🏥 How Aetna is Redefining Itself
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Happy Thursday, Hospitalogists, Today, I’m sharing the biggest takeaways from a conversation I had with Dr. Ali Khan, Chief Medical Officer for Aetna Medicare. I think you’ll really appreciate getting these insights from a payor executive who actually understands clinical operations from the ground up. Enjoy! Was this email forwarded to you? Sponsored by R1 AI is rapidly transforming utilization management, enabling faster case identification, earlier intervention, and more consistent medical necessity decisions. But automation without clinical context and physician oversight can introduce new risks alongside AI’s benefits. On June 4 at 1:00 PM ET, Dr. Jennifer Weinberg and Dr. Ronald Hirsch from R1 will host a webinar exploring how leading organizations are using AI to enhance, not replace, clinical judgment, shifting utilization management from reactive denial defense to proactive clinical governance. You’ll learn:
Register here to reserve your spot. BLAKE'S BREAKDOWN Going Back to the Future: How Aetna is Redefining Itself and the Current State of VBCThere aren't many people in healthcare who've been employee 34 at a venture-backed primary care startup, a hospitalist authorizing SNF transfers from the ER, a division leader who scaled a clinic network from 23 to 75 locations through a pandemic, and a chief medical officer at the largest health insurer's Medicare book — all within 15 years. Dr. Ali Khan has done all of those things, and he joined me on Claims Denied recently to talk about what he's learned and what he's trying to build now as CMO for Aetna Medicare. I'll be honest: I went into this conversation with my usual payor skepticism dialed up. The managed care industry is under fire from basically every direction — politically, financially, operationally — and I wanted to pressure-test whether the "vertical integration drives value" thesis at CVS is real or just a slide deck. What I got was one of the most operationally grounded conversations I've had on the podcast. The VBC Reckoning Is HereKhan's career arc is a useful lens for understanding where value-based care has been and where it's stuck. He started at Iora Health's first clinic in Vegas, taking care of casino workers in what he describes as an "ambulatory ICU" — a community health worker-centered, high-touch model that was entirely focused on keeping sick people out of hospitals. That was the original ethos. CareMore, where he went next, was the same philosophy executed through a different chassis: health plan operations and clinical care fused together, with Khan literally serving as both the UM medical director and the hospitalist for the same patient population. I thought the CareMore story was fascinating. Khan described walking into an ER within 18 minutes of getting a call about an admitted member, and by the time he arrived, he'd already spoken to care management, reviewed the clinical picture, arranged three SNF beds, and had authorizations in hand for the transfer and the ambulance. Zero-dollar copay for skilled nursing. His only job was to make sure he wasn't anchoring wrong and that the patient actually needed to be somewhere other than the hospital. That's what the payor-provider integration model looks like when it's working. The question Khan has been chasing ever since is whether you can do that outside of California and Florida, consistently, at scale. His honest answer: not yet. And the reason is uncomfortable for the VBC industry. Khan broke the evolution into distinct eras. The first generation — CareMore, Iora, ChenMed — was obsessively focused on total cost of care. They weren't thinking about risk adjustment as a primary revenue lever. Stars wasn't the behemoth program it is today. The work was clinical: get people healthier, keep them home, control chronic disease. Then the Affordable Care Act happened, and the incentives shifted. Stars money flowed. Risk adjustment became an actuarial science project. And as Khan put it, "the work required to reduce total cost of care by 10% is much different, requires many more different actors, and is much more complicated than the work of raising your Stars score by 10%." So the industry, rationally, chose the easier path. The result is that we now have millions of lives in "accountable care relationships" — and yet, as Khan said, you can still find primary care docs in these systems seeing 28 patients a day and then going home to 40 HCC queries in their pajama time. That's not transformation. That's a billing overlay on a broken workflow. I pushed back a bit here — I wanted to be clear that I'm not skeptical of the spirit of VBC. I think the vision is right. What I'm skeptical of is how loosely the term gets defined, and how many organizations use "value-based care" to describe what is fundamentally a financing mechanism