of early HMOs long after more
nimble rivals were

offering greater choices of doctors and services.15
The plaintiffs’ lawyers could not have scripted a better cast to
play villains and victims as they
placed the next target for their mass tort litigation enterprise in
their crosshairs. Enter stage left:
David Boise, who was then leading the Justice Department’s
case against Microsoft, and Richard
Scruggs, who had led the litigation against tobacco companies,
particularly the state lawsuits.
True to their formula for softening up the environment before
even filing a lawsuit, they obtained
high-profile Wall Street Journal coverage of their litigation
plans: “Attorneys Prepare Suits
against HMOs.”16 Aetna, the nation’s largest health insurer,
saw its stock drop 18%; the number-
two insurer, United Healthcare, experienced a 19% drop.
Four months later, on February 25, 2000, William Donaldson
was named Aetna president
and CEO, replacing Richard Huber, who resigned. Donaldson,
then immediate past chairman and
CEO of the New York Stock Exchange, had served on Aetna’s
board of directors since 1997.
It was time for urgent care.
Triage: 2000–01
As Aetna entered the year 2000, the company had become the
industry’s leading health

care insurer with the majority of its business in that sector, most
of which was based on the
managed care business model. But the managed care entities
Aetna had acquired in the last half
of the 1990s to provide economies of scale had each had their
own struggles in converting to the
managed care model. Integrating them into a single, effective
operation had been more difficult
than anticipated.17 In addition, Aetna had credibility problems
with physicians and Wall Street
15 Moore.
16 Laurie McGinley and Milo Giyelin, “Attorneys Prepare Suits
Against HMOs,” Wall Street Journal,
September 30, 1999.
17 Case writer interview with Roger Bolton, January 10, 2009;
unless otherwise noted, all subsequent Bolton
quotations derive from this interview.
Feb
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investors, two of its key stakeholders. “Aetna was promising

lower cost for consumers and
textbook, evidence-based medicine. Most saw this as good,”
Shaw said. “But it was not good as
seen by doctors. Instead, they saw it as interfering with the
doctor–patient relationship.” Wall
Street investors had seen the company miss earnings guidance,
escalating high-profile litigation,
a major decline in the stock, and a CEO resignation.
Ironically, by the time the class action litigation had emerged,
the managed care industry
was already moving away from what Aetna Corporate Counsel
Robert Stillman called the
“Mother May I?” policies that had triggered the consumer
backlash. The industry had also begun
to streamline processing, implementing online access to fee
schedules and current procedural
terminology (CPT) codes. The exception to that trend, however,
was industry leader Aetna.
Following its acquisition of U.S. Healthcare, Stillman
explained, Aetna clung to the cost control
model of managed care and was aggressively communicating its
practices, leading some critics
to maintain that the policies were placing the insurer in the
position of deciding what the right
medical care was.18
Health care of the 1990s, Stillman said, could not survive if it
angered doctors: “All these
massive lawsuits came down to fundamental business practices
that were symptomatic of aspects
of the business model that angered physicians.”

The company needed new management to take a fresh look at
the situation and decide
what actions to take. Under Donaldson’s leadership, Aetna
found new guidance and a fresh
perspective in John (Jack) W. Rowe, MD, who became CEO and
president of Aetna US
Healthcare in September 2000. Rowe, an esteemed
gerontologist, was the former CEO of Mount
Sinai NYU Health, one of the nation’s largest private hospital
systems. While he had never run a
publicly traded company the size of Aetna, which had at the
time 18.3 million members and
$27 billion in revenues, as a physician, he brought a
stakeholder’s perspective to assessing
Aetna’s situation.
In a September 2000 New York Times profile, Rowe compared
the challenge facing him
at Aetna to his first job as a junior faculty member at Harvard
Medical School, where he was
assigned to develop the first-ever academic research and
teaching program on aging:
It was an uphill battle to establish a new era of medicine in a
school that had been
around for hundreds of years. I felt like Sisyphus, pushing a
rock uphill every day
only to have it roll back down again. Over time, we built the
nation’s largest
academic research program on aging…Aetna looks very much to

me like my first
job at Harvard. Health insurance is broken in this country and
we need to re-
18 Case writer interview with Robert Stillman, December 19,
2005; unless otherwise noted, all subsequent
Stillman quotations and attributions derive from this interview.
Feb
2018 to Apr 2019.
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engineer it. I don’t know if it will be like pushing a rock uphill,
but if it is, I am
prepared.19
Rowe signaled a new perspective even before his first day at
Aetna. “The Saturday before I
started with Aetna,” Rowe recalled, “I was invited by the
American Medical Association to meet
with its board. The first thing I said was that I had been a long-
term, dues-paying AMA member.
That differentiated Aetna for them.”20

