Navigating the murky waters of federal health care plans is no easy feat, but Molina Healthcare's mission is to help Medicaid and Medicare members find their way to health care. Its Health Plan segment arranges for the delivery of health services to some 1.8 million people who receive their care through Medicaid, Medicare, and other government-funded programs in 9 states. Its Medicaid Solutions segment provides business process outsourcing solutions to Medicaid agencies in five states for their Medicaid Management Information Systems (MMIS), the tool used to support administration of state health care entitlement programs. The family of founder C. David Molina controls the company through holdings and trusts.
A third segment of the company, referred to as the direct delivery line of business, consists of about 20 primary care community clinics, primarily in California and other western US states. Molina manages three county-owned primary care community clinics through a contract with Fairfax County, Virginia.
As the company remains concerned over state deficits, it is keeping a close eye on its operations and ways to improve performance. Despite a 15% increase in earned premium revenues and improvements in its health plans segment in 2011, Molina's net income was $20.8 million, a decrease of 66% over 2010, which was attributed to a $65 million impairment charge related to the expiration of the company's contract with the state of Missouri in mid-2012. The Missouri health plan had contributed premium revenue of about $230 million, or 5% of total premium revenue, in 2011 and held about 5% of the health plans segment's total membership.
Molina grows in its existing markets by broadening its service areas and adding physicians to those provider networks. Additionally, it looks to add new members by increasing its brand awareness through marketing and advertising campaigns.
In addition, Molina enters new markets through acquisitions, targeting entry into large markets with competitive provider communities. Molina's growth strategy also consists of opening additional primary care clinics in existing and new territories. The addition of more clinics helps Molina diversify its operations by expanding its involvement in the direct delivery of primary care. About 20% of Molina's California health plan membership is being served by its primary care clinics there.
Molina is preparing to meet health care reform changes by growing the direct delivery component of its business and developing additional community care clinics for some of its health plans during 2011. Components of the health care reform bill call for increased health insurance coverage and changes to the way government health plans are reimbursed (which could include significant decreases). Molina expects the requirements to cause a shortage in health care services.
Mergers & Acquisitions
In 2010 the company entered a high-growth market with the acquisition of Abri Health Plan for about $15 million. Abri Health provides Medicaid managed care services in Wisconsin.
Also in 2010, Molina purchased the information management business that now operates as Molina Medicaid Solutions.
Founded in 1980, Molina Healthcare is headed by founder C. David Molina's sons: Dr. J. Mario Molina, who serves as chairman and CEO, and John C. Molina, who is a director and the company's CFO. – less