Aetna CEO Got Summer’s First Merger Agreement, Raised Minimum Wage and More

WASHINGTON — The CEO who pulled off the first major insurance company merger agreement of the summer also achieved what many executives might think impossible: He raised his company’s minimum wage, announced plans to up its contribution to workers’ health care and watched the stock soar by nearly 30% since January.

But Aetna’s Mark Bertolini is used to defying expectations. With his permanent face stubble, he gives off a devil-may-care attitude but is coolly calculating.  And he exhibits as much tough-guy bravado as he does gentleness.

In addition to skipping some morning shaves, Bertolini eschews ties whenever possible and has been known to show up at work in leather gear popular among fellow motorcyclists. He also mourned the death of his “beautiful sweet friend” Lucky, a golden retriever, on Twitter last summer. He favors robust Italian red wine, Macallan18-year-old whisky and Budweiser and often wears Mala beads, popular in meditation, and religious jewelry around his neck. He joined the board of directors of the National Gay & Lesbian Chamber of Commerce in 2008 before he became CEO and remains the first and only straight member.

Beating incurable cancer

For Bertolini, pulling off July’s $37 billion merger with Humana was a small challenge compared with some of his personal hurdles.

After doctors told him in 2001 that his then-teenage son Eric’s cancer was incurable, Bertolini practically moved into his hospital room so he could monitor his care. While one drug was able to stop internal bleeding that sent him to hospice, Eric was starving to death because he was allergic to the only fat supplements approved for use in the U.S., according to a Hartford Courant profile. Bertolini had a doctor locate a fish-based supplement in Austria, got the maker’s chairman to get it for him and flew to Switzerland to bring it home. Today, he says his son is the only person to ever survive his type of cancer, gamma-delta T-cell lymphoma.

Then, three years later, Bertolini survived a ski accident so serious he was given last rites. He broke his neck in five places and lost the use of one arm.

Still, he learned to manage the pain without narcotics. Instead, he relies on cranial sacral massage, acupuncture, yoga and meditation. Some of the treatments proved so beneficial, he rolled out versions across Aetna after he took over as CEO in 2010. The company now has free yoga classes, mindfulness training and meditation rooms.

Bertolini still struggles with pain, however. Known to have a temper, he says he tries to avoid getting angry or stressed at work because it literally hurts.

“My left arm feels like it’s on fire all day long, and the only way to control it is to control my sympathetic nervous system,” he told an audience at a 2013 conference sponsored by the well-being group Wisdom 2.0. “Most people think I’m being Zen because I’m really cool, but no.”

Lest he sound more Berkeley than bottom line, Bertolini commissioned a study on the effect mindfulness training had on his workforce. Productivity was up by 62 minutes a week, which saved the company about $3,000 per employee a year, according to Aetna.

“He is very innovative and very bright and compassionate because of what he has been through,” says physician Toby Cosgrove, who is CEO of the academic medical center Cleveland Clinic and a friend of Bertolini’s.

Cosgrove, whose industry is often at odds with insurers, credits Bertolini with being “a disruptive force in the insurance industry,” which Cosgrove thinks it needs.

Bertolini is running the third-largest health insurance company during a period of enormous change and consolidation, much of it wrought by the 2010 health care law, the Affordable Care Act. After a flurry of deal rumors, Aetna announced on July 3 that it was buying Humana. Three weeks later, Cigna CEO David Cordani gave into Anthem’s third attempt to acquire his company for $54 billion.

Both deals are expected to give the companies a greater potential for growth in the lucrative government health insurance markets for Medicare and Medicaid.

A mindful start to every day

Bertolini gets up at about 5:30 every morning to meditate, chant, do mindfulness training or yoga.

That’s the kind of business behavior that attractedHuffington Post founder Arianna Huffington.  The two met four years ago, when Huffington was a guest host on CNBC’s Squawk Box and invited Bertolini on as a guest. Since then, she regularly mentions his unconventional leadership approach in her speeches and has had him speak at her well-being conferences.

