PCHC Announces Layoffs Amid Financial Struggles

News Summary

Providence Community Health Centers (PCHC) will lay off over 70 employees due to ongoing financial pressures, continuing a trend from the previous year. The organization’s CEO characterized the layoffs as necessary for survival while aiming to save approximately $5 million this fiscal year. With a growing demand for services, PCHC faces challenges due to low Medicaid reimbursement rates and cuts to federal programs. The center serves around 80,000 patients annually and has a waitlist of 5,000, highlighting the urgent need for support.

Rhode Island – Providence Community Health Centers (PCHC) announced on May 8, 2025, that it would lay off more than 70 employees as part of a strategy to address ongoing financial pressures. The layoffs will affect various staff members in administrative, support, and clinical roles, continuing a trend from the previous year when around 40 employees were let go, and the closure of a clinic in Olneyville left 4,500 patients without service.

Merrill Thomas, the president and CEO of PCHC, characterized the layoffs as a painful but essential step for the organization’s survival. This decision aims to save approximately $5 million in the current fiscal year. Between the closures and eliminations, PCHC plans to streamline operations to concentrate on providing primary care and to reach a break-even status financially.

PCHC serves as the largest community health center in Rhode Island and the only federally qualified health center in Providence, providing care to around 80,000 patients annually. Despite facing these challenging circumstances, PCHC currently has a waitlist of 5,000 individuals seeking appointments, reflecting a continued high demand for its services.

The layoffs will lead to reduced operations, particularly impacting staff positions in Information Technology, Human Resources, and Billing departments. Furthermore, PCHC has abolished a teaching program for nurse practitioners as part of these cutbacks. Affected employees will be offered severance packages, and the health center plans to allocate over $2 million for unemployment support, which includes assistance with resume reviews and job referrals.

The financial difficulties at PCHC stem from several factors. The center has cited low Medicaid reimbursement rates and recent cuts to the federal 340B Drug Pricing Program, which permits eligible providers to buy medications at discounted rates, as significant contributors to the economic strain. With around 70% of PCHC’s patients relying on Medicaid, the health center has reported that its costs have surged by 30% since 2020, while Medicaid reimbursement rates have only seen a modest increase of 10%.

Demand for PCHC’s services has escalated, with an influx of 8,000 to 10,000 new patients over the last five years. The restrictions imposed on the 340B Drug Pricing Program have led PCHC to incur losses of approximately $9 million over the past three years. Additionally, the cessation of federal funding sources, including those from the American Rescue Plan Act, alongside the stagnation of PCHC’s federal grant for a decade, contributes to what is described as a significant loss of buying power.

Thomas has communicated PCHC’s financial challenges to state leaders without receiving immediate funding relief. In response, Governor Dan McKee has tasked the Office of the Health Insurance Commissioner with accelerating its review of Medicaid rates, although any new rates would not be implemented until 2027. Recent updates from the Office of the Health Insurance Commissioner mandate that insurers increase spending on primary care by 10% by 2028.

To improve the financial situation, two proposed bills in the state legislature may offer support by preventing drug manufacturers from restricting pharmacy participation in the 340B program and ensuring fair reimbursement rates. If passed, these initiatives could potentially bring in around $3 million annually for PCHC.

PCHC is actively seeking proposals to redirect state budget funds to leverage federal matches, which could enhance available funding for community health centers. The ongoing financial challenges raise concerns that without increased investment in primary care, there could be a rise in emergency room visits, subsequently leading to higher costs and poorer health outcomes for patients across the region.

Deeper Dive: News & Info About This Topic

• Turn to 10
• GoLocalProv
• WPRI
• Wikipedia: Community health
• Providence Journal
• GoLocalProv: Fate of Hospitals