PROVIDENCE — The largest owner of community health centers in Rhode Island, serving nearly 100,000 patients, is laying off more than 70 employees, citing inadequate Medicaid reimbursement rates.
Providence Community Health Centers, a nonprofit organization operating eight clinics across the greater Providence area, confirmed the layoffs to the Globe Thursday morning. The system provides affordable pediatric and adult primary health care services, dental care, and behavioral health care.
“These layoffs, while incredibly painful, are an absolute necessity for our long-term sustainability,” said Merrill Thomas, the president and chief executive officer of Providence Community Health Centers, also known as PCHC.
Despite what he called a “strong balance sheet, the layoffs were directed by PCHC’s board, Thomas said, which has ”a fiduciary responsibility to PCHC and its patients."
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“These are difficult but necessary decisions to ensure we are here for the community for years to come,” said Thomas.
The news comes as other health care organizations around the state and region are facing deteriorating financial situations.
In Springfield, Massachusetts, Baystate Health has cut 275 jobs after posting an operating loss of $300 million over the last few years. Mass General Brigham, the largest health system in Massachusetts, is eliminating hundreds of positions in order to save more than $200 million.
In Rhode Island, primary care network Anchor Medical Associates is permanently shutting down this spring, leaving 25,000 adult and pediatric patients scrambling to find new providers. Blue Cross Blue Shield of Rhode Island posted a loss of $115 million in 2024, prompting the insurance company to cut its workforce by 3 percent this year. Brown University Health, formerly known as Lifespan Corp., which owns hospitals in Rhode Island and southeastern Massachusetts, cut 20 percent of its executive team in the fall of 2024 to save $6 million in a year.
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Prior to cutting more than 70 of its employees, Providence Community Health Centers was on track to lose $5 million in 2025, executives say. Those losses are a result of Medicaid rates not keeping up with inflation, and promised relief from the state that rates would be raised, but never delivered, said Brett Davey, PCHC’s director of development.
PCHC, which also cares for homeless individuals and families, relies on Medicaid for 70 percent of its funding. But over the last five years, reimbursement rates have been increased 10 percent, while costs to deliver care have risen by 30 percent, said Davey.
Facing mounting public pressure to find a solution for health care, Governor Dan McKee recently unveiled a $5 million plan, which included a budget amendment that would “accelerate” a proposed review of primary care provider rates. But any rate increases to come from that review wouldn’t occur until at least July 2027, confirmed state officials.
PCHC also relies on the 340B pharmacy program, a federal program that requires pharmaceutical manufacturers to sell certain drugs at discounted prices to community health centers that care for many uninsured and low-income patients. But the program, which has been the subject of debate between manufacturing companies and patient advocates, delivered $3 million less than what was budgeted to PCHC this year.
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Enacted under former President George H.W. Bush, the 340B Drug Pricing Program is a lifeline for many nonprofit providers. But in recent years, while the program has expanded – discounts have risen from $6 billion in 2015 to $46.5 billion in 2022, according to the Lown Institute in Massachusetts – drug manufacturers have sought to scale it back, and have looked to restrict how many community pharmacies can use such discounts.
“PCHC remains committed to fighting at the state and federal levels for relief,” the system wrote in a statement.
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.