Six months after joining Aetna, Rowe was named president,
CEO, and chairman.
Donaldson, having established Aetna’s new leader and having
refocused Aetna entirely on health
care and group benefits by selling Aetna Financial Services and
Aetna International to AIG,
could now step down from active management but remain on the
board.
By July 2001, less than one year after joining Aetna, Rowe’s
top executive team was
entirely new. “A lot of people in the company,” Rowe said in a
2001 BusinessWeek article, “need
the kind of leadership that says, ‘Don’t tell me where you are
from. Tell me where you are
going.’”21 Two key new members Rowe recruited to the
management team were Ronald
Williams, named EVP and chief of health operations, and
William Popik, MD, chief medical
officer. Together, the team quickly assessed the situation as
urgent and prioritized what needed
to be done. In 2001, Rowe estimated that Aetna was losing
about $1 million a day.
Williams provided the strategic vision and detailed
understanding of how to achieve
operational excellence. As the former president of WellPoint
Health Networks, he had played a
key role in moving WellPoint from near-bankruptcy to being
recognized as one of the best-
managed companies in health care.22 A quiet, unassuming

leader, Williams set the tone by
showing up for work at Aetna one day after he left WellPoint.
“If I didn’t show urgency in what I
did,” Williams asked, “why should anyone else?”23
The operational systems challenge for Williams was daunting.
While Aetna’s competitors
had expanded patient choices and had begun to provide more
online access for patients and
doctors, Aetna did not have the management information
systems in place that could yield
reliable data and enable those kinds of operations. Stillman said
that a common complaint among
physicians was Aetna’s slow pace in paying claims, something
doctors attributed to the
company’s playing the float, given its history as a financial
services company. In addition, the
rationale for why some claims were approved and others
rejected was a “black box” mystery.
While some believed these operational glitches represented
willful misconduct, in reality Aetna
19 Jenny Holland, “My First Job: John W. Rowe: Different
Rick, Different Hill,” New York Times (September
17, 2000).
20 Case writer interview with John W. Rowe, MD, July 5, 2006;
unless otherwise noted, all subsequent Rowe
quotations derive from this interview.
21 Moore.
22 Moore.
23 Sonia Alleyne, “Aetna: The Turnaround King,” Black

Enterprise, August 2, 2006.
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had inadequate system tools in place that could sort through
fundamental data, such as which
codes it would pay and which codes it would not.24
William Popik, a well-regarded medical chief recruited from
Cigna, faced the similarly
daunting challenge of reorienting Aetna’s understanding of the
inherently negative impacts the
company’s policies and practices were having on their key
stakeholder—physicians. Popik
explained:
Aetna was operating on a tightly controlled HMO model
coupled with an
institutional arrogance among those who had led that model on
what health care
should be for members and doctors. The company was also
naïve about the power
of physicians. The physicians were not blameless in this, some

thinking they
could run the show based simply on “Trust me” with no
accountability. But Aetna
thought it could overcome the doctors and run their model
through. Doctors
normally could not agree on anything. But Aetna’s business
practices were able to
unite them in their desire to kill off the company and join with
the lawyers.
Popik summarized the situation they faced in 2001: “Aetna had
become the poster child
for everything wrong with managed care.”
Another immediate priority was fixing Aetna’s unprofitable cost
structure. Aetna had
ended 2001 with a net loss of $279.6 million and growing
concerns about being targeted for a
hostile takeover. Painful but decisive steps were needed. Under
Rowe’s leadership, Aetna
adjusted premium costs to better reflect the actual health care
costs the company faced. This
change resulted in a membership loss of nearly eight million
individuals, as well as product and
market withdrawals in areas where it lacked the ability and
market share to adequately negotiate
profitable contracts with providers.25
Building the Aetna Way: 2001–06
From inherent risks to inherent strengths: transforming the
business model

