- Molina has completed an acquisition of certain assets of YourCare Health Plan, mainly a Medicaid managed care plan that covers about 47,000 members in New York.
- It’s a smaller deal, but it more than doubles Molina’s footprint in one of the largest Medicaid managed care markets in the country. The market share leaders still vastly outrank Molina there, though.
- Still, it’s a positive move for the Long Beach, California-based insurer and it’s an example of the company executing on its strategy to grow revenue by snapping up smaller plans, Jefferies analyst David Windley told Healthcare Dive.
Earlier this year, before the country was consumed by the novel coronavirus, Molina CEO Joseph Zubretsky outlined his strategy to the company he helped turn around.
Zubretsky said the company would focus on growing its three lines of business organically and through acquisitions. Those bolt-on acquisitions would be added on to the company’s core competencies. Zubretsky said during the J.P. Morgan Healthcare Conference in January that he was not interested in acquiring companies to pursue new avenues.
“We will not pursue capability plays. We are a managed care company. We like membership. We like premium. We like capitated risk. That’s what we do, that’s who we are,” Zubretsky told the crowd in San Francisco. He added that the company had assembled a team to look for very specific deals across the country.
This latest acquisition, while small, delivers on that promise.
The YourCare buy gives Molina seven more counties in New York. It currently covers members in four, according to figures with the state’s health department. In total, Molina will manage about 66,000 members in the state, which is more than double its current footprint. There are 17 Medicaid managed care plans in New York and Centene controls the largest market share with 1.4 million members. There are about 4.5 million Medicaid members in the state.
“It is a big market. If you’re already there and you think you can operate effectively and perhaps gain share in a big market, that’s worth more,” Windley said. “I think probably the significance of the transaction is simply the efficiency in the ability to take that acquisition and merge it with existing operations.”
Earlier this year, Molina entered into an agreement to acquire Magellan Complete Care, which serves 155,000 members in six states.
Before that, Molina was on track to purchase a smaller plan in Illinois that would expand its Chicago presence by 50,000 members, but the deal later fell through.
Meanwhile as the virus rages on, Molina said it expects growth in its business as many are expected to lose employer-sponsored health insurance and may join the Medicaid rolls or Affordable Care Act plans.