Richard Montoni has served as president and CEO of MAXIMUS since 2006 and was recently recognized as the Executive of the Year for companies generating more than $300 million in annual revenue at the Greater Washington Government Contracting Awards.
Montoni previously served as MAXIMUS’ chief financial officer and treasurer for four years, reprising the CFO role he held alongside executive vice president responsibilities at Ciber.
In an interview with ExecutiveBiz, the former KPMG audit partner discussed topics including what he sees as MAXIMUS’ future growth drivers, the company’s M&A positions, where his focus is in international markets and how he keeps a healthy work-life balance.
ExecutiveBiz: How does being recognized as Executive of the Year at the Greater Washington Government Contracting awards measure against some of the other big successes in your career?
Richard Montoni: Well, certainly receiving this award is a great honor. It is especially meaningful to be recognized by one’s peers, as we all strive to deliver greater value to our government clients and truly take the government mission to heart.
If I were to identify the greatest achievement in my career, it would be what our team at MAXIMUS has done over the last six years to become one of the most successful pure play providers of health and human services program administration.
I really think the GovCon award validates our team’s hard work to get where we are today, and being part of this team is something that I am very, very proud of.
ExecutiveBiz: What would you say drove your success and made this year so special?
Richard Montoni: When I think about our success, I think it can be attributed to our unique blend of people, process and technology, combined with an intimate understanding of how to serve diverse populations in high-profile and complex government programs. I think it’s this combination that has really enabled us to consistently deliver results for our government clients. Consistency and reliability are of the utmost importance to them.
For us to consistently deliver exceptional results to our clients and to have done so for nearly 40 years, I think that makes us special. I’d also say that our employees are clearly the number one resource in our ability to do this. Our employees have always been and will continue to be the lifeblood of MAXIMUS. I think it is their contributions that differentiate us from our competitors. They spark innovation, develop and operate our technology, and drive exceptional performance.
ExecutiveBiz: Even with tough budget environments and sequestration looming, your company reported earnings exceeding the Wall Street consensus for estimates for fiscal 2012. How are you positioning MAXIMUS to grow in this budget environment?
Richard Montoni: Our fiscal year 2012 was a successful year. It was a growth year. We also concurrently released our expectations for fiscal 2013 and we expect that it is going to be another growth year. Additionally, I think we will have growth for many years to come. In order to understand our growth potential, let me give you the backdrop.
Future opportunities for MAXIMUS are driven by two very significant drivers. The first of these drivers is based on demographics. And, the demographics are quite simple; there are more people on this planet – we just broke the 7 billion person mark – and it is estimated that in the next 10 years there will be another billion people on this planet, up to around 8 billion.
That alone is a pretty significant increase in the number of individuals that governments will serve and when you study the demographics, a growing number of these individuals are becoming elderly and will need help. There are also growing numbers of individuals who will need to access services and need assistance from their government, including help with their health care and help getting and keeping jobs. So, exponential world population growth is one driver.
The second driver is that many governments, especially those in developed nations, are responsible for serving these increasing populations, but are experiencing fiscal problems. It’s the intersection of those two drivers that are compelling many governments to seriously move forward and reengineer their welfare and health programs.
That sets the table for MAXIMUS to continue to be a valued provider to governments. We are a trusted partner to step up and help them. As governments study their options, they’re going to turn more towards public-private partnerships to help them deliver these critical programs.
We think the model of the future favors more integration and collaborative partnerships between the government and the private sector. This model allows us to combine our institutional knowledge of government programs with the agile, flexible and outcome-oriented private sector approach to service delivery.
ExecutiveBiz: With the changing demographics and fiscal problems that these countries are seeing, can you explain one way that MAXIMUS is coming in and helping the situation?
Richard Montoni: I think our recent Medicaid managed care expansion efforts in Texas are a great example. It’s an example of how MAXIMUS offered flexibility, innovation and timely results that are very important to governments. And we did it in a public, private partnership that is second to none.
In this situation, MAXIMUS and the Texas Health and Human Services Commission addressed the challenge of rolling the state’s Medicaid and CHIP populations into re-procured managed care plans, while keeping the associated costs under control. We were able to scale our existing operations to enroll one million beneficiaries, which included rapidly setting up temporary call center operations with 700 staff and quickly establishing an online enrollment channel.
This is a pace and scale that you just couldn’t achieve without a strategic public-private partnership. The Texas managed care expansion serves as a great model for other states to consider as they try to control their health care costs and also deal with transitioning populations into Medicaid managed care.
