The gig: J. Mario Molina and John Molina, who are brothers, run Molina Healthcare Inc., a health maintenance organization provider that operates 19 clinics in 10 states. The company, based in Long Beach, has 2,900 employees and more than 1.4 million customers, most of whom receive Medicaid, Medi-Cal and other government healthcare assistance.
Last year the company took in $3.7 billion, of which $31 million was profit.
Founding father: In 1980, emergency-room physician C. David Molina started Molina Healthcare after noticing an influx of patients in the ER who had been turned away from doctors who wouldn’t accept Medi-Cal. “Nobody wanted to take care of them,” said Mario, 51, chief executive of the company. “They would come in for sore throats and diaper rash, kids with fevers and earaches, things that weren’t really emergencies.”
Family business: Mario, John and their three sisters all pitched in at the initial three clinics. “It was expected of us to help out,” Mario said.
“We’d work at the reception desk, we’d paint the buildings, sweep, mop, water plants, mow the lawn, wash windows, clean bathrooms, anything that needed to be done, short of seeing patients.”
Different paths: Mario followed in his father’s footsteps and became a doctor, attending medical school at USC. John got a degree in economics from USC. “I was the exact opposite of Mario and I was very squeamish,” said John, 46, now chief financial officer of the company. “I didn’t want to go hang out in the ER, but I loved doing payroll.”
Growing pains: In 1989, the company took over the lease on nine closed clinics formerly operated by Maxicare Corp. To help pay for the expansion, David Molina took out a second mortgage on the family home.
“We literally started those nine clinics empty,” Mario said. “Dad sent John and I out to recruit back all the people who were working for Maxicare. It took months to get going, but patients eventually came back too.”
Twist of fate: Mario, who aimed for a career in research, was conducting diabetes studies at USC in 1990 when Molina Healthcare’s medical director died unexpectedly. Mario took the job part time and continued on at USC until his father gave him a choice.
“He said, ‘I really need someone to be a full-time medical director. If you want the job, it’s yours. If you don’t, I’m going to hire someone else,’” Mario said. “So I decided to leave academics and go with my dad.”
On their own: David Molina died in 1996, two months before the company was set to expand into Utah. “Dad had always been here and we worked very closely with him, but all the big decisions were his,” Mario said. “It was sort of like being on a high wire and then they take away your safety net. John and I were young and a lot of people didn’t think we’d be able to pull it off, but we did.”
The brothers continued the company’s expansion by purchasing HMO providers in Washington state and Michigan.
Going public: “We had come to a fork in the road and it was clear that we couldn’t continue to grow the way we wanted if we didn’t get more capital,” Mario said. Molina Healthcare went public in 2003, raising more than $115 million in its initial public offering. The brothers used that money to expand further. The revenue brought in from the growth of the company allowed Molina Healthcare to buy a health information management business from Unisys Corp. that runs Medicare programs under state contracts for $135 million in cash in January.
According to Hispanic Business Magazine, Molina Healthcare is now the second-largest Hispanic-owned company in the U.S., behind Brightstar Corp., which provides distribution services for wireless firms.
Obama boost: The recently passed healthcare legislation could benefit Molina Healthcare, Mario said. “We serve primarily Medicaid patients, and the Congressional Budget Office has estimated that with the Obama healthcare changes, another 15 to 19 million people that are uninsured now will be placed on Medicaid over the next few years. That will increase our potential customer base by about 25%.”
Risk as a business strategy: “If you look back at the history of the company, each of our turning points as a company involved taking a risk,” John said. “When Dad expanded from three to 12 clinics, that was a risk. When we expanded into Utah after Dad died, that was risky too. For some deals, to buy a small health plan in another state or something like that, we’ve had to scrape every penny we had together to pull it off.
“It can be scary sometimes, but we make the moves that we think will make the company better in the long term, not just what will be the best in the short term.”