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We are pleased to report to you that 2003 was another outstanding year at Anthem as we continued to focus on meeting the needs of our customers and fulfilling our mission: to improve the health of the people we serve. As a result, we:
More Americans than ever chose Anthem for their health benefits as we ended 2003 with 11.9 million members, an increase of 874,000 over 2002. Our membership increased in all four geographic regions and in all our major products. Our individual business for members under 65 years old increased 22 percent, and our national accounts business increased 16 percent. Also during the year, we introduced our newest product line—vision benefits—throughout the company as we continued to evolve into a total health benefits company. Our customer retention rate remains very high. We believe this strong showing reflects high levels of customer satisfaction and loyalty, the value of our product offerings and the power of the Blue Cross and Blue Shield brand…the most recognized and trusted brand in health benefits. Even so, we know we must work hard every day to continue to meet the needs and expectations of our members. By meeting the needs of our members, operating revenue increased to $16.5 billion. Our net income increased to $774.3 million. Our pending merger with WellPoint Health Networks Inc., announced last fall, will create the nation’s leading health benefits company. Subject to state regulatory and shareholder approvals, we expect to complete this transaction by mid-2004. At that time we will be a Blue Cross or Blue Cross and Blue Shield licensee in 13 states, serving nearly 27 million members across the United States—from Maine to California. As a result of the merger, our customers, health care professionals, communities and shareholders will realize several important benefits. By spreading our administrative costs over a much larger membership base, we will be able to keep our products and services more affordable for existing and new customers. By adopting best practices from both companies, we will be able to provide better access to quality health care, offer more affordable products, and use innovative technology to further improve service. At Anthem, we recognize that more needs to be done to make health care more affordable and to address the needs of the 44 million Americans without health insurance. We believe that through thoughtful collaboration among all of us—insurers, consumers, medical professionals, business leaders and government officials—innovative solutions can be found. At Anthem, we have worked hard to make our products more affordable and to help improve the quality and availability of needed care. We’re beginning to make a difference through many of the products and programs described in this report. Our strategy for managing Anthem’s business is straightforward:
We do this by putting customers first and running our business so that decisions about products and relationships are made by associates in local communities, close to our customers. Let me share a few specific examples with you. Many physicians and hospitals have enthusiastically embraced our quality programs that recognize and reward their efforts to improve member health. These initiatives provide extra recognition for physicians and hospitals working hard to save lives and improve care. During 2003, we continued to lead the nation in quality improvement initiatives. We increased the number of hospitals and physicians participating in our collaborative programs that are further improving the quality of care and the health of all patients, not just Anthem members. Through our proactive care and disease management programs, we continue to work closely with members and their physicians to provide important health information that helps members manage their own health while also reducing medical costs. For our efforts, health plans in eight of our states are rated Excellent—the top rating—from the National Committee for Quality Assurance, the industry benchmark for quality of care. As the company grows, so too does the importance of delivering outstanding, cost-effective service. Through ambitious but carefully planned investments in technology, we can now process claims and answer customer questions more quickly and accurately. In addition, investments in innovative Web technologies provide personalized information and new customer service tools for our members, employers, physicians, hospitals and brokers. Our Web site—www.anthem.com—was awarded the Webwatch seal for Web site integrity by Consumer Reports. We were the only health plan to earn this important designation. Information Week ranked Anthem 45th on its list of top 500 companies based on technology performance and innovation, quite an improvement given that just four years ago, we were ranked 444th.
Fortune magazine once again recognized Anthem as one of its most admired companies in health care. For the second consecutive year the Health Ethics Trust honored Anthem for our efforts to conduct business ethically and with integrity; this time for our Web-based ethics and compliance training program for our 20,000 associates. In addition, Money magazine—citing our continued growth and the potential of our merger with WellPoint—named Anthem one of its six “Best Stocks to Own in 2004.” While we embrace our role as a national leader in our industry, we remain focused on our local business operations and the Blue Cross and Blue Shield tradition of service to the communities where we live and work. Many of our ongoing community-based programs addressed key public health issues such as diabetes, heart disease and the growing epidemic of obesity, as well as the need for dental care. Appropriately, continued national attention is being paid to the issue of corporate governance. Anthem has a history of strong corporate governance and board independence; 13 of the company’s 15 board members are independent directors. I am pleased to report that your board of directors took additional steps to ensure confidence in Anthem’s corporate governance and re-affirmed key governance practices already in place. “Results with Integrity” is an integral part of everything we do at Anthem. Our board, management, associates and external business partners continue to be governed by Anthem’s Standards of Business Conduct. As always, we believe it is important to recognize the individual and collective efforts of our board of directors, our strong leadership team, and our 20,000 associates. In our corporate headquarters, regional locations and in communities large and small, these dedicated and talented people contribute every day to the leadership of our company, and more importantly, to the health and well-being of our nearly 12 million members and the hundreds of communities we serve. At Anthem, improving the health of the people we serve is more than a slogan; it is our way of life.
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