Rowe understood that what needed fixing at Aetna was more
than tactical improvements
of inefficient processes. The conclusion from a recently
completed enterprise risk management
assessment had indicated that Aetna’s greatest risk would be its
failure to differentiate. “Without
24 Shaw; case writer interview with William Popik, January 4,
2006; unless otherwise noted, all subsequent
Popik quotations derive from this interview.
25 Moore; Katzenbach Partners, “Anatomy of a Turnaround:
The Difference Between Leading and Managing,”
http://kathzenbach.com/Work/PublicationsInstance/tabid/73/Def
ault.aspx?Entity_ID=383 (accessed July 2, 2009).
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differentiation,” Rowe explained, “insurance becomes a
commodity with price being the only
differentiator.”

Re-engineered operations enhanced through improved
information processing would not
differentiate Aetna if the underlying processes added no
differentiating value. A more
fundamental step to Aetna’s turnaround first required
challenging long-held beliefs on what
should be re-engineered. Otherwise the company could find
itself efficiently implementing
strategically flawed business processes. Rowe’s fresh
perspective as a physician was critical at
this stage, Shaw said:
He was particularly good at knocking down the conventional
wisdom. For
example, the medical loss ratio or MLR had been a long held
financial metric at
Aetna. From Jack’s perspective, this was not a loss. It
represented Aetna paying
doctors for what they are supposed to do. It should be the
medical cost ratio, not a
loss ratio.
Rowe quickly understood that some of Aetna’s underlying
processes and business
practices were counterproductive, such as the precertification
requirement. “In some cases,”
Rowe said, “that requirement made sense. But in other cases,
like requiring precertification
before performing a caesarian section, it was silly since the
procedure would not have been
denied anyway.” Aetna was the industry leader, and if it left

inherently flawed processes
unchallenged, the damage would be replicated thousands of
times, given the volume of Aetna’s
claims.
Rowe’s strategic vision for Aetna’s differentiated position was
based on its ability as an
insurer to prove the business case for quality care, not simply
cost-effective care. The source for
that differentiation rested with the smarter use of information to
yield better medical outcomes.
“The value-add of a health plan is more than negotiating and
paying claims,” Rowe said. “The
information we have about a member can improve the health of
patients and can help doctors and
patients decide on treatments and options.” In seeking to
differentiate Aetna, Rowe was
converting the inherent risks imposed by the current business
practices in the managed care
business model into inherent strengths in a transformed
managed care business model.
Rowe understood that physicians would be essential to
accessing that information and
defining insurance policies and practices that improved health
care rather than seeming to
interfere with it. If Aetna were going to change its practices, it
needed to stop alienating doctors
and start getting their input. There was, however, a significant
roadblock. Following up on the
groundwork Donaldson had done, Rowe began his outreach to
physicians by setting up a

meeting with the Connecticut Medical Society. The meeting was
soon canceled due to the
physician class action that had been filed. So long as the class
action were in place, meaningful
dialogue with doctors and progress on Aetna’s strategic
direction would be at a stalemate.
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Removing the Roadblocks
After the September 1999 Wall Street Journal article had broken
the story about
impending litigation, plaintiffs’ attorneys had sought to certify
two class actions against managed
care insurers Aetna, Humana, Cigna, Prudential, HealthNet,
WellPoint, United Healthcare, and
Coventry. One class would represent consumers (or subscribers)
and the other would represent
doctors (or providers). The suits alleged conspiracy under the
Racketeer Influenced and Corrupt
Organizations Act (RICO), which, if successful, would mean
treble damages for the defendants.

