In many ways, Outer Cape Health Services had a great year.
The community health center, which has locations in Harwich Port, Wellfleet and Provincetown, was operating in the black, after running a $2.3 million deficit in 2023. With finances stabilized, its executives had hopes to reach more patients in the 10 outermost towns on Cape Cod.
Instead, the health center is buckling down, facing a potential 30 to 40 percent decline in revenue over the next several years, and girding for layoffs, program cuts and more.
They are not alone. In the coming years, a slew of changes from Washington will meaningfully alter the financial picture for the state’s 50 community health centers, including shifts in how their pharmacy programs are funded, how many of their current patients are insured, and perhaps what populations they can care for at all.
Such challenges could be catastrophic for a crucial piece of Massachusetts’ health care ecosystem. Health centers provide primary and mental health care, substance use disorder services, dental and vision care and far more to more than 1 million of the state’s poorest and most vulnerable residents.
While individual community health centers face slightly different situations, one thing is almost universally consistent: they are worried about the future.
“We have to figure out radically and as quickly as possible how to make a shift, to prevent health centers from failing,” said Damian Archer, CEO of Outer Cape Health Services.
Some reductions have already begun.
In March, the Dimock Center in Roxbury let go of 21 employees and instituted a hiring freeze, while in April, Brockton Neighborhood Health Center followed suit, eliminating 65 jobs and freezing hiring. NeighborHealth, formerly East Boston Neighborhood Health Center, laid off 1 percent of its 1,700 employees in June, a move it described as necessary “to maintain financial stability.” Greater New Bedford Community Health Center has started not filling vacant positions, and is considering budget cuts and, as a last resort, layoffs.
This month, the Legislature took one small step to help, including allocating $35 million for community health centers as part of a $234 million healthcare funding bill. Health center executives said they’re grateful, but will need more.
“Health centers will close,” Archer said. “If there is no radical intervention by the Legislature (and) the state, there is no way all of us can survive this.”
It’s not one single threat, Archer said, but rather federal policy changes that feel like “death by a thousand cuts.”
Most threatening to Outer Cape are proposed changes to a federal drug-purchasing program known as 340B. The program lets providers purchase prescription drugs in bulk at significant discounts, while getting reimbursed at market rate prices. The net difference subsidizes the care and services they provide.
Drug makers have long pushed for changes. And in August, the Trump administration announced a pilot program for a small number of drugs, giving providers a rebate instead of lower up-front costs.
The pilot is expected to begin in January, and more drugs could be added to this type of reimbursement model in the future.
Depending on the mix of drugs that health center pharmacies dispense, upfront costs for the pilot drugs will be between 50 to nearly 500 times higher than their current price, according to the Mass League of Community Health Centers.
That would create administrative hurdles and cash flow challenges, said Archer, whose center gets about half of its $35 million in revenue through 340B. He estimates it could cost Outer Cape $5 to $10 million a year by 2029.
At the same time, health centers expect to see some of their patients lose insurance, threatening not only those patients’ health, but how health centers are paid to care for them.
A timeline of changes to ACA and Medicaid insurance
January 2026
Subsidies that offset the cost of commercial health insurance will go away for people who earn less than 100 percent of the federal poverty level.
Potential impact: 36,000 people.
Starting August 2026
Additional changes will occur, including shortening the open enrollment period when people can sign up for health care.
Potential impact: 20,000-40,000 people.
October 2026
Federal changes in eligibility will mean certain immigrants legally in the US — including refugees, asylum seekers and abused spouses and children — could no longer be eligible for comprehensive Medicaid coverage.
Potential impact 2,500 people.
Starting 2027
Over the course of several years, some MassHealth members will face newly instituted work requirements, coupled with new rules requiring some people to reapply for eligibility every six months instead of once a year.
Potential impact: 175,000 people.
Starting 2027
Elimination of commercial insurance subsidies for certain immigrant communities.
Potential impact: 25,000-30,000 people.
