24 Sep 340B at a Crossroad Webinar Recap: Does the Program Reach Underserved Patients?
The 340B Drug Pricing Program was created to help safety-net providers care for low-income and uninsured patients. As the program has grown, a harder question has come into focus: are its benefits reaching the communities it was designed to serve?
On September 24, the Health Equity Collaborative (HEC) hosted a 30-minute webinar, 340B at a Crossroads, to explore that question. Amy Hinojosa, President and CEO of MANA, A National Latina Organization, and co-founder of HEC, joined Laura Jenkins, Senior Associate at Charles River Associates (CRA), to discuss HEC’s new report, Nonprofit Hospitals Do Not Use the 340B Program to Expand Unprofitable Care. Here is what the report found and the questions that framed the conversation.
The Central Question
The report asks whether 340B participation has pushed hospitals toward the communities and services with the greatest need. It looks at three things: where 340B hospitals expanded between 2015 and 2024, whether participation was linked to more unprofitable services (such as psychiatric care and obstetrics), and how affiliated “child sites” shaped the program’s footprint.
The context matters. The program lets covered entities buy outpatient drugs at deