UMass Memorial CEO: Clinic closure part of $50M efficiency plan

Courtesy UMass Memorial Health Care CEO Eric Dickson called the closure of Plumley Village Health Services "the right decision for the organization."

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By Emily Micucci

With a razor-thin operating margin, the UMass Memorial Health Care system is eyeing $50 million in annual cost reductions for the foreseeable future -- the latest of which is the closing of a Worcester clinic serving a large number of Medicaid and Medicare patients -- CEO Eric Dickson said on Wednesday.

The closure of Plumley Village Health Services on Belmont Street is a drop in the bucket toward that, but with the recent sale of the office condominium building --a collective decision by the owners -- Dickson said leasing space back to keep the two doctor practice wasn’t feasible.

Instead, the roughly 1,800 patients served there will be redirected to other sites, including practices on UMass Memorial’s Hahnemann Campus in Worcester, the Family Health Center of Worcester, and the Edward M. Kennedy Community Health Center, which are separate from the UMass Memorial organization but are closely linked through its Accountable Care Organization, Dickson said.

About half of the Plumley Village Health Services patients are covered by Medicaid insurance, compared to an average of about 30 percent of patients at other sites, according to Dickson. The clinic shares a name with nearby Plumley Village, a subsidized housing complex.

“We’re sorry for the people impacted by this, but really, this is the right decision for the organization,” Dickson said.

The closure might save UMass Memorial a few hundred thousand dollars, and the system would not have pursued it if it weren’t for the recent building sale. Dickson said UMass Memorial executives initially wanted to relocated the clinic to the Hahnemann Campus at 279 Lincoln St., but the two doctors at Plumley wanted to continue to see patients at the original site.

Running a two-doctor practice is not sustainable, as the system needs to stay focused on managing overhead expenses. UMass Memorial, the region’s dominant healthcare provider, finished its fiscal 2017 year on Sept. 30 with an operating margin of just 0.4 percent, Dickson noted.

Costs are growing at 4 percent, while revenue is rising barely 2 percent annually, meaning the system has to save money through efficiency and consolidation measures in order to maintain its slim margin and keep the cost of care down. This year, that’s also included the closure of endoscopy services at Health Alliance Hospital’s Clinton campus, and the merger of HealthAlliance and Clinton Hospitals last year, Dickson said.

“Nobody wants change, but nobody wants to pay more for care,” Dickson said.

Note: An earlier version of this story was updated to note that the Family Health Center of Worcester is not part of the UMass Memorial Health Care system.