August 1999 Bulletin

Stakes are high, Aetna gives up 'filet mignon' Texas

He once vowed never to give up the Texas market, reportedly telling local businessmen that "... this is the filet mignon." But when the stakes were high, Richard L. Huber, Aetna's CEO, changed his mind.

Huber agreed to sell the NYLCare HMOs in Dallas and Houston to settle a civil antitrust suit filed by the Justice department and the Texas attorney general's office. That opens the door to Aetna's $1 billion acquisition of Prudential Health Care.

Aetna, combined with NYLCare and Prudential, would have had 42 percent of the HMO market in Dallas-Ft. Worth and 63 percent of the market in Houston. The divestiture will give Aetna about 22 percent of the Dallas HMO market and 24 percent of the Houston HMO market.

The acquisition of Prudential will mean that Aetna will cover 22 million people in 31 states.

The company hopes to close the deal this summer although officials in California, Florida, Georgia, New Jersey, New York and Texas are still reviewing the acquisition and could order further modifications.

Nancy Dickey, MD, AMA president, said other markets are "as badly out of whack" as the ones in Texas. She said New Jersey has a "potentially worse" anticompetitive situation than Texas. Also, New York and Georgia would be adversely affected by the merger. The AMA said it would work with state medical societies and state attorneys general to ensure patients and physicians are protected.


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