with no operational teeth behind it. Khan agreed, and he framed the current moment as a fork in the road: either the industry responds to the regulatory and financial pressure on MA by doubling down on genuine clinical transformation, or it doesn't. There's no middle ground left. The Analog BetHere's where the conversation surprised me. I expected Khan to lead with AI. Every healthcare executive I've talked to in 2026 leads with AI. Instead, he explicitly said he'd "stick to analog" and described a strategy that's almost retro in its simplicity. Aetna is organizing its approach around what Khan calls "care models" — not just medical homes, but condition-based, cohort-based, and categorical frameworks. If someone has complex CKD or CHF or active cancer, the question isn't "who's their PCP?" — it's "what's the right place of first contact for longitudinal coordination?" For cohorts like people with severe mental illness or patients at end of life, it's a different model entirely. And for categorical needs — DME, for example — Aetna is looking at how to use product design, network sculpting, and gold carding to make those experiences less miserable. The most tangible example was Signify Direct Connect. Signify Health, which CVS acquired, sends clinicians into hundreds of thousands of homes annually for health assessments. Khan's team started pushing alerts to those clinicians during home visits: this member is eligible for a care management program, or they're attributed to a VBC provider but have never engaged. The clinician then, with the patient's consent, dials the partner on the patient's phone — and the partner has committed to a 15-second SLA for picking up. Khan said they're seeing 10-15X engagement lifts over traditional outreach. I thought this was great, and honestly kind of obvious in retrospect. Every VBC proforma I've ever seen assumes 30-40% engagement at best. Khan called that "an F." And he's right — if the entire business model depends on engaging patients who are sick, complex, and often structurally marginalized, and you're only reaching a third of them, that's a fundamental problem. The Signify play is a brute-force analog solution to a problem the industry has been trying to solve with apps and portals for a decade. Behavioral Economics and the Consumerism GapKhan dropped an interesting thread about CVS's behavioral economics team, which I hadn't heard much about before. The basic premise: CVS has an enormous surface area of consumer touchpoints — retail pharmacy, prescriptions, MinuteClinic, the app — and Aetna is now running A/B tests on text-based nudges to drive specific health behaviors. Not just flu shot reminders, but prompts like "you should talk to your doctor about cardiac rehab — bring them this message." The cardiac rehab example was telling. Michael Poku — shout out, Michael, you need to come on the pod — apparently goes on full tirades about how effective cardiac rehab is for preventing recurrence of heart failure and cardiac events. But the program requires 36 sessions, and if each one has a significant copay, people drop out. So the behavioral nudge only works if it's paired with benefit design changes that make the program affordable, which then has to be paired with network design that makes it accessible within 7-10 days, which then has to be tracked and governed at the operational level. That's four separate functions — behavioral science, product design, network operations, clinical governance — that have to coordinate on a single patient journey. Khan acknowledged this is incredibly hard, and that CVS structures it around 2-3 year return horizons with agile-style sprint cycles. That's a dramatically different operating cadence than most of healthcare, and frankly, than most of what I've seen from large payors. Whether it actually works at scale is the billion-dollar question, but the framework is more sophisticated than I expected. I will say, though: the consumerism framing still feels aspirational. Khan himself noted that healthcare consumerism has "often fallen flat" because we haven't figured out how to empower people in asymmetric information environments. That's a generous way of saying that 20 years of consumer-directed health plans and price transparency tools haven't fundamentally changed how people interact with the healthcare system. The CVS thesis is that walking with people — digitally, in analog, or with shoe leather — is the answer. I'm cautiously optimistic, but this is a show-me story. Rebuilding Trust at the BedsideThe payor-provider trust conversation was probably the most honest part of the interview. Khan didn't dodge the reality that health systems are angry at managed care. Reimbursement at 85 cents on the dollar, prior auth burden, administrative complexity — he's heard it all, and he's been on the provider side receiving it. His approach is what he called "going