Chairman and Chief Executive Officer of Aetna
Born John Wallis Rowe, June 20, 1944, in Jersey City, NJ; son of Albert Wallis (a professional soccer player and factory worker) and Elizabeth (a hospital clerk; maiden name, Lynch) Rowe; married Valerie Ann DelTufo, August 10, 1968; children: Meredith, Abigail, Rebecca. Religion: Roman Catholic. Education: Canisius College, B.S., 1966; University of Rochester, M.D., 1970.
Addresses: Office—Aetna, 151 Farmington Ave., Hartford, CT 06156.
Completed residency, Harvard Medical School and Beth Israel Hospital, Boston, 1970-72; worked as an instructor, then professor, Harvard Medical School, 1976-88; founded the Harvard Medical School's Division of Aging, 1979; chief of gerontology, Beth Israel Hospital, c. 1982; president, Mount Sinai Hospital and School of Medicine, 1988-98; president and chief executive officer, Mount Sinai NYU Health, 1998-2000; chairman and chief executive officer, Aetna Inc., 2000—.
Member: Council for Affordable Quality Healthcare; National Academy of Sciences' Institute of Medicine; Medicare Payment Advisory Commission; NY Yacht Club.
Jack Rowe is a turnaround king, credited with saving insurance industry giant Aetna Inc. from the brink of extinction. When Rowe joined Aetna as chairman and chief executive officer (CEO) in 2000, the company was deep in trouble. Doctors and patients alike were fed up with its policies. In fact, more than 700,000 practitioners nationwide had filed a class-action lawsuit against the insurer, citing dubious billing practices and patient-care interference because doctors had to get permission for even the most basic procedures. Financially, the company was a mess, too. But none of that scared Rowe, who came in with an ambitious plan for restoration. Rowe laid off thousands of workers and trimmed the customer base. He sought ways to practice good medicine and good business. As a physician himself who once considered suing Aetna, Rowe concentrated efforts on improving relationships with doctors. The hard work paid off. In just three years, Rowe's leadership transformed Aetna "from being a poorly run company with very few prospects to an intriguing one with very solid growth," Lehman Brothers Inc. senior analyst Joshua Raskin told BusinessWeek's Diane Brady.
Rowe was born on June 20, 1944, in Jersey City, New Jersey. His father, Albert, played professional soccer in Britain, then worked in a pencil factory. His mother, Elizabeth, worked as a hospital clerk. An Irish Catholic, Rowe attended Jesuit-based Canisius College, located in Buffalo. He graduated in 1966, then studied medicine at the University of Rochester in New York, earning his medical degree in 1970. From 1970-72, Rowe completed a residency in internal medicine at Harvard Medical School and Beth Israel Hospital, located in Boston. By 1976, Rowe was an instructor at Harvard and later became a professor. He specialized in gerontology (the study of the aging process). At Harvard, Rowe founded and directed the medical school's Division of Aging. He also served as chief of gerontology at Beth Israel Hospital.
In 1988, New York City's Mount Sinai Hospital and School of Medicine lured Rowe away from Harvard to become its president. The position saddled Rowe with a lot of administrative work, but he still found time to maintain a small practice and spent one month each year rounding with medical students. Under Rowe, the Mount Sinai medical school also received a lot of money in research grants from the National Institutes of Health.
Things went smoothly for Rowe until the late 1990s, when managed-care cutbacks made money tight. Government reimbursement money dwindled, making the hospital's required care of the poor more costly. Rowe worried about keeping the hospital afloat. He thought a merger with the New York University (NYU) Medical Center would fix the fiscal mess. The plan was announced in 1997. Rowe figured Mount Sinai could save money by combining office operations and sharing high-priced medical equipment with NYU. He also thought the merger would give the institutions better bargaining power with insurers. NYU faculty opposed the merger and formed an opposition group called the Committee of Concerned Physicians. The group published fiery memos, according to the Wall Street Journal's Lucette Lagnado, warning that their medical school was about to be taken over by Rowe, "the aggressive 'czar' of Mount Sinai Medical Center."
After a year of talks, Rowe pushed the merger through, gaining prominence as an administrator who could get tough things done. He reportedly appeared on then-President Bill Clinton's list of candidates for FDA Commissioner, though he was never called. With the merger complete, Rowe, in 1998, became president and CEO of the not-for-profit Mount Sinai NYU Health. In this capacity, Rowe formed partnerships with dozens of neighboring hospitals to turn the institution into one of the nation's leading academic health-care centers. Mount Sinai NYU Health also became New York's largest employer, with 31,000 employees and revenues of $1.8 billion—all under Rowe's direction. By the summer of 2000, however, Rowe was losing support as the merger continued to be a sore spot for faculty. When Aetna asked Rowe to become its CEO, he jumped at the chance, eager to attack a new challenge.
When Rowe took over Aetna, the company was in a shambles. Patients, doctors, and shareholders were all fed up with the insurer. As one analyst remarked to BusinessWeek's Brady: "Aetna came close to blowing itself up." Wall Street hardly gave Rowe a vote of confidence. Share prices dropped 0.7 percent after the announcement, but that is not surprising, given the enormity of the task before him: keeping costs under control and making peace with physicians at the same time.
Rowe brought in a new management team and developed a three-pronged attack to restore the insurance company's health. First, Rowe cut costs by eliminating 15,000 jobs. He shrank the customer base from 19 million to 13 million by abandoning unprofitable markets. Secondly, Rowe made peace with physicians in May of 2003 by settling a massive class-action lawsuit claiming unfair billing practices. Aetna became the first insurer to settle the suit. The deal paid 700,000 practitioners up to $150 million. Some of Rowe's moves proved good for the bottom line, but not for customers. He raised annual rates more than 16 percent, he said, to better reflect the actual costs of health care. Though the company suffered losses of more than $265 million in 2001, by 2003, it had turned a profit.
As part of the class-action lawsuit, Aetna agreed to contribute $20 million to establish a foundation to study issues such as childhood obesity, end-of-life care, racial disparities in health care, and the uninsured. Aetna also began offering customer-driven products and gave patients more say over their care. Speaking to BusinessWeek's Brady, Connecticut State Medical Society executive director Tim Norbeck praised Rowe's performance: "Aetna has become the physician-friendliest and userfriendliest company in America." It is a model Rowe hopes other insurance companies will follow.
BusinessWeek, June 9, 2003, pp. 98-102; December 8, 2003, p. 86.
New York Times, April 7, 2003, p. F1.
USA Today, September 7, 2004, p. B4.
Wall Street Journal, November 21, 1997, p. 1.
"Aetna Aims to be Friendly to at Least One Physician," American Medical Association News, http://www.ama-assn.org/amednews/2000/09/25/bisa0925.htm (November 4, 2004).
"Aetna's New CEO can 'Rowe' Through Choppy Waters," American Medical Association News, http://www.ama-assn.org/amednews/2000/10/16/bica1016.htm (November 4, 2004).