As an emergency room physician in Long Beach, C. David Molina saw immigrant families come in for everything from high fevers to ear infections because they didn't have regular doctors. To help them, he opened three small clinics in the city.
From those humble beginnings in 1980, Molina Healthcare Inc. mushroomed into one of the nation's largest -- and most profitable -- health maintenance organizations serving low-income people on Medicaid. With nearly half a million members in California and three other states, Molina's earnings rose to $30.5 million last year, up from $2.6 million in 1998. Now it's preparing to go public in a $115-million stock offering.
In regulatory filings, the HMO attributes its financial success to providing medical care efficiently and to its long experience serving culturally diverse communities. Molina Healthcare employs a full-time cultural anthropologist, and its Web site can be viewed in Spanish, Russian, Hmong and Vietnamese.
"They seem to have the formula in place," said David Menlow, president of IPO Financial .com, a New Jersey data service that tracks initial public offerings.
But according to some health professionals, consumer advocates and independent reviews, Molina profits partly because its members don't see doctors when they should and may not complain when they are denied care.
Reports from the state and a health-care analyst show, for example, that Molina's pediatric patients in California and Michigan tend to have immunization rates well below the statewide average. What's more, Molina and other HMOs that serve Medicaid patients in California can and do readily shift care of acutely ill children to state programs such as California Children Services, thereby reducing their exposure to some of the most expensive cases.
Molina isn't the only HMO making handsome returns from government contracts with Medicaid, called Medi-Cal in California. But it is among the most profitable in the managed-care industry -- Medicaid or otherwise -- and consumer groups say hefty margins are incongruous at a time regional HMOs have generally struggled, budget-strapped states such as California are slashing funds for health programs, and doctors and other providers are clamoring that they are losing too much money serving Medicaid patients.
