Seeking to improve its 0.4 percent operating margin, Worcester, Mass.-based UMass Memorial Health Care System is eyeing a $50 million cost reduction plan, which includes closing a clinic that serves a large portion of low-income residents, reports the Worcester Business Journal.
The health system will close Plumley Village Health Services in Worcester, which services about 1,800 patients per year. About 50 percent of its patients are covered by Medicaid insurance.
"We're sorry for the people impacted by this, but really, this is the right decision for the organization," said UMass Memorial Health CEO Eric Dickson, MD, according to the WBJ.
The patients serviced at this clinic will be directed to other sites, including UMass Memorial's Hahnemann Campus in Worcester, as well as Family Health Center of Worcester and Edward M. Kennedy Community Health Center in Worcester, which are not part of the health system but are closely linked by its ACO.
According to Dr. Dickson, the closure will save the health system a few hundred thousand dollars, which is only a small drop of its $50 million cost reduction plan. However, the UMass Health chief stands by the decision because leasing the space for the clinic is unfeasible. The condominium building, where the two-physician clinic is located, was recently sold to new owners.
Running a two-physician clinic is unsustainable, especially as the system focuses on reducing expenses, Dr. Dickson said.
The health system finished fiscal year 2017 with an operating margin of 0.4 percent — and its costs are growing 4 percent annually while revenue is rising only 2 percent. These financial pressures are driving the cost saving measures.
"Nobody wants change, but nobody wants to pay more for care," Dr. Dickson told WBJ.