Plaintiffs alleged that the HMO defendants had used cost
containment as a screen to cheat
doctors by manipulating claims and delaying payments. This
included allegedly automated
procedures to “down code” claims submitted by doctors to
exclude those services from payment.
Also at issue was the “all-products clause” requiring a doctor in
an insurer’s network to accept
all forms of plans offered by that insurer, no matter how
unprofitable or administratively
encumbered those plans might be for the physician. The intent
was to prohibit doctors from
cherry-picking. In 2000, doctors’ cases that had been filed
across the country were consolidated
in the Southern District of Florida before U.S. District Judge
Federico A. Moreno in Miami and
certified as a class action of more than 700,000 physicians.
Moreno subsequently dismissed the
consumer class action in 2002, ruling that there were too many
differences among what different
members were told about their coverage to justify class action
treatment.26
Most observers had believed the patients/subscribers case had
been the weaker of the two
and expected the dismissal. Aetna’s focus, from the start, was
on the doctors/providers class. As
the industry leader in a financially weak position, the case
posed a substantial threat. Given its
huge volume of claims transactions, if Aetna lost on any of the
key issues, its financial exposure

would be enormous. “This was bet-the-company litigation,”
Shaw said.
Given the high stakes, Shaw adopted a two-track litigation
strategy. On track one, Aetna
would play hardball, sending an unequivocal message that it
would aggressively pursue its
defense and vigorously engage at each step of the legal process,
from discovery and depositions
of class members to thoroughly arguing each key issue.
According to Shaw, track two would focus on a potential
settlement aimed at changing
the business practices at issue. Rowe’s recruitment of Williams
and Popik were key enablers for
track two. Through Williams’s work on improving operations
and Aetna’s information systems,
the company was now in a position to understand the financial
implications of potential changes.
Through Rowe’s and Popik’s combined efforts to improve
relationships with physicians, a
dialogue could now begin. From the start, Aetna had ruled out
any settlement compensation on a
per-transaction basis for past practices. For the industry leader,
an amount calculated on a per-
transaction basis would be financially impossible. Instead,
Aetna would focus settlement
26 Julie Kay, “HMO Suit Brings Big Payoffs to Lawyers but
Leaves Unsettled Questions,” Daily Business
Review, June 27, 2006.

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discussions on future business practices, consistent with its
strategy for transforming its managed
care business model, advancing Rowe’s strategic vision for
Aetna while also addressing
physicians’ underlying concerns in ways beyond what a
monetary settlement alone could do.
As settlement discussions began, reinvention at Aetna was
already under way, and the
industry as a whole had already begun moving away from the
policies at issue in the litigation.
But the cost-control-driven policies and practices of the HMO
model had built a legacy of
distrust among physicians, who entered the settlement
discussion skeptical that the changes they
had seen would be sustained.
Shaw named Aetna Corporate Counsel Robert Stillman to lead
the negotiations on track

two with a core group of doctors and state medical societies. As
the discussions began in 2002,
Aetna was in the uncertain, early stages of a turnaround,
accentuating concern for the financial
implications of any potential settlement, particularly if it meant
that Aetna would be at a
competitive disadvantage by assuming a higher cost structure.
As Stillman guided the ensuing
discussions, he kept the emphasis on future business practices
that would improve the overall
quality of care, a common ground for all sides of the
negotiating table. “Some of the discussions
confirmed changes we already had in place or were moving
toward,” Stillman recalled. “For
example, Aetna did not yet have online access for doctors to
access fee schedules or CPT codes,
but we were moving in that direction, and that capability would
be needed, in any case, for the
more open and transparent practices we envisioned.” Even with
the focus on the future, the
physicians’ frustrations with past practices were always present.
“By 2001, the industry had
already ceased requiring the contentious all-products clause,”
Popik explained as an example of
that frustration. “But during the settlement negotiations,
physicians would insist that issue be
included to ensure it would never reappear.”
Once settlement discussions had advanced beyond theory, Aetna
decided to advise the
other defendant companies, which tried to talk the company out
of its plan. At the time, Cigna
had also been in urgent settlement discussions due to the
aggressive trial schedule it was facing.

