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24 февраля, 13:05

4 Ways CEOs Can Conquer Short-Termism

In a recent survey, 70% of respondents said that CEOs focus too much on short-term financial results, and nearly 60% said that they don’t focus enough on positive long-term impact. These findings mirror the growing chorus of voices in business and academia that point to short-termism as being a major threat to business. It’s easy to fault CEOs for being too fixated on the short term. However, we believe that most CEOs don’t lack good intent. Rather, they’re missing a practical road map to beat back short-termism and build enduring firms — ones that deliver superior economic returns, make positive contributions to society, and inspire public trust. We offer such a roadmap here, the outcome of a research project, at the Center for Higher Ambition Leadership, with 25 CEOs and their practices for mastering short-term pressures and creating long-term social and economic value, even in the toughest conditions. Here are four practices that stand out: Tell a Story That Is Bigger Than Quarterly Earnings The CEOs in our study were adept at telling their company’s story. Great stories are credible, simple, consistent, and use both financial and nonfinancial metrics to link a long-term vision and firm values with a distinctive business strategy and focused operational priorities. Essential to the story is the company’s purpose. Fred Lynch, CEO of Masonite, a 92-year-old company that manufactures interior doors and entry door systems, created a long-term value creation thesis that he called the Masonite “blueprint.” The blueprint included the company’s purpose, vision, values, and strategic goals, and fits on a single page. Purpose is the why, says Lynch: “Why do people get up and come to work in the morning?” For people at Masonite, it’s not just about building doors; it’s about breaking down barriers. The company’s stated purpose is to “help people walk through walls.” Masonite fulfills that purpose not only with its door products but also by breaking down barriers to development for employees, through the company’s intensive training and leadership development programs, and in the larger community, by helping local high school students and newly immigrated workers find well-paying work and connect to resources that can help them thrive. CEOs in our study repeated their companies’ stories often and consistently to all their stakeholders — employees, boards, customers, business partners, communities, and the general public. As Doug Conant, former CEO of Campbell’s Soup, put it, “I declared what we needed to do, and I was incredibly, obnoxiously consistent.” Keeping it simple, with five core strategies in his long-term plan, helped people remember his message. A purpose-driven story of value creation that is clearly and powerfully told is a CEO’s first line of defense against short-term pressures. Once in place, it both generates commitment of employees and customers and puts the short term and the quarter in context as the immediate building blocks to longer-term goals. The story can then be referenced to justify business decisions that build, rather than erode, the fundamental assets that underlie long-term value creation: trust-based relationships and distinctive firm capabilities. Muster the Courage to Set Realistic Targets The quickest way to spring the short-term trap is to set overly ambitious targets — the kind that make the CEO a hero with investors in the short term, but threaten the long-term plan by, for instance, skimping on scheduled maintenance, cutting R&D investment, and shrinking travel and training budgets. Mark Bertolini, CEO of Aetna, began his tenure, in 2010, by lowering targets by over one-third, in a single bold move. Bertolini observed that many of his peers had been promising 15% earnings per share (EPS), even during the financial crisis of 2009. Bertolini knew that such unrealistic targets would create problems. “If you promise those kinds of returns, you’re going to do stupid things to your company and to your fundamentals to make that 15% work.” Bertolini and his team studied the industry and concluded that a reasonable target was no more than 6% EPS. By telling Wall Street not to expect unrealistic growth, he could focus on investing in future growth and better supporting customers and employees. In 2015, for instance, he raised the base employee wage by 33%, to $16 an hour, and introduced an enhanced benefit program for employees with household incomes under 300% of the federal poverty level, potentially saving them thousands per year in health care costs. Aetna’s growth and employee investment strategy has paid off: Its stock rose threefold in the last five years, and it posted record revenue and earnings in 2016. CEOs have a great deal of control over the financial targets they set. However, once the targets are decided on, the company must live up to them in order to build and retain credibility with investors. Setting them high — too high to sustain for long — is a tempting way to drive performance. But the pursuit of those performance goals may drive bad decisions and harm the company’s long-term prospects. Setting realistic targets is only possible after thoughtful analysis, and requires the board’s agreement along with a good measure of courage from the CEO. Adopt a Both/And Performance Mindset The CEOs in our study saw no contradiction between short-term performance and long-term value. They operated with a both/and mindset, seeking to deliver on immediate goals in a way that also built a sustainable future. Dick Gochnauer, the former CEO of United Stationers (Essendant), put it succinctly: “Most leaders come to realize that you can’t overfocus on one or the other.” The challenge faced by all our study CEOs was how to instill that both/and mindset throughout the entire organization. Doug Conant got his senior team aligned around a both/and outlook using positive peer pressure. He developed a three-year plan for his turnaround vision, which was translated into annual and quarterly operating plans, and biquarterly responsibilities for his executive team. “And then,” Conant described, “my team had to send me postings every Friday on how they were doing against quarterly expectations, followed by a group meeting every Monday morning. The power of that process was that I got their attention. And the beauty was that it became a self-governing system. After a little while, the guy in International was saying to the person running North America, ‘Last month didn’t you say that the project was going to be done by now? Has something changed?’ And all of a sudden my whole team had an appreciation for our long-term plan and how we were going to get there.” Many CEOs in our interviews emphasized the importance of choosing the right metrics to support both/and decision making. Brad Hewitt, CEO of Thrivent, has developed leading indicators for his long-term strategic intent that are organized in layers, from short term (one to three years) to medium term (three to five years). Shorter-term metrics are designed to be leading indicators for long-term strategic intent, and are integrated into the company’s incentive plans. The key to getting this system to work is ongoing reflection and adjustment to ensure that the short-term and medium-term metrics are truly the right leading indicators for a long-term strategic intent, and aren’t motivating unintended short-term behaviors. Stay True to Your Values The CEOs in our study made clear that the demands to deliver short-term results can be brutal and unrelenting, and that standing up to them requires a tough skin and a strong moral center. Consider, once again, the case of Fred Lynch. Before Lynch’s arrival, the private equity firm KKR bought Masonite for more than $2.7 billion. Masonite began to struggle shortly after the deal was completed, in 2005, and then declared bankruptcy in 2009. Lynch, who came on board as CEO in 2007, steered the company through that bankruptcy, cutting costs dramatically and laying off nearly half the company’s workforce. No matter how difficult, with every move he made, Lynch aimed to act with integrity. In keeping with Masonite’s values of transparency and fairness, the entire senior team froze their own pay and took furloughs. They were completely candid with workers about the company’s situation and the need for layoffs. All employees were given at least two months’ notice prior to a layoff, and a severance package. This value-based leadership paid off. Rather than destroying morale, Masonite built stronger trust with workers through the downsizing — trust that laid the foundation for a return to profitability. As Lynch put it, “We might have had to burn some furniture to survive, but we couldn’t pull the studs out of the walls.” Preserving the company’s culture and the trust of its workers was what kept the walls up in the short term, steadying them to support Lynch’s longer-term plan. As Masonite regained financial health, the company’s hedge fund investors pushed for a short-term approach, urging the board to load the company up with debt and approve a dividend recapitalization. With his long-term vision in mind, Lynch found the courage to push back, putting his job on the line in the process. “As the leader of the company, I said there was no way were we going to put ourselves in that position again. If the board was going to do that, then they should find another CEO, because that’s not what I wanted to do. Thankfully, our board members were all on the same page.” These four practices operate together as a system. Purpose motivates and inspires people to work toward building long-term relationships based on trust and mutual commitment. Realistic targets make it possible to deliver both short-term performance results and long-term value creation. Internal practices, led by the CEO, reinforce the both/and mindset. But these three elements can only work if people inside and outside a firm believe that its leaders will protect company values and uphold their trust in good times and in bad. Short-termism can be conquered, one quarter at a time.

