Molina Healthcare to cut 1,400 jobs

Molina Healthcare will cut 1,400 jobs following financial struggles late last year. (jGetty/jansucko)

Molina Healthcare plans to cut 1,400 jobs over the next few months following significant financial losses related to its Affordable Care Act plans.

Reuters obtained a copy of an internal memo sent to Molina staff by interim CEO and Chief Financial Officer Joe White, who said the job reductions should contribute savings by 2018. The cuts include 10% of Molina’s 6,400 corporate employees and 10% of its 7,700 health plan employees, according to the memo.

"Moving forward, we must be exceptionally strategic in doing more with less," White wrote.

Free Daily Newsletter

Like this story? Subscribe to FierceHealthcare!

The healthcare sector remains in flux as policy, regulation, technology and trends shape the market. FierceHealthcare subscribers rely on our suite of newsletters as their must-read source for the latest news, analysis and data impacting their world. Sign up today to get healthcare news and updates delivered to your inbox and read on the go.

Molina’s Pathways business, which is focused on behavioral health and employs about 5,500 people, is not included in the cuts, according to the memo.

RELATED: Even with company's recent losses, Molina CEO takes sunny view of ACA exchanges

Molina had thrived in the ACA exchanges prior to posting a fourth-quarter loss last year, which it blamed on risk-adjustment issues. Molina lost $110 million on its ACA plans during the last quarter of fiscal year 2016, while it had expected to make $60 million.

Molina said it had to pay $325 million more into the risk-adjustment program than it anticipated, as medical costs were $120 million lower than expected.

The company then fired its CEO, J. Mario Molina, and its CFO, John Molina. The company's former CEO later suggested that his ouster may have also had something to do with his political beliefs; he was an outspoken critic of the Republicans’ plans to replace the ACA. He remains on the company’s board.

In the first quarter of 2017, Molina seemed to be on the rebound financially, as it posted earnings that beat analysts' estimates. The company is expected to announce its second-quarter earnings and hold a call with investors on Aug. 2.

Suggested Articles

Medicare's improper payment rate fell to its lowest level since 2010, as CMS touts new fraud prevention measures.

Here's a look at how the top publicly-traded health systems performed in the third quarter.

Patient engagement, analytics and precision medicine will be key to shifting to value-based care, but funding is a significant challenge, CIOs say.