It’s not often that you hear the leader of a Fortune 100 company publicly acknowledge the imminent demise of his venerable, profitable business model.

Yet, speaking at the HIMSS12 Conference in Las Vegas, Aetna CEO, Chairman and President Mark Bertolini, said a reckoning for the traditional health insurance model was at hand. “The system doesn’t work, it’s broke today” Bertolini told attendees. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Bertolini said an amalgamation of regulatory, demographic and economic factors were driving this change. The Patient Protection and Affordable Care Act in particular has made the traditional health insurance business model untenable in the long term, he said. Nonetheless, he offered measured praise for the law, even citing the controversial medical loss ratio rules as having a smoothing effect on premium swings. “We got pulled through the crucible against our will and have been reshaped because of it,” he said. “For most of what has already been implemented, it has been a pretty good thing.”

Moreover, he discounted the prospects that the results of the 2012 presidential election or a Supreme Court decision striking down aspects of PPACA would deter the change. “Reform is not going to stop. It won’t go away.”

So what will the health insurers look in the future? Bertolini offered a strong endorsement of the accountable health organization model, positing health insurers as uniquely suited to usher in an era of coordinated care. “We need to move the system from underwriting risk to managing populations,” he said. “We want to have a different relationship with the providers, physicians and the hospitals we do business with.”

Technology is crucial to redefining this relationship, he said, noting that Aetna recently purchased health information exchange Medicity. Part of the rational behind the deal, he said, was Medicity’s software development kit for mobile app creation. Bertolini said Aetna will give away the SDK to the public domain for free, hoping to spur a marketplace for health care-centric mobile apps.

Thus leveraging mobility, social and cloud technologies, he sees health insurers increasingly providing providers with the technical wherewithal to better serve patients and drive costs out of the system, likening the relationship to Intel’s strategy to support computer manufacturers rather than targeting consumers directly.

Pondering the future of the health care exchanges, Bertolini foresees the brands of health systems superseding those of health insurers. “We want to leverage our technologies and capabilities to allow you to be the face in marketplace,” he said.

Indeed, Bertolini says this new arrangement makes great sense from the perspective of the customer. The lack of coordination inherent in the current system stems largely from the various stakeholders acting rationally in their own self-interest. “For the patient it’s a nightmare. Think of a hockey game where everybody has their own puck.”

A new business model for insurers predicated on partnering with providers coupled with skillful use of technology can turn the focus back on the customer, he said. “We can use technology to make it easier for the consumer. Convenience is the new word for quality.”

This is a staff report from Health Data Management, a SourceMedia publication.