“Even though they were advanced in their discussions,” Shaw
recalled, “the settlement they had
constructed was fairly limited in terms of changing future
business practices.” When Cigna
announced its tentative settlement in 2002, medical societies in
19 states aggressively opposed it,
calling it “woefully inadequate.”27 A few days later, Moreno,
under whom the cases had been
consolidated in 2000, halted Cigna’s proposed settlement after
preliminary approval had been
granted in a state court. No further action on the Cigna
settlement could occur without Moreno’s
permission.28
From Controlling to Enabling
27 “200,000 Physicians: Cigna Settlement Bad for Doctors and
Their Patients,” http://www.allbusiness.com/
legal/trial-procedure-suits-claims/6012559-1.html, December
10, 2002 (accessed November 2, 2009).
28 “U.S. Judge Halts Cigna Settlement,” New York Times,
December 13, 2002.
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The biggest battle in negotiating the settlement centered on the
amount of money Aetna
would pay the more than 700,000 doctors in the class. Any
meaningful per-doctor payment had
the potential to bankrupt the still financially fragile Aetna. The
common-ground breakthrough
came through the creation of a medical foundation. Initially
conceived of by Stillman and
strongly supported by Bolton and Carter, the new foundation
would be funded by Aetna and
would focus on enhancing physicians’ ability to provide their
patients with quality health care.
Critical areas would include initiatives to reduce or prevent
childhood obesity, for example, and
to improve end-of-life care. Physicians, who would receive
minimal per-physician compensation
through the settlement, could choose to contribute their
compensation to the foundation,
expanding on Aetna’s grant. The addition of the foundation to
the settlement provided Aetna
with a constructive action platform that positioned the company
as taking positive, forward-
looking action and differentiated the company from its
competitors.
In addition to the foundation, negotiations focused on revising
the contested managed
care practices. “The overall settlement involved a mixture of
new things not already done, some
things that had already been changed, some things Aetna knew

it had to do, and some things that
Aetna did not want to do, but had to do anyway,” Popik
recalled. Managed care had focused on
controlling costs through the insurers’ administrators, who
authorized treatments based on
proven procedures. Through the settlement, in language
approved by the American Medical
Association, Aetna changed its coverage language to explicitly
give more weight to treating
physicians’ clinical judgment as a factor in approved treatments
and applying generally accepted
medical standards in determining medical necessity. In addition,
the settlement would establish a
national advisory committee of practicing physicians to provide
Aetna with ongoing counsel on
issues of concern. The committee would institutionalize a
cooperative process between Aetna
and physicians as they worked together to improve health care
through revised managed care
practices.
Finally, Aetna would implement information systems and
policies that would
dramatically increase its openness and transparency with
physicians, enabling them to
understand their options in advance of treatment, reduce
administrative overhead, and speed
payments.29 The much disliked “black box” of insurance claims
processing would now be in the
sunlight.
In all, the settlement totaled $170 million, resulting in an after-
tax charge net of insurance

coverage of $75 million (Table 1). Aetna estimated the value to
physicians for these changes in
its business practices would be $300 million, resulting from
outcomes such as more prompt
payments and lower administrative costs.
29 “Physicians and Aetna Begin New Era of Cooperation,”
Aetna press release, May 22, 2003.
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Foundation $20 million
Legal fees $50 million
Payment to Physicians $100 million
Total $170 million
Data source: Aetna Inc.
Anticipating the reaction to Aetna’s settlement terms, Rowe
understood that some people would
think spending $170 million to settle the case was crazy. “As a
CEO, I was making a strategic
decision. Lawyers offer a legal view, but a legal victory doesn’t

necessarily equate to a business
victory,” he said.
Table 1. Settlement summary.
The Announcement Dilemma
Once the settlement was finalized in spring 2003, Aetna needed
to announce it promptly,
given its obvious material impact on the company. How to
announce the settlement was not
obvious.
The context
Based on the pattern of previous major litigation settlements
from high-visibility cases,
Aetna could anticipate headlines such as “Plaintiffs Bring Aetna
to its Knees” as journalists and
commentators inevitably began their scoreboarding of who won
and who lost. The plaintiffs’
high-profile celebrity attorneys and their obvious enjoyment of
being in the spotlight seemed to
guarantee a major story with the typical David-and-Goliath
casting.
By 2003, Aetna was barely turning a profit. Observers could
conclude that Aetna’s

decision to settle was a sign of desperation, guilt, or a weak
defense. Whatever the perceived
cause for settling, some would see this as Aetna’s taking on a
larger cost structure than its
competitors because of the settlement terms. That perception
could trigger a bad Wall Street
reaction and potentially concern some of Aetna’s corporate
benefits customers, who might
question whether Aetna would be less able to manage the cost
of their health care plans.
Employees were another key stakeholder to consider. Having
previously witnessed
firsthand Aetna’s fallen market position, many Aetna employees
had been encouraged once the
company had begun to turn the corner. Aetna was a proud
company with a long tradition, and
its culture would have a hard time accepting that it had done
something wrong and needed to
be punished.
Feb
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Finally, Aetna’s line business management was eager to put the

