News Column

In Down Economy, Molina Healthcare Soars to New Heights

June 15, 2010

Rob Kuznia -- HispanicBusiness Magazine

For countless companies, 2009 was the worst year on record, but for Molina Healthcare Inc., it might have been the best.

Like a high fever, the nation's unemployment rate rose from 7.6 percent in January of 2009 to about 10 percent by year's end. Meanwhile, Molina Healthcare's revenues in 2009 surged nearly 20 percent over the year before, from $3.1 billion to $3.7 billion.

As a result, for the first time in its 30-year-history, Molina Healthcare has unseated the No. 1 company on Hispanic Business magazine's HB500 list, making it the largest participating Hispanic-owned business in the United States.

These are all great things, but CEO J. Mario Molina said he never wants high rankings and public accolades to distract the company from its core mission.

"The goal is to serve the lowest-income patients, who get health care paid for by government programs," Dr. Molina told Hispanic Business magazine.

The handing of the crown from Brightstar, a telecom wholesaler, to Molina not only marks a historic change for Hispanic-owned businesses in America, it also seems to signal health care's rising dominance in the structure of the overall U.S. economy.

With the healthcare percentage of U.S. gross domestic product skyrocketing almost out of control -- from 12 percent in 1990 to about 17 percent now -- and with the ink still barely dry on the historic health reform law, the industry in recent years has seen unprecedented growth.

Molina Healthcare is a case in point.

During a year when General Motors was bumped off the Fortune 500's top 10 list for the first time in history, Molina Healthcare expanded its footprint to 15 states in 2009, up from 10 the year prior. Molina, which is on pace to boost revenues to $3.9 billion in 2010, is also threatening to become the first Hispanic-owned company to break into the Fortune 500 club, whose smallest member takes in about $4 billion annually.

But while the contrast between Molina's meteoric performance and the poor state of the job market is striking, it's hardly a coincidence.

Molina Healthcare provides managed health care to low-income people covered under Medicaid and others dependent on government assistance. With about a third of all unemployed Americans eligible for Medicaid, the company over the past couple years has seen its customer-base balloon.

Dr. Molina, son of the company's late founder, C. David Molina, makes no effort to downplay this.

"We saw about a 14 or 15 percent growth in the number of our patients last year," he said. "That's what's really driving our growth, is more members."So does this mean Molina's growth will stop when the job market improves? Here again, the company is fortuitous.

Molina Healthcare is poised to benefit from the sweeping new health care law, named the Affordable Health Care for America Act. This is largely because the new law in 2014 will significantly expand Medicaid, boosting the total number of beneficiaries to about 75 million from the current 60 million.

Molina Healthcare, which serves roughly 1.5 million Medicaid patients, is sure to see its customer base rise in tandem.

Roughly 50 percent of its patients are Hispanic.

Molina Healthcare got off ground in 1980, opening as a single clinic in Long Beach, California. The founder, an emergency room physician named David C. Molina -- who died in 2006 -- saw a void in the market for the underserved. His clinic served patients regardless of their ability to pay.

It took nine years for one clinic to expand to three. In 1996 it expanded to Utah. In 2003, it went public.

By 2008, Molina Healthcare had spread to 10 states from coast to coast. The 15 states it currently serves includes Washington, Missouri, Michigan, Ohio, Maine, New Jersey and Florida.

If it's true that Molina Healthcare benefits from rising unemployment, it's also the case that the company is ameliorating the nation's jobless woes. In 2009 alone, its employee roster swelled to 4,000 from 2,800.

With the fast-paced growth has come a raft of new initiatives.

Arguably the most futuristic is the telemedicine program being piloted at several locations. The project, which Molina has launched in partnership with Cisco Systems, is akin to teleconferencing, but takes it a step further by allowing doctors in one city to treat patients in another via video.

The program not only allows for video conferencing, but also transmits in real time the results of medical testing, such as a stethoscope's measurement of a heartbeat.

"It's really going to change what doctors can do at a distance," Dr. Molina said. "Twenty five to 35 percent of Americans live in rural areas, but only about 10 percent of the doctors practice from rural areas."

Also, in January, Molina Healthcare purchased Unisys's health information management business, meaning it officially entered the realm of Medicaid administration.

The company in the beginning of 2009 also opened its doors in Florida, opening facilities in Miami and Tampa. Already, it serves 50,000 member patients.

"It's right about where we expected to be," said David Pollack, CEO of Molina Healthcare of Florida.

With Florida's unemployment rate hovering around 12 percent, the state ---- has the fifth-largest population of Medicaid-eligible people of all 50 states (2.6 million). Clearly, it's a good place for Molina Healthcare.

Source: (c) 2010. All rights reserved

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