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22 февраля, 15:46

Aetna announces $3.3 bln accelerated share buyback

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

21 февраля, 16:39

Community Health Systems (CYH) Q4 Earnings Beat Estimates

Community Health Systems, Inc. (CYH) reported adjusted earnings of 46 cents per share in the fourth quarter of 2016, which crushed the Zacks Consensus Estimate of 12 cents by 283%

17 февраля, 23:31

Moody's Jumps into Action as Aetna-Humana Deal Fails

After the merger deal between Aetna Inc. (AET) and Humana Inc. (HUM) fell through, rating agency Moody's Investors Service jumped into action

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16 февраля, 19:42

Next Steps on Repeal and Replace: Remarks from Weekly Press Conference

Summary: This morning at his weekly press conference, Speaker Ryan discussed the House’s plans to introduce legislation to repeal and replace Obamacare following the President’s Day work period. Key Quote: “Here is what is important for us all to understand: Obamacare is not simply stuck in some kind of status quo. It is getting worse by the day, and it will keep getting worse unless we act.” Transcript: “After the House returns following President’s Day, we intend to introduce legislation to repeal and replace Obamacare. “It has become increasingly clear that this law is collapsing. People’s premiums are getting higher and higher. Their deductibles are soaring. And their choices are dwindling to the point that so many families have no choice left at all. “But if it was not already clear, look at the events that happened this week. On Tuesday, another major insurance company announced that it, too, will leave the marketplace. In its decision, Humana cited a lack of young people signing up—a problem that has dogged Obamacare for years now. In many areas, Humana is the only carrier left, so this will mean even more instability.   “And then on Wednesday, the CEO of Aetna—another large insurance carrier—said that Obamacare is in a ‘death spiral.’ His words. “Here is what is important for us all to understand: Obamacare is not simply stuck in some kind of status quo. It is getting worse by the day, and it will keep getting worse unless we act. “We need to rescue people from this collapsing law, and we need to replace it with a true patient-centered system. One that gives every American access to quality, affordable coverage. “That means more choices and lower costs. It means real protections and peace of mind. And it means returning your care to your control. Patients and doctors should be making the big decisions—not government bureaucrats. “Step by step, this is what our plan to repeal and replace Obamacare will do. We look forward to making progress in the coming weeks and keeping our promise to the American people.” 

