Molina Healthcare: Well Equipped to Venture into the New Frontiers of Universal Coverage

Mar 4, 2014 | Greggory Moore | Best of Best
Molina Healthcare: Well Equipped to Venture into the New Frontiers of Universal Coverage

image by: Mmjones3

Dr. Mario Molina believes that government can be a force for good. His Fortune 500 company is spreading that force as widely as possible to help those medically and economically underserved.

In 2013, Molina Healthcare both celebrated its 10th year as a member of the New York Stock Exchange and was ranked #423 in the "Fortune 500." And while these are noteworthy achievements for any company, they're remarkable for a business whose business is providing health services to the economically disadvantaged.

"Nobody cared, nobody wanted this business," says CEO Mario Molina, M.D., in his 14th-floor office overlooking downtown Long Beach. "People looked at us like, 'Why would you want to take care of poor people? There's no money in it.' Admittedly, there's not as much money in it as if we were taking care of commercial patients. But we didn't go into this primarily to make money. My father used to say, 'This is a business of nickels. But if you pile up enough nickels, you can make a profitable business out of it.'"

In 1969, four years after the federal government founded Medicaid and Medicare, Molina's father, C. David Molina, M.D., sent out a letter informing all his patients that a fellow doctor would be taking on some of his private practice so that he could go back to school to obtain a master's degree in public health.

"My dad saw that the world was changing, that government was going to be providing health insurance to people—a brand-new concept in the United States […] just revolutionary," says Molina. "So he decided to go back to school and learn about healthcare administration. He fundamentally believed that organized healthcare through HMOs was going to be the way of the future. And he's largely been correct. The old fee-for-service model has disappeared over time, and it will continue to do so. "

Today Molina Healthcare is a growing concern, with over 8,000 employees helping to provide medical services to nearly 2 million low-income patients across a dozen states by way of contracts with the federal government. That's a long way from the dilapidated clinic Molina remembers visiting in 1980. "We were walking down the hallway, and I remember the leaves on the floor," Molina says. "I look up, and I see blue sky through the ceiling. It was like 'Jack and the Beanstalk': 'You traded the cow for a handful of beans?! Dad, what have you done?'"

"It started with my father's vision that Medicaid patients who are underserved deserve good care," Molina fils says. "My father sometimes worked in the ER. Whenever you discharge someone from ER, you tell them to follow up with their doctor. But a lot of the patients my father treated would say they didn't have one because they were on Medi-Cal [viz., California's Medicaid program]. 'Doctors don't want to treat us,' they would tell him."

One clinic became three. Three became 10. By 1997 Molina Healthcare's reach extends beyond California's borders. Molina says the company's growth is partly due to being in the right place at the right time with the right mission ("This was a business that not a lot of other people were interested in," he says). And with the advent of the Affordable Care Act (ACA), the mission is only expanding.

"When you look back on this 20 years from now, the landmark event [vis-à-vis the ACA] is this notion that everybody should have insurance, that we're going to find a way to get everyone insured," Molina says. "Once you do that, everyone has a stake in the healthcare-delivery system, so it becomes important how the system works."

Molina feels that all of the issues related to improving healthcare delivery—particularly in regard to government programs—boil down to value.

"Someday, when we get everybody insured, then people are going to start saying, 'Where's the value here? What am I getting for my money?'" he says. "[…] If the government is paying for you, the government is going to want to know, 'Are we getting value for our money, or should we be contracting with someone else?' […] That's where we'll get delivery reform: How do we improve the outcome of patients, the quality for the patients, and the cost? You want to buy a car? Your interest is in value—how much am I spending and what am I getting in return. Right now we don't have those conversations in medicine."

But those conversations having been going on inside Molina Healthcare all along. It's what led the company to be one of the first to post Healthcare Effectiveness Data and Information Set (HEDIS) data online for all to see so that potential patients can compare care providers by some sort of objective measure.

"There's no Consumer Reports grading hospitals yet. But we're getting there," Molina says. "[…] You've got to have objective measures—like any industry, like any business—and then work on improvement. Because you can't really improve something if you can't measure it. […] We [i.e., the healthcare industry in general] don't really do that right now—you know: Who does a better job of treating cancer, this group of doctors or that group of doctors? [People] just sort of assume that everything is the same across the board. But it's not. […] We have to move away from reputation. 'I know a good doctor, I know a good hospital.' Really? How do you know? 'My uncle was treated there, and he got better.' Well, you don't really know, then, do you?"

Another objective measure of value is cost, and Molina believes that not only is it possible to improve care without spending more money, but that, considering the scope of insuring the entire country, it is a necessity.

"The biggest barrier to getting everyone insured is the cost of healthcare. It's too expensive," he says. "Part of that has to do with the fragmentation of the delivery system. […] A lot of this is going to be, 'How do we provide that same care at a lower cost?' Remember, I'm saying, 'the same care'; I'm not saying, 'an inferior care.' And ideally, if you really want to increase value, you'll provide a better result at a lower cost."

