Magellan Health Services has charted its course to become one of the largest managed behavioral health care companies in the nation. The company manages mental health plan, employee assistance, and work/life programs through its nationwide third-party provider network of some 70,000 behavioral health professionals. Magellan also provides radiology benefits management, specialty pharmaceutical management, and Medicaid management. Overall, it serves more than 58 million members through contracts with federal and local government agencies, insurance companies, and employers. Its services include administration, billing, claims handling, technology programs, and coordination of care.
Magellan operates about 55 offices in 25 states and Washington, DC.
Magellan's managed behavioral health care operations account for about 70% of annual revenues, with services provided to public sector clients accounting for the lion's share (50% of sales). These programs generally provide behavioral health benefits to Medicaid and other state benefit recipients through contracts with state and local authorities. Some of the states with which it has contracts are Arizona, Florida, Iowa, Nebraska, and Pennsylvania. Managed behavioral health services provided to commercial insurers and employer groups account for 20% of revenues.
The company's growing specialty pharmaceutical management (special handling distribution and mail-order pharmacies) and radiology benefit management (diagnostic imaging network and coverage) segments each account for about 10% of revenues. The divisions include subsidiaries National Imaging Associates (NIA), which manages benefits for diagnostic imaging facilities, and ICORE Healthcare, which manages coverage of specialty drugs to treat cancer and other serious diseases, as well as two mail-order pharmacies in Florida and New York.
A fifth division, Magellan Medicaid Administration, helps public sector clients run their Medicaid programs.
In 2012, Magellan increased revenues by 15% to some $3.2 billion, primarily due to growth in the public sector managed care, commercial managed care, and specialty pharmaceutical management segments. Growth was attributed to increased dispensing and contract activity with new and existing customers. As a result of the revenue growth, as well as due to lower income tax provisions, net income rose 17% to $151 million.
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Magellan's customers include about 40 health plans and employer groups, as well as government agencies in 24 states and Washington, DC. It also provides services to select pharmaceutical manufacturers.
While Magellan still works to expand its managed behavioral health business by promoting and adding new services, its primary strategy is to seek growth through the diversification of its business lines. Acquisitions and organic measures have allowed the company to enter new business segments including radiology benefits management and specialty pharmaceutical management, both of which are showing rapid growth.
In 2011 Magellan created a new business, Magellan Pharmacy Solutions, to help health plans and employer groups manage what they spend on prescriptions for their members; the unit implemented its first integrated management program for a customer in 2013.
According to the Centers for Medicare and Medicaid Services, Medicaid enrollment is projected to increase rapidly over the next decade, and Magellan intends to take advantage of that increase by marketing itself to states that need guidance navigating the public mental health system.
The company is also expanding Medicaid management programs for special high-cost populations including members with serious mental illnesses or dual-eligibility patients (those qualifying for both Medicare and Medicaid services), partly forming partnerships and ventures with regional health plans.