litigation behind the
company as quietly and as quickly as possible. All its
competitors were still committed to
battling the issues through litigation. Aetna was by itself in its
decision to settle.
Range of strategies
All these concerns could support a low-key announcement
strategy with talking points
ready to refute the anticipated negative reactions. In this
scenario, the announcement would
likely occur at the end of the day on a Friday or just before a
holiday, making it a one-day news
story without much visibility.
On the other hand, a negative reaction to the settlement was not
guaranteed. By 2003,
many on Wall Street and in the business world in general had
seen the risks companies faced if
they chose to fight all battles with a well-funded and media-
savvy plaintiffs’ bar. Aetna’s
forward motion in its turnaround and new strategic course could
be compromised by the arduous
and distracting process of effectively managing mass litigation.
In addition, continuing the legal
battle would mean ongoing litigation expenses estimated to be
about $20 million per year.
Regardless of which communications approach Aetna selected
at announcement time,
Bolton and Carter knew the company had one shot at getting it

right.
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Exhibit 1
April 2, 1996, Press Release
Aetna Completes Previously Announced Sale of
Property/Casualty Operations to Travelers
HARTFORD, CT, April 2, 1996—Aetna (NYSE: ΑET) said
today that it has completed the
previously announced sale of its Property/Casualty operations to
the Travelers Insurance Group
Inc. for total consideration of $4.1 billion.
“The closing of the sale of our Property/Casualty business
completes a major phase in Aetna’s
transformation from a traditional multiline insurer to a growth
company focused on leading edge
health care and retirement services, in both the U.S. and

selected international markets,” Aetna
Chairman Ronald E. Compton said.
As part of the P/C sale agreement, Travelers has assumed eight
years of Aetna’s lease at
CityPlace in downtown Hartford. Aetna has previously
announced that it will take a $190 million
after-tax charge for its remaining CityPlace lease obligation in
conjunction with the close of the
transaction.
For more information about Aetna Inc., please visit the
company’s website at www.aetna.com.
Source: Aetna Inc.
Feb
2018 to Apr 2019.
-20- UV3935
Exhibit 2
July 19, 1996, Press Release

Aetna and U.S. Healthcare Complete Merger
Merger creates nation’s leading health care benefits company
HARTFORD, CT, July 19, 1996—Aetna (NYSE: ΑET) and U.S.
Healthcare (NASDAQ:
USHC) today announced that they have completed their merger,
creating the nation’s leading
health care benefits company.
Aetna Chairman Ronald E. Compton said, “This merger
transforms Aetna into a growth
company with the scale and expertise necessary to thrive in the
dynamic health care industry, and
positions us to deliver superior long-term value to shareholders.
The health care industry, and
managed care in particular, continues to be a business with
excellent current and future
prospects.
“Our unique ability to provide access to affordable, high-quality
health care on a national level
will be the key to our future success, allowing us to create the
first truly national managed care
company,” Compton said.
As part of the merger, Aetna Life and Casualty Co. has been
renamed Aetna Services, Inc. and a
new holding company, Aetna Inc., has been formed as the
parent company to Aetna Services and
U.S. Healthcare, Inc. Aetna Inc. will begin trading on the New
York Stock Exchange under the
symbol “AET” commencing on Monday, July 22, 1996.

U.S. Healthcare shareholders will receive $34.20 in cash,
0.2246 shares of Aetna Inc. common
stock, and 0.0749 shares of Aetna Inc. 6.25% Class C Voting
Preferred Stock for each share of
U.S. Healthcare stock. Each share of Aetna Life and Casualty
Company stock will become one
share of new Aetna Inc. stock.
The combined Aetna/U.S. Healthcare health business will
provide health care benefits, specialty
health, group life and disability insurance to more than 23
million Americans.
For more information about Aetna Inc., please visit the
company’s website at www.aetna.com.
Source: Aetna Inc.
Feb
2018 to Apr 2019.

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