October 2028
Some MassHealth members earning certain amounts will have to share some medical costs.
Potential impact: 25,000 people
By 2028, the federal government will change several aspects of how people purchase health insurance on state exchanges, including phasing out subsidies that offset the cost of commercial health insurance for some people. All told, spokespeople with the Health Connector estimate between 85,000 to 100,000 people in Massachusetts may lose their commercial insurance coverage over the coming years. Another 200,000, state officials estimate, could lose Medicaid coverage in the coming years, due a variety of changes including eligibility rules for some immigrants, and new work requirements for some.
Community health centers are likely to feel the brunt of the Medicaid changes in particular, as on average half of their patients are on Medicaid.
“It’s a tsunami of circumstances, including but not limited to loss of federal funding and having more patients coming back with acute conditions and cost of goods and serves going up,” said Michael Curry, CEO of the Massachusetts League of Community Health Centers.
Those changes come at a fragile time for community health centers. In a survey last November, more than three-fourths told the Mass League of Community Health Centers they were in an operating loss.
Medicaid cuts are of particular concern at Brockton Neighborhood Health Center, where more than half of its patients are on the state insurance for lower-income and disabled residents. Medicaid is the biggest source of revenue for the organization, and up to 10 percent of the health center’s MassHealth patients could lose their coverage, causing a “significant” revenue drop.
“In our worst case scenario, it would bottom us out,” said CEO Maria Celli.
The timing is particularly painful, as BNHC had been emerging from two years of deficits, which included the organization’s first major layoff in April, letting go approximately 10 percent of its over 600-person staff.
The hoped-for result was financial stability. But now executives are bracing for further challenges. BNHC has frozen hiring and raises, and has pulled back some transportation services. Though 70 percent of its patients prefer a language other than English, there are fewer translators. Necessary investments in things like IT services have been put on hold.
The organization is trying to increase productivity and increase patient visits, and is aggressively going after grants. But even pulling back on investments will have long-term consequences for the business, Celli said.
“I don’t want our can-do attitude to overshadow just how disruptive this scenario is for BNHC and other organizations like ours,” she said.
Even if state officials are able to redirect enough funding to compensate for lost Medicaid and commercial insurance, another federal change may restrict health centers from even providing care to certain populations.
In July, several federal agencies issued notices reinterpreting and reimplementing a federal law from the 1990s that limits the ability of certain immigrants to access the federal welfare system. Under the new interpretation, many kinds of legal immigrants — such as students, individuals with temporary work visas or those with temporary protected status — could no longer access several types of public benefit programs, including community health centers.
Several states, including Massachusetts, have challenged the move, which a judge has temporarily stayed. But if the change takes effect, it could potentially bar community health centers from caring for certain immigrants at all, and consequently, bar any kind of payment for providing that care.
New Bedford Community Health Center CEO Cheryl Bartlett has told her staff just to keep meeting their community’s needs, and let her worry about how to make ends meet.
But she does worry. Nearly two-thirds of the health center’s patients are on Medicaid, and though the health center does not ask patients about immigration status, many are immigrants. Half speak a language other than English, and 10 to 15 percent are uninsured.
Cuts won’t happen all at once, and it’s difficult to plan around so much uncertainty. But Bartlett has begun to look at what it would mean to lose one-fifth of her patients over the next few years.
Even for a health system operating in the black, with close to 100 days cash on hand and a $5 million expansion campaign underway, it could mean budget cuts. Bartlett is not filling any non-clinical vacancies. And she’s coordinating with other community based organizations to think about how to deliver care absent federal funding.
Sometimes out of adversary comes creativity, Bartlett said, and she said there is a universal commitment amongst CEOs to figuring out how to make it work. But hard questions and decisions remain.
“If I needed to cut, could I cut somewhere that didn’t cut valuable health services?” Bartlett said. “These patients would have nowhere else to go but the ER.”
Globe staff reporter Samantha Gross contributed to this reporting.
Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett.