Thread regarding Molina Healthcare Inc. layoffs

Important parts from Q2 transcript

@OA9wyoN-1qgz took the time to highlight some of the important parts of the transcript, hope they do not mind it being bumped up for more people to see.

Everyone should take the time to READ the transcript, it provided insight and answers to many questions asked throughout this thread. Below are a few of the experts from the transcript folks - if you want to know more, go to the previously provided.

Per SVP of Investor Relations:

"...We are streamlining our organizational structure to improve efficiency and the speed and quality of decision-making. We expect those changes to be largely complete by the end of 2017 and anticipate that this effort will ultimately yield an estimated $200 million in annual run rate savings...re-designing core operating processes such as provider payment, utilization management, Marketplace risk adjustment, and quality monitoring and improvement to achieve more effective and cost-efficient outcomes. While this effort will extend well into 2018, we hope to see our first meaningful results by the end of 2017...remediating high-cost provider contracts and building around high-quality, cost-effective networks. This initiative will take time and will likely not show meaningful benefits until 2018...restructuring our direct delivery operations. We expect these changes to be complete by the end of 2017. Finally, we are reviewing our vendor base to ensure that we are partnering with the lowest-cost, most effective vendors."

Per the COO/acting CEO (during Q&A):

"...Your third question, I think, was about the nature of staffing reductions we've implemented. I don't think you can say they reach into any specific areas more than others, with a general caveat that most of these reductions are reflecting managers and affect people leaders, individuals higher up in the organization. As part of this effort, we are trying to expand spans of control for managers, which unfortunately is resulting in the exit of a large number of our management personnel."

"...The strategic review initiated very early this year, back in February. I think we're done with the outlines of the plan and the path forward and the setting of savings targets. Of course, there's going to be modifications as we go along. And many of these activities, such as provider re-contracting, vendor re-contracting, will continue well into 2018. But I am confident in saying the plan is fleshed out and is built and is complete in terms of planning and design. Now, again, the operation and the roll-out of the plan will continue through 2018."

"...There's no doubt performance in Texas has been very nice. Performance in some of the smaller states, Michigan and New Mexico, has been nice. California has been okay. Florida, though, has not been a good market for us. We're going to have to look closely at it."

"...there are pockets of the company where we will see additional resources directed. So, for example, contract procurement, business development, RFP team, we'll see more resources directed in that area."

"...There was $55 million of cost take-out last Thursday and that is, obviously, not reflected in these numbers because it was a July event. So we're already $55 million down the path to that $200 million we've committed to for the full year."

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The transcript also includes more details regarding layoffs and pull out from Marketplace in UT and WI.

Per the SVP of Investor Relations:

"...As part of our organizational Restructuring Plan, we are reducing our workforce by approximately 10%, or 1,500 employees. The reduction is designed to increase operating efficiencies, while reducing cost is part of the reorganization of our corporate and health plan operations.

This was a very difficult decision and one that we do not take lightly. We never want to lose any of our talented and dedicated colleagues. We are committed to treating our departing colleagues with dignity and respect, and we'll be providing severance and outplacement assistance to those affected.

We initiated the first wave of the workforce reduction last Thursday, July 27. This single action will reduce annualized run rate expenses by $55 million and constitutes a substantial down payment on our commitment to build a profitable business that delivers better shareholder value...In addition to our restructuring plan, we are taking the following steps to manage our Marketplace exposure in 2018. We are exiting the ACA Marketplace in Utah and Washington (sic) [Wisconsin], effective December 31, 2017. For the six months ended June 30 of 2017, these two health plans contributed only 60% of our total Marketplace revenue, but they constituted slightly more than half of our consolidated Marketplace operating loss. We are also reducing the scope of our 2018 participation in the Washington Marketplace.

In our remaining Marketplace plans, we are increasing our premiums for 2018 by 55%. Our premium increase assumed the absence of cost-sharing reduction subsidies. Had we assumed that the CSRs would be funded for 2018, the premium increase would still had been 30%."

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