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 nearly 2 million people who receive their care through Medicaid, Medicare, and other government-funded programs in 11 states. Its Medicaid Solutions segment provides business process outsourcing (BPO) 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.
Altogether, Molina's operations provide plans or services to 2.3 million individuals in a dozen states. Molina's health plans segment accounts for a majority (97% in 2013) of revenues. The company's health plans provide medical services through state networks of contracted hospitals and physicians that accept Molina health plan coverage.
Molina's health plans primarily operate in Washington, California, Texas, Ohio, and Michigan, as well as in New Mexico, Utah, Florida, and Wisconsin. The Medicaid Solutions business provides IT services in Idaho, Louisiana, Maine, New Jersey, West Virginia, and the US Virgin Islands; it also administers a drug rebate program in Florida.
A third component of the company, referred to as the direct delivery line of business (reported within the health plans segment), consists of about 25 primary care community clinics in California, Florida, New Mexico, and Washington. Molina also manages three county-owned primary care community clinics through a contract with Fairfax County, Virginia.
Molina has reported steady revenue increases the last few years and 2013 was no exception. Revenue increased 9% to $6.6 billion due to increased sales across the company. The company reversed its trend of declining net income, however, when it declared a huge jump, from $8 million to $53 million, on the strength of revenue growth and income from discontinued operations relating to the Missouri health plan. Cash from operations has been up and down and it fell in 2013 after a rise in 2012 from deferred income - there was no deferred income for 2013. And cash from operations dipped due to increased receivables.
Molina grows in its existing markets by increasing services and adding physicians to its provider networks. It also looks to add new members by increasing its brand awareness through marketing and advertising campaigns. In addition, Molina enters new markets through both organic measures and through acquisitions, targeting entry into large markets with competitive provider communities. In 2013 it added new members in New Mexico and South Carolina by purchasing other plans' contracts.
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.
Growing the direct delivery component of its business also helps Molina prepare for health care reform changes. 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 impact the company's financial returns on health plan operations. In addition, Molina sees opportunities in the Affordable Care Act's provisions to expand state Medicaid programs, as well as by participating in dual eligibility programs designed to improve the coordination of care for members that are eligible for coverage under Medicaid and Medicare plans.
Mergers and Acquisitions
In 2015 Molina Healthcare of Michigan agreed to buy certain assets of HealthPlus of Michigan, expanding its operations in the state. The deal will include assets of HealthPlus' Medicaid and MIChild (for uninsured children) businesses. Later that year, Molina Healthcare of Florida agreed to buy assets of Preferred Medical Plan's Medicaid business in Florida, while Molina Healthcare of Illinois planned to enter the Chicago market with the acquisition of certain assets of Accountable Care Chicago (aka MyCare Chicago).
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.