Molina Healthcare's Health Plan segment arranges for the delivery of health services to some 4.2 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 4.2 million individuals in about a dozen states. Molina's Health Plans segment accounts for a majority (98% in 2015) of revenues. The company's health plans provide medical services through state networks of contracted hospitals and physicians that accept Molina health plan coverage.
Other operations include Pathways, which provides behavioral health and social services.
Molina's health plans primarily operate in Washington, California, South Carolina, 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 30 primary care community clinics in California, Florida, New Mexico, Utah, Virginia, and Washington.
Molina's Health Plans segment leases 84 facilities, while the Medicaid solutions segment leases a dozen facilities.
Sales and Marketing
Molina's client base includes independent physicians, physician groups, hospitals, and ancillary care providers, as well as its own clinics.
Molina has reported steady revenue increases over the last few years; in 2015, revenue rose 47% to $14.2 billion, primarily due to growth in the Health Plans segment. That business saw 42% growth in membership thanks to Medicaid expansion as a result of the Affordable Care Act, as well as Medicare-Medicaid plan enrollment and the start-up of the health plan in Puerto Rico that year. A 5% increase in monthly revenue per member also contributed to the gain. However, this was partially offset by a decline in revenue from the Molina Medicaid Solutions segment.
Net income fell for a couple of years but it has been on the rebound since 2013. In 2015, the company's increased revenue led profits to more than double to $143 million. Cash flow from operations, which spiked more than 450% in 2014, rose another 6% to $1.12 billion in 2015. This was due to the higher net income and a change in 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 2014 Molina acquired two Medicaid contracts in Florida, adding some 73,000 new members. Later that year, it secured a contract to administer Puerto Rico's Medicaid program in a couple of regions, adding some 350,000 new members.
In 2015 the company's Florida and Michigan plans added 192,000 new members through the acquisitions of Medicaid contracts. The following year it added contracts in Illinois, Michigan, and Washington, adding 257,000 new members.
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.
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 has benefited from the Affordable Care Act's provisions to expand state Medicaid programs. It has furthermore seen growth 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 acquired certain assets of HealthPlus of Michigan for $47 million, expanding its operations in that state. The deal included assets of HealthPlus' Medicaid and MIChild (for uninsured children) businesses. Later that year, Molina Healthcare of Florida bought assets of Preferred Medical Plan's Medicaid business in Florida for $8 million, while Molina Healthcare of Illinois entered the Chicago market with the acquisition of certain assets of Accountable Care Chicago (aka MyCare Chicago). The Illinois unit also purchased certain Cook County-based Medicaid assets of accountable care entity Better Health Network for $18 million.
Another deal was the acquisition of Providence Human Services (which provides behavioral and mental health services in more than 20 states) and Providence Community Services from The Providence Service Corporation for some $200 million. Those companies will now operate under the Pathways brand. And in 2016 Molina Healthcare agreed to buy Total Care Medicaid, a plan serving some 39,000 members in upstate New York, from Universal American for $41.3 million. Completed deals that year included the purchases of Loyola Physician Partners ($15 million, adding 21,000 Medicaid members in Illinois) and HAP Midwest Health Plan (adding some 81,000 Medicaid and MIChild members).
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.