Four Principles of Transformation: What I Learned from Aetna CEO Mark Bertolini

Mark Bertolini is an innovator. He likes to push the boundaries of common thinking and find new solutions to big problems. One huge problem we face today is America’s bureaucratic spaghetti mess in health care. Aetna is committed to tackling this problem and is working to redesign health care’s future. As Mark said, “Aetna is a 165 year old company. We have always found a way to make a difference and to lead and innovate in the businesses we run.”  

Aetna does not just want to change health care gradually, but is rethinking the whole system, looking for dramatic changes that will lead to the best possible outcomes for patients.  Mark has said, “Some problems are so complicated you have to step back from the current realities and think through how a new system can be created.” 

When a leader works this way, a system is not incrementally improved from the inside out. It is transformed from the outside in.  

I had the opportunity to talk with Mark Bertolini and the Aetna team during a recent learning visit to their corporate headquarters sponsored by The Center for Higher Ambition Leadership

Here are four principles of transformation that came out of our discussions:

1. Start with what you want to create - your purpose.  

Russ Ackoff from Wharton Graduate School of Business taught us that the first step in systems thinking is to answer the question, “What is the purpose of the system you want to build?”  

For Aetna the purpose of the health care system is to put the health objectives of a patient ahead of everything else and then build the organizational architecture that serves the patient’s objectives. This one purpose starts the conversation around strategy and the means to get there. 

Mark used a metaphor to help explain this.  He said health care today is like an auto body shop where you only visit the shop when you have a dent that needs repaired. In contrast, Aetna wants to transform healthcare into an integrated network of support where the system helps you work through what you want in order to live a long, healthy, productive, and satisfying life. 

2. Strategy is not linear but a series of real time experiments:  

In transformation, strategy is not a straight forward exercise, because you need to experiment with new ways of doing things and new ways to engage a customer. As Mark says about the strategy at Aetna, “It is a random walk, not a linear progression. We know the principles we need to follow, and then we begin experimenting with the best ways to get from where we are to where we want to be.” 

For instance, Aetna is looking at how they can get into a customer’s home to look at safety hazards and evaluating together what they keep in their food cupboards, how much exercise they get, and what they do to socialize. Health care takes on a much larger scope than simply seeing a doctor when you are sick.   

3. Collaborate closely with your partners to affect change.  

The partners for Aetna who can work to achieve the goals of the patient are the doctors, the hospitals, the employers, and the communities where the patients live and work. All four must be engaged in improving the health care aims of the patient. Aetna is working to implement new payment models based on quality of health care received, not the quantity of services delivered.  

In this system, all parties are aligned to keep the patient healthy. The healthier the patient, the healthier is the overall system. The collaboration requires education and lots of problem-solving to address the concerns of each partner. A hospital fears they will lose money if they empty their beds, a doctor fears she can’t pay for equipment if she does not prescribe tests, an employer fears escalating costs, or a patient fears people will cut costs and not deliver the very best solutions. Collaboration is not easy and requires new skills and capabilities.  This drives us to the last principle.  

4. Trust is the foundation for change.  

The lower the trust, the higher the resistance. Aetna knows they cannot accomplish transformation in a system if each and every part of the system does not eventually support the change. That’s the challenge of a human system. All parties have choice to move freely, as they choose to either embrace change or fight it. Building trust will make or break a transformation - not only for partners but also for Aetna employees.  

Mark talks about the social compact his organization keeps with employees. Aetna introduced wage increases for the bottom 10% of the workforce because he found these people could not make it on their current income -- some had required supplemental food stamps to survive. Wages were increased from just above a minimum wage to $16.00 per hour plus benefits. Mark believes that the added expense is proving to be a good investment. Front line employees are more engaged, more committed to service, and less worried about the daily trials of just surviving.   

In summary, the above four principles are the foundation of transformation: 1. Be clear on your purpose. 2. Be bold to experiment and evolve with new ideas.  3. Collaborate closely with your stakeholders.  4. Build in the systems and behaviors that will cultivate trust across the entire system.  

If the health care system does not change, the costs will become an unsustainable burden on the American economy. Leading the change will not be easy, but as Mark says, “Like an artist painting on a canvas, living through change and disruption isn’t pretty, but in retrospect, we believe it will turn out to be the right thing and a beautiful masterpiece.”