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16 февраля, 11:00

Political Calculations, Mathematics Education and Obamacare

Mark Bertolini is the CEO of Aetna (NYSE: AET). Yesterday, he gave an extended interview with the WSJ's Dennis Berman on the topic of the future of health care, in which he made big news by describing the Affordable Care Act (ACA), which is more popularly known as Obamacare, by saying that "it is in a death spiral." But the part of his comments that really stood out to us came just after the 14-minute mark of the interview, where he said: You know that mathematics education in the United States is working when someone says, let's see, I'm going to pay this much premium, I've got a $6,000 deductible, the average deductible across the country is $3,600 dollars, it's up 15% this year alone, right, and when I go to the doctor I'm going to pay cash, nobody anticipates spending a day in the hospital or going to the doctor more than once... so premium, plus deductible, plus paying cash... why do I do this? I'll just pay the penalty and move on. We here at Political Calculations have been happy to help provide Americans with that particular mathematics education since 17 September 2013, when we introduced our tool "ObamaCare: Should You Pay the Premium or the Tax?" (a 2017 version is also available), in which we made the kind of personal finance math described by Bertolini easy to do for any American with an Internet connection. So, in a way of speaking, we're the solution to the game of Clue featuring the all-but-confirmed death of Obamacare: it was Political Calculations, on the Internet, with Math! That said, we do have some thoughts on how to address the situation that Bertolini describes as the result of the adverse selection that has drawn in the sickest Americans eligible for Obamacare while driving out the healthiest Americans. In our view, that outcome will be exceptionally valuable in making good on the failed promise of Obamacare to provide people with pre-existing conditions with the ability to obtain affordable health insurance coverage. Unlike the other failed Obamacare promise that "if you like your health care plan, you can keep it", we think it may be possible to make that kind of health insurance portability a reality, so long as it can be separated from the all the other, excessively wasteful baggage of the Affordable Care Act. If you want a teaser, we think that the solution to that issue is not subsidized health insurance, but rather reinsurance, which is an idea that we'll explore more at a later date. In the meantime, if you'd like to see what else Aetna's CEO had to say on about the future of health care, here's the WSJ's full video of the 50-minute interview, but we'll warn you in advance that it starts off with over four and a half minutes of some especially awful background music before it gets going.

15 февраля, 21:24

We Saw This Coming: Another Major Insurer to Exit Obamacare

We were warned Obamacare exchanges would see less competition and choice in 2018—and over the past 24 hours, two insurers have turned that fear into a reality. “Humana to drop out of Obamacare marketplace at the end of 2017.” That headline flooded inboxes yesterday afternoon—one more sign that things are only getting worse under Obamacare. But that’s not all. Just this morning, Aetna’s CEO declared that Obamacare markets are in a “death spiral,” predicting even more insurers will leave in the coming weeks. With shrinking competition in individual markets, incentives for Americans to sign up for coverage are dwindling. Now, incentives for insurers to stick around are fading, too. The Humana news follows the decisions last year by insurance giants United and Aetna to leave the Obamacare markets. Here was Speaker Ryan’s reaction to Humana’s decision during his interview on Morning Joe: “Assuming that the status quo can stay with Obamacare is wrong—it’s collapsing as we speak. Humana, I think, just announced yesterday they are pulling out. So we’ve seen United pull out, we’ve seen Aetna pull out, we’ve seen Humana pull out. The Blue Crosses are on their last breath in these plans. So the status quo isn’t staying put—it is collapsing. So that’s one of the reasons why we’re doing Obamacare first because we’ve got to rescue people from this collapse. And we feel an obligation to do that.” WHY THIS HAPPENED Humana cited two main reasons for its decision: One, “the market has not stabilized enough to participate next year,” and two, the company “is losing money from taking on too many sick people without enough healthy people to balance the pools.”  In other words: Obamacare markets are not sustainable. Aetna’s CEO admitted “it’s getting worse.” As designed, the system relies on young, healthy Americans to keep it afloat. Unfortunately, people just aren’t buying it, making health care across America less affordable. Last October, POLITICO delved into “Obamacare’s millennial problem”: “The 18- to 34-year-olds who helped elect Barack Obama could consign his signature domestic policy achievement to failure. That’s because not enough millennials have signed up for Obamacare to make it work well. Despite repeated outreach—including entreaties from all manner of celebrities, including NBA stars and Obama himself —young people make up less than 30 percent of Obamacare customers. The White House had set a goal of 40 percent in that age bracket to sustain a healthy marketplace…” Unfortunately, we saw this coming—it’s more bad news for the country as a result of the collapsing health care law. As Speaker Ryan said Tuesday, “Insurers should compete for your business, and treat you fairly.” But as evidenced by the latest development, under the current system, they aren’t able to. That’s why Republicans are pursuing solutions that will increase competition, lower costs, and put the patient back in control. Using ideas introduced last summer, we are working to repeal Obamacare and replace it step-by-step. We believe in a system that encourages choice and prioritizes the patient, not Washington’s mandates. It’s time to restore the competition that gives Americans the control and flexibility over their health care that they deserve.  