In doing so, Huffington says she hopes to encourage more leaders to move away from the “macho culture” where “bragging about how little sleep you get” is common. Bertolini, on the other hand, “is meticulous about recharging himself,” says Huffington. “It gives him the ability to work.”

A push for income equality

That’s, of course, easier to do if you aren’t worried about getting by financially. As Bertolini visited Aetna’s offices around the U.S. and stopped by workers’ offices or cubicles, he said he learned how hard their lives were. More than 80% of call center workers are women — including many single mothers, Bertolini says — and some of those he spoke to needed to use food stamps and the free government program Medicaid to cover their children’s health care.

“It doesn’t feel good to me to be walking around in my suit talking to these folks while they’re trying to make ends meet,” says Bertolini.

Bertolini, 59, may be firmly entrenched in the 1% — he earned $15 million last year — but he has a strong interest in income inequality. About two years ago, he read the French economist Thomas Piketty’s book, Capital in the 21st Century, and then got a copy for each of Aetna’s senior executives. Piketty warns against growing income inequality, something Bertolini and his team took to heart.

So after considerable internal study on the likely effect, Bertolini announced in January that it would raise Aetna’s minimum wage starting in April to $16 from what was often $12 an hour or less.

Starting this January, about 7,000 of Aetna’s workers who have household incomes below 300% of the federal poverty limit (about $73,000 for a family of four) will have lower out-of-pocket costs for their health care, without having to pay more in premiums. Aetna estimates the move could save a worker’s family as much as $4,000 a year.

At the same time, Aetna is doing well financially.  Last month,Aetna announced that its second-quarter earnings were up 33% to $731.8 million and the company raised its 2015 forecast for the third time.

Working his way up

Bertolini spent his early years in what was likely the lower 99%. The son of a part-time auto-industry pattern maker and his part-time nurse mother, he says he seldom had insurance growing up.

He worked his way through Wayne State University in Detroit in eight years by doing jobs that often required union membership, including as an orderly, paramedic and autoworker. He assumed he’d probably wind up back at a car plant, but after attending graduate school at Cornell on a scholarship, he joined a health maintenance organization, SelectCare, that a friend from Detroit was starting. After helping the HMO become one of the largest in the region, he joined New York Life Insurance and Cigna, before arriving at Aetna in 2003.

That set him on the health care path, where he’s stood out for being neither very CEO-like nor hardly the union guy he once was. He says he didn’t know “summer” was a verb until he became a CEO. But he didn’t head to the Hamptons or start summering anywhere just because he took over at the top.  Instead, “I hang out with my buddies on motorcycles and cruise around,” Bertolini told an audience at the Peterson Institute for International Economics in April.

Bertolini, whose motorcycle is specially fitted so he doesn’t have to use his irreparably damaged left hand, likes to ride with son Eric, who is now a principal with the financial services company State Street in Boston. Daughter Lauren is director of platform products at Gawker Media.

His slightly more than 11,000 Twitter followers get frequent updates on his life, such as from the Rolling Thunder motorcycle rally near the Pentagon in May or the tweet with a rainbow flag at Aetna headquarters on June 29, the day the Supreme Court affirmed the right for gays to marry.

 ‘That’s absurd!’

Bertolini was in Washington earlier this year to talk about wages and corporate behavior, namely his view that corporations should help re-establish the middle class in this country.
And then he proceeded to be characteristically straightforward — recounting what he asks other CEOs about their lowest-paid workers: “Do you feel good about how they’re living their lives?”

Jack Rowe, a physician who was Aetna’s CEO when Bertolini was hired to head the company’s pharmacy benefits, recalls one of the first meetings Bertolini attended. After Rowe made a point, he heard someone say, “That’s absurd!” — unusual both for its presumptuousness and candor.
“Fortunately for him, I came in from academia,” says Rowe, a professor at Columbia University’s Mailman School of Public Health. “I’m willing to argue about the merits of X or Y.”
So the then-current and future CEOs got into an extended debate of the “philosophy of the absurd,” touching on Freud and existentialism, Rowe says.
“The rest of the executives were sitting open-mouthed,” says Rowe. “That, in a nutshell, is Mark Bertolini.”

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