ExecutiveBiz: In the past year, MAXIMUS has established footholds in Canada and continued work on several continents. What role do international operations play in your growth strategy?
Richard Montoni: International expansion is a key element of our growth strategy. We are a leading provider of business process services for government health and human services programs worldwide, and our international operations are an integral part of our growth. I think it could become 50% or more of our business in the next three to five years. Clearly, it is the demand for our services that really drives our international growth.
When we look at this demand, international governments face the same social challenges with which we have helped state governments overcome in serving people here in the United States. As states face budgetary pressures and rising caseloads, they need to provide their citizens with critical social safety net services, which is when they turn to us for help. Therefore, our international expansion is primarily about matching our core services to the increasing demand that we see from governments around the world.
I would also say that being a partner doesn’t mean we only help these governments operate the programs. It also means we help them achieve their desired outcomes, which is very, very important to them. Whether it’s helping someone enroll in Medicaid in Texas or helping welfare recipients into long-term employment in Australia, MAXIMUS is a reliable and experienced provider that helps achieve the outcomes that matter to governments.
There is no doubt that there are certain challenges to global expansion, but we take a very methodical approach. We understand the challenges and work to deal with them successfully. For example, we look for stable countries with a propensity to outsource, specifically those with developing economies.
We also look for governments that have stable currencies and favorable regulatory environments. However, most importantly, we know that no two governments are alike. With a clear understanding of the differences in cultures and communities, we take a holistic approach to supporting the diverse needs of government customers and their constituents.
ExecutiveBiz: So what does MAXIMUS do better than anyone else to support the implementation of the Affordable Care Act and health insurance exchanges?
Richard Montoni: We’ve been around for nearly 40 years, and we have decades of experience serving and administering U.S. health and human services programs. Therefore, I think MAXIMUS is in a unique position to provide the support that states and the federal government will require as we go through a reengineering of the health care system in the United States.
We see a lot of parallels between our current work and what will be involved in helping states operate their health insurance exchanges. For example, we understand all of the business processes involved from the very beginning – from application intake, to customer support, to enrollment and ongoing case management.
We understand what is necessary to serve diverse populations and how to leverage states’ existing resources. That’s at the heart of the partnership. Unlike our competitors, MAXIMUS is not a government division of a larger enterprise. In our nearly 40 years of existence, we have almost solely focused on simply helping governments serve the people. This is our focus and core mission.
Another reason we can help governments operate exchanges better than anyone else is because we are the largest single administrator of managed Medicaid and CHIP health programs in the United States. We serve more than half of all standalone CHIP and Medicaid managed care beneficiaries across the United States. This is an important cornerstone of the exchanges and we have done it successfully for decades through public-private partnerships with more than 20 states and the District of Columbia.
The last point I would make is on the importance of being an independent partner. MAXIMUS prides itself – and believe we add significant value to our clients – in that we are independent and have only one allegiance: our client. Our commitment is to our government clients and the beneficiaries they serve. We think that’s very important to our clients and their beneficiaries.
ExecutiveBiz: MAXIMUS helps people all over the world. I was wondering if in your experience with MAXIMUS, if you have any human interest stories that have occurred where MAXIMUS has stepped in and helped an individual or family in a large way?
Richard Montoni: I can think of several situations where we supported our clients during natural disasters. When a series of hurricanes hit the gulf coast of Texas, we leveraged our large operations through our citizen service center (rather than a “call center” for us, there’s a distinct difference) to support the state in responding to the needs of people who were in danger or serious need.
We were able to redirect our resources to make our folks readily available to take calls from Texans who were being directly impacted by the hurricanes. Additionally, our people stepped up and learned new policies and scripts to meet the quickly changing needs of their fellow Texans. Many of our employees volunteered to work extra hours and on the weekends, while others traveled to the hardest hit areas to provide food and support.
Another recent example is with Super Storm Sandy – where many, many people in New York and New Jersey were impacted. MAXIMUS employees in our New York Medicaid CHOICE office heeded the call of action and volunteered to work with our clients to do something similar as what was done in Texas. They took calls from people who could not reach anybody else and helped them deal with this disaster. As a company, and this is really interesting in terms of our business solution, we have a number of at-home agents. Therefore, as the region was at a stand-still due to the widespread storm damage, we were able to redeploy our at-home agents and continue to make them available to help beneficiaries. When we experienced extreme call volumes, we also were able to redirect calls to some of our operations in other states. These extra steps ensured that we were able to come to the rescue of those individuals affected by the storm.
