Molina ex-CEO buying payer's California primary care clinics
- Molina Healthcare is dropping its primary care business to focus on health insurance, Modern Healthcare reports. The Long Beach, Calif.-based company is shuttering 24 clinics in states across the U.S.
- Now, it seems, ousted Molina chief executive Mario Molina is stepping in to buy 17 of those clinics in California and ensure they stay open. Together, they serve about 120,000 patients a year.
- “We’ve got more than 100,000 people who are depending on us for their day-to-day healthcare and these clinics are located in medically underserved areas,” Mario Molina told the news site. “They (Molina Healthcare) would have shut down the clinics as they are doing in other states.” If the deal is approved, he plans to rebrand the clinics as Golden Shore Medical.
Molina continues to struggle financially, so the move to drop some services isn't a surprise. Those services are desperately needed in some areas, however, and the former executive's investment could certainly work out in the long run as the demand for retail clinics continues.
Mario Molina was abruptly ousted in May along with his brother John Molina, who was the CFO. At the time, board chairman Dale Wolf cited a “disappointing financial performance” during the company’s 2017 first quarter and a need to “drive profitability through operational improvements.”
Molina Healthcare fared poorly in the ACA exchanges last year, reportedly losing around $110 million before income taxes. In February, Mario Molina said ongoing uncertainty about the marketplace left the payer unsure about its participation beyond this year.
Mario Molina has been outspoken in his support for the exchanges and the need to continue funding for cost-sharing reduction subsidies that help insurers participating in the exchanges provide coverage for lower-income individuals.
Molina Healthcare California clinics range from Citrus Heights northeast of Sacramento in the northern part of the state to Wilmington, which is north of Sacramento in the southern area.
Ensuring access to underserved areas is a constant challenge. Rural areas, particularly poorer ones, can have high rates of chronic conditions and other health vulnerabilities. The same is true in underserved urban areas. Many providers find it hard to survive financially in such areas.
One answer is increasing access to primary medical care while holding down costs is retail health clinics. As of last year, there were close to 2,000 retail clinics nationwide and the number is growing. The majority are owned and operated by large retailers like CVS Health, Walgreens and Wal-Mart.
These clinics are mostly staffed by nurse practitioners and physician assistants and offer longer hours than a typical doctor’s office. And they’re easy to reach, as more than half the population is within 10 miles of a retail clinic.
Studies have been mixed, though, on whether they reduce costs. A 2016 Rand Corporation study found that retail clinics actually led to a slight, yet significant, rise in healthcare spending.
“What we find … is that because these retail clinics are so convenient, more people are going to them who would otherwise stay home,” lead author Scott Ashwood told Healthcare Dive at the time. “The net effect is not savings, but a cost increase.”
- Modern Healthcare Ousted Molina Healthcare CEO to snap up insurer’s Calif. clinics