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.
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.