back to the future." Aetna's Clinical Collaborative program is putting care management nurses back at the hospital bedside, a practice that was common in the per diem contracting era of the 90s and early 2000s but largely disappeared as DRG-based payments reduced the shared incentive for length-of-stay optimization. These nurses do collaborative discharge planning: the hospital orders home health, the Aetna nurse makes sure the authorization goes through immediately. Patient needs a shower chair? Hospital orders it, Aetna processes it in parallel. The goal is to be the "easy button" for hospital care managers rather than the adversary they're used to dealing with. Khan also talked about prior auth bundling for oncology — the idea that when someone is actively being treated for cancer, all the imaging, medications (including anti-nausea drugs), and related services should be authorized as a bundle upfront rather than requiring individual approvals. This is the kind of operational de-friction that sounds obvious but has historically been absent. He noted that one Midwest health system saved dozens of days over a six-month period that their teams had been spending on appeals and peer-to-peers. I have to wonder whether these programs can actually move the needle on a relationship that has decades of scar tissue. Khan used a surgical metaphor that I liked: sometimes rebuilding trust requires fine dissection, and sometimes it requires blunt force to break through. Both take time and consistency. The early signals are encouraging, but this is a long game. The M&A Integration PlaybookKhan has a unique vantage point on healthcare M&A integration, having lived through the Anthem acquisition of CareMore, the One Medical absorption of Iora (and then Amazon's acquisition of One Medical), and the CVS acquisition of Oak Street Health. His takeaway was simple: most deal theses are directionally correct, but they fail on time horizon and trust. The synergies proposed at the time of purchase usually aren't that far of a leap operationally. But clinical operations need 18-24 months to percolate and show results, and most acquirers either don't give that runway or cycle through leadership before the thesis can be validated. Khan's current role is essentially being the connective tissue — making sure the Oak Street deal, the Signify deal, and the broader CVS integration strategy get the sustained attention they need to actually deliver. CVS apparently uses the term "enterprise athletes" for people who can operate across multiple business lines and serve as dot connectors. It's a useful concept, even if it sounds like something from a McKinsey deck. The underlying point is valid: healthcare M&A integration fails when the acquiring company treats it as a financial exercise rather than an operational and cultural one. I did get a small dig in at the end — Khan has been at every organization right before it got acquired, so I asked if CVS was next. He diplomatically said "fingers crossed" that it's not. I'll take that as a no. Probably. Where This Leaves UsThe through-line of this conversation was connecting the dots — a phrase Khan used about 15 times, and for good reason. The gap between healthcare strategy and healthcare execution has always been the last mile: getting the right patient to the right care at the right time with the right financial incentives aligned. Every era of healthcare innovation has proposed a new technology or framework to close that gap — blockchain, social media, apps, AI — and every era has underdelivered because the fundamentals of human behavior, infrastructure, and trust weren't addressed. Khan's bet, and by extension CVS's bet, is that the combination of vertical integration, behavioral economics, analog care coordination, and selective AI deployment can close enough of that gap to make MA work the way it was originally intended: lower costs, better quality, fewer people falling through the cracks. It's an ambitious thesis, and the execution risk is enormous. But if you're looking for a payor executive who actually understands clinical operations from the ground up — who has literally walked into ERs with SNF authorizations in hand — Khan is a credible messenger. The book he recommended at the end was "The System," about the 93-94 Hillary Care failure. It's a fitting choice. Healthcare is full of great ideas that die on the altar of ego, politics, and operational complexity. The question for CVS and Aetna is whether this time, with this level of vertical integration and this particular team, they can actually execute before the next cycle resets the board. TOP READS AND RESOURCES
*This resource is brought to you by one of my brand partners who help make this newsletter possible! Thanks for the read! Let me know what you thought by replying back to this email. — Blake |
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