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14 февраля, 17:32

Humana's stock gains 0.1% after Aetna merger deal terminated

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

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14 февраля, 17:31

Aetna's stock slips 0.2% after Humana merger deal terminated

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14 февраля, 16:54

Aetna and Humana call off $34 billion merger

Aetna and Humana are calling off their $34 billion health care merger.

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14 февраля, 15:22

Aetna, Humana walk away from merger bid

Health insurance giants Aetna and Humana are dropping their $37 billion merger bid, declining to challenge a January court ruling that blocked their deal on antitrust grounds.The decision ends the companies’ nearly two-year-long pursuit of a deal that would have made them the nation’s largest seller of private Medicare plans. Aetna Tuesday morning said the companies mutually agreed not to appeal, blaming in part the uncertainty surrounding the future of the nation’s health care system under President Donald Trump and the Republican-led Congress.“While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” Aetna CEO Mark Bertolini said in a statement Tuesday morning. Aetna and Humana first agreed to merge in 2015, amid a wave of dealmaking as health insurers positioned themselves for a long-term future under Obamacare. But the Obama administration and several states objected to the deal, warning it would leave seniors with fewer and costlier Medicare Advantage options.Following a 13-day trial, District Court Judge John D. Bates last month emphatically sided with the Obama administration and struck down the merger.The insurers’ decision not to appeal comes days after Anthem said it will challenge a decision blocking its own $54 billion merger with Cigna. Aetna had previously expressed concerns about the uncertainties created by Republicans’ push to repeal and replace Obamacare. The insurer late last month warned that the individual insurance market is deteriorating and that it planned to shed most of its customers in that area. In early February, Aetna officials including Bertolini met with Senate Majority Leader Mitch McConnell to discuss the GOP’s health reform efforts. Aetna will pay Humana a $1 billion breakup fee, the company said. It is also terminating its planned sale of 290,000 Medicare Advantage customers to Molina Healthcare, a deal originally aimed at making its tie-up with Humana more palatable to regulators.

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14 февраля, 15:11

Aetna Gives Up On Merger, Will Pay Humana $1B Breakup Fee

Aetna and Humana said they have terminated their merger agreement after a U.S. District Court Judge earlier this month ruled against the deal, effectively blocking the combination.

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14 февраля, 15:03

Aetna, Humana terminate merger deal after court grants DOJ request to enjoin the merger

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14 февраля, 15:03

Aetna terminated agreement to sell Medicare Advantage assets to Molina Healthcare

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

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14 февраля, 15:02

Aetna to pay Humana $1 bln merger termination fee

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

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14 февраля, 15:02

Aetna and Humana agreed to end their merger agreement

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news.

13 февраля, 17:30

Zacks Industry Outlook Highlights: Molina Healthcare, Centene, WellCare Health Plans and UnitedHealth Group

Zacks Industry Outlook Highlights: Molina Healthcare, Centene, WellCare Health Plans and UnitedHealth Group

11 февраля, 02:18

Will Health Insurers Face the Music of Trump's Policies?

Will Health Insurers Face the Music of Trump's Policies?

10 февраля, 17:30

Zacks Industry Outlook Highlights: Anthem, Cigna, Aetna, Humana and U.S. Healthcare Providers iShares ETF

Zacks Industry Outlook Highlights: Anthem, Cigna, Aetna, Humana and U.S. Healthcare Providers iShares ETF

10 февраля, 01:35

Health Insurance Industry Outlook - February 2017

Health Insurance Industry Outlook - February 2017