HB: What effect is the U.S. presidential election having on the sector?
It is weighing heavily on sector stock prices. People are nervous about the future, and investors have backed away from stocks like ours that depend on government contracts. They are nervous despite the fact that these government health care programs have been around since 1965. We have always provided health care for low-income people, and I don't see any long-term diminishing of the need for our services. We expect things to rebound after the election. The outcome, ironically, won't have much of an effect on us. Our company does well under Republicans and Democrats. It's one of the situations where if you continue to provide a better product at a lower cost you'll be in good shape regardless of politics.
HB: With your stock prices falling, what are you doing to attract investors?
We've been very active. The large investor banks hold big conferences, and we participate in those. We go out and meet with investors, and every quarter we hold large conference calls with investors and potential investors where we talk about earnings. There are significant investor meetings in New York at the end of May, and we actively take part in those. Those are the primary ways we get the word out, but it is difficult. As a Fortune 1000 company, we are in competition with 999 other companies for investors. Because we are relatively small, we don't attract a lot of media attention, so we have to proactively tell our story.
HB: Who are your biggest investors?
Our biggest investor is the family, and thank goodness it isn't hard to convince them of the value of our stock. The family owns about 53% of the shares right now, but that will go up when we repurchase the shares.
HB: Where do you see the primary opportunities for growth in 2008 and beyond?
First, we are looking at geographic expansion. We are now in nine states, we just entered Missouri, and we have a couple of new states in mind for '08. At the same time, we are also looking at a new demographic. We will be serving low-income seniors, which is a market overlooked by HMOs right now. We feel this is a great opportunity for us. Ultimately we plan to have Medicare products for seniors in every state. The way we look at it is that we're taking care of young people and children, and now we're including the grandparents.
HB: Has the poor economy forced you to change your business model?
No, we really haven't changed it, but we have continued to focus hard on controlling cost. We aren't like other businesses, which tell the hospitals, etc. what they are going to charge. The government tells us how much it will pay us, not the other way around. So, for us, it is all about managing our business costs. My father once told me this is a business of nickels. That's something I've never forgotten.
HB: From nickels to cyberspace, how important is the Internet to your business?
We are starting to use it more and more. We use it with hospitals and doctors to transfer information, in terms of claims. Its use still isn't high yet inside the company, but we see a lot of use for it in the future. For example, if you lose your health benefits card, you can call health plan to get a new card, or now you can go on line and get it yourself. We also see it playing a big part in disseminating health education, but the truth is we are behind the curve in utilizing its potential.
HB: If you had a piece of advice for young Hispanic entrepreneurs, what would it be?
I've thought a lot about this since you asked about it earlier, and I've come up with four things. First, you have to believe in yourself. If you don't believe in yourself, nobody else will. Second, be persistent. My father failed at several businesses before he founded this one. Persistence is really important in every aspect of your business. Third, it is critical to understand that people don't make it on their own out here. Everybody needs help. We all need other people to talk and consult with, so it is important to cultivate friendships and seek out people who can help. Finally, once you become successful, you have an obligation to help others. It is okay to focus on your own success, but once you achieve it, you need to give back.
HB: What lessons did you learn early in your life that helped your career?
What you traditionally learn in business school is that it takes money to make money, that you have to have a fancy business plan to gain get investors, and that you should expect to lose money for a time before you begin to make it back. Frankly, most successful entrepreneurs don't do any of these things. They bootstrap themselves up, usually don't have much money, and they are profitable right from the beginning. In fact an important lesson our father taught us was that we should avoid debt as much as possible. We have a small debt now, but we had none most years. Once you get yourself in debt, you are not working for yourself anymore, you are working for the bank. It's ironic that we are not looking for capital, other than through stock sales, but today we have banks willing to loan to us. When we first started, and for a long time, nobody would give us money. That changed when we went public. Most public companies, of course, have better access to capital. That makes it even more important that you steer clear of borrowing money, just because it is available.
HB: What do you do to relax when you aren't working?
I am on the board of a couple of nonprofit boards, and I like working with them. I also like to collect books, old medical books, because I have a deep interest in the history of medicine. Sometimes I buy them off the Internet, but I know certain people who specialize in historic medical books. I also really enjoy going to book fairs, where you can sometimes find a rare edition.
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