It’s really our goal to help people deal with difficult situations. We even had employees who faced their own dire situations, but still came into our offices to help others. The desire to help others is contagious and infiltrates our culture. We have employees who were previously helped by MAXIMUS to access government assistance, and now work for us helping others who are experiencing many of the same hardships they did. It helps develop an environment where the desire to help exceeds that of just earning a paycheck.
ExecutiveBiz: What contracts or possible M&A activity are you really looking forward to with MAXIMUS?
Richard Montoni: In general, the way we think about growth is by forming new public-private partnerships to assist governments. One key area where state governments are needing help is in the processes that are now bubbling up under the Affordable Care Act, and which I think will play a very significant role in our future growth. Whether it’s those states that want to have their own exchange or states that want to work with the federal government, we are well-positioned to help.
Therefore, I think we will see a lot of new contracts in that space. I also think we will be positioned for new opportunities and contracts internationally. When you study what countries are doing when it relates to reengineering their welfare systems, there are significant opportunities arising in countries such as Australia and the United Kingdom.
Over the next few years, I expect we will see several other countries move toward the Australian model, or what is also referred to as the Wisconsin model for welfare reform, a type of program that MAXIMUS is very experienced in running.
We view M&A as a companion to growth, as a means to help us develop one of two things. First, M&A can provide us with an opportunity to move into a new geography where we don’t have a presence. For instance, we often times will acquire a small company to gain a foothold in a particular area. Once we have established ourselves, we then look for opportunities to propose work to the government in a very sizable fashion.
We did this in Canada, Australia and in the UK. We have looked to use M&A to establish that geographic foothold and in helping with knowing their culture, their government, and having an established reputation. Acquiring an existing company in a country is one of the ways we do that.
The second avenue, as it relates to acquisitions, is to move to one or two adjacent markets, ones that are not a totally new business to MAXIMUS, but ones where we don’t have a strong presence. There are some commonalities and synergies that can be leveraged by us through acquiring firms with the skillset that are of interest and importance to our clients. Therefore we foresee using M&A in both of those fashions. I would also mention that in this past year we acquired a company, Policy Studies Inc. (PSI) out of Denver, which is a great collaboration. It was really a zero adjacency, however had a very meaningful presence across the United States and is renowned for its great reputation and child support assistance. So we are very, very pleased to have combined PSI with MAXIMUS this past year.
ExecutiveBiz: I talked to Chris LeGand of Futures Group the other day and he told me they had just merged with the Australian firm GRM International. I wonder what makes Australia such a good environment for health contractors?
Richard Montoni: I think Australia is a good environment because it seems to be one of the leaders in practicing public-private partnerships, going back decades. In the 1990s, the Australian government had some fiscal challenges and really saw the light in that there was a better way to do things by using a “pay for performance” model that connects outcomes that matter to government programs and serving the beneficiaries.
They have really been a country that leads in that context and there is a significant trend out there to move away from the old model, which involves governments totally doing it themselves or hiring a firm to do it and just to pay for those activities completed. Australia leads the performance-based trend in terms of defining the outcomes of importance to the beneficiaries of a program and then rewarding those partners who really deliver the outcomes that matter – and not paying when they don’t deliver.
Therefore, that sets the table for firms that have the subject matter expertise and the proper alignment of people, process and technology to take on these contracts and find the sweet spot in delivering the results that really matter. We have this expertise and that’s why we think Australia is a very good country to do business with.
MAXIMUS started our Australian operations when we bought a small local company. At the time of acquisition, nearly 10 years ago, the company had an annual run rate in the vicinity of $15 million. As we met the key performance requirements of our contract, the government awarded additional assignments to us (as they give new work to those providers who perform well). After evaluating vendor performance, the government will reallocate work to those companies that earn top rankings under their five-star rating system and take it away from those firms that are underperforming.
Under those circumstances, we chose to focus on performance and, after nearly a decade, our revenues have increased from $15 million to about $170 million a year. By anybody’s standards, that is phenomenal growth. We are anxious to continue to grow our Australian business, but again, as long as we focus on performance and the outcomes that are important to that government, we will be rewarded and they will achieve their mission.
ExecutiveBiz: Being in charge of such a big firm like MAXIMUS, how do you keep a good work life balance with all of the responsibilities that you have?
Richard Montoni: If I had the magic pill for it, I would put it in a package and sell it to everybody. However, I would tell you it’s one of those things where you just have to use your judgment. At MAXIMUS, people truly operate as a team to pull together and get things done.
I’m a big believer that many hands get work done and that you can’t be a soloist. You have to look to your team and challenge them to work in concert as well as set deadlines and goals. I find that when we all strive to work hard together, we accomplish great things and free ourselves to have time for our families.