Molina has some specific ideas of how to achieve that lofty goal, such as increased standardization.  "One hospital can't talk to another right now," he says. "If you have services done at St. Mary's [in Long Beach] and you end up in the emergency room at Long Beach Memorial, you're going to get another CAT scan, even though you had one three days ago, because we can't find it—or if we can find it, we can't look at it.

Eventually all x-rays will be digitized, so that everywhere in the world the information can be shared. […] Say I belong to Union Bank. I'm driving down the street, but there's no Union Bank. I go to Bank of America. Guess what? I can get money without opening up a new account. The banking industry figured out this stuff years ago. Now, healthcare is more complex, but a lot of these issues can be solved. [… O]ne of the things the Affordable Care Act is doing is forcing electronic standards on the healthcare industry. […] Government doesn't always make things better, but this is one area where they are."

Molina also sees the fee-for-service healthcare model—as opposed to "paying people for quality and outcomes"—as antiquated.

"It grew out of a 19th-century cottage industry, where medicine was pretty simply [and] not very scientific," he explains. "[…] The old fee-for-service model is very fragmented. There's no care management, there's no care coordination, so the patients are left to fend for themselves. So they might be seeing five specialists, none of whom are talking to each other. […] Right now healthcare revolves around the provider—big hospitals, medical groups, going to the doctor. You've been to a doctor. You get to the doctor's office, and what do you do? You sit and wait for the doctor. It's not a patient-friendly experience. It's all really being built around what the doctor needs and what's convenient for the doctor. That's gotta change. We've got to be more focused on what the patient wants, what the patient needs, and what the patient's experience is all about."

Molina would like to see a paradigm shift in the direction of more in-home care—a throwback to the house calls his father used to make. Such a move would be of particular value—in terms of both cost and patients experience—to patients eligible both Medicare and Medicaid. Beginning in April, eligible California residents will be able to coordinate these services through the Cal MediConnect program, an opportunity about which Molina is particularly enthusiastic.

"These patients are very expensive for the government," Molina says. "They are a small minority of the patients, but they account for about 35% of the cost. […] They sicker and more complex, so the government wants to do a better job of caring for these patients. […] The idea was to combine the funding from Medicaid (long term care services) and Medicare (acute services) […,] put it into one contract, give it to the health plan, and say, 'Now you manage this patient, you coordinate the healthcare.' […]

A lot of what we're going to be doing is helping people stay out of nursing homes. For example, [say] you really can't take care of yourself, and you don't have any family that can take care of you. You're going to end up in a nursing home. But if we can provide you with support services, you may not have to. So we'll have someone who will clean your house for you, do your laundry. We'll have Meals on Wheels make sure that you have food. […] Turns out it's actually cheaper to do that, and the patients end up being healthier and happier. But unless there's someone to coordinate all of this, it doesn't happen."

Molina's biggest concern for the future of healthcare is the financial bottom line, partly because right now healthcare costs are cutting into government spending on education.

"The competition between healthcare-entitlement programs like Medicaid and Medicare [on one side] and public education on the other side is very real," he says. "We're cannibalizing our future. If we can't provide a good public education for our kids, what's our future like? In many states, healthcare and education are #1 and #2 [respectively] in the budget. Typically education has been #1, but now it's being challenged by healthcare. We may end up spending more on healthcare than we do on education. […] I remember the discussions where people were saying, 'Oh, we can't afford healthcare if it hits 15% of GDP. The country's going to come apart.' Well, now we're at 17–18% being spent on healthcare, and it's continuing to rise. […] We need to figure out how to lower healthcare costs—not control, but actually lower healthcare costs."

Part of the solution, he says, is fully employing the available technology. He uses ultrasound machines as an example. Once necessitating room-sized machinery operated by specialized technicians, now ultrasounds can be performed simply using a portable device the size of a laptop.

"Our ability to do all kinds of things with technology has improved tremendously, and I think that's going to make it a lot easier for us to go into the home and do a lot of the things we used to do in the hospital," he says. "[…] I think a lot of the healthcare needs to shift away from the expensive, high-technology places like hospitals and big clinics into the community. […] You've got to be able to measure healthcare and look at value. 'Yes, you got a great result, but it cost five times as much as the same result over there.'"

Because its founder simultaneously felt called to serve the underserved and understood that even "a business of nickels" could become profitable, Molina Healthcare is particularly well suited to lead the way into this uncharted territory, where everyone is a stakeholder in everyone else's healthcare.

And unlike so many stories of big business, growth for this billion-dollar company is good for far more than just its shareholders.

About the Author:

Except for a four-month sojourn in Comoros (a small island nation near the northwest of Madagascar), Greggory Moore has lived his entire life in Southern California.  Currently, he resides in Long Beach, CA, where he engages in a variety of activities, including playing in the band MOVE, performing as a member of RIOTstage, and, of course, writing. 

His work has appeared in the Los Angeles Times, OC Weekly, Daily Kos, the Long Beach Post, Random Lengths News, The District Weekly,, and a variety of academic and literary journals.  HIs first novel, The Use of Regret, was published in 2011, and he is currently at work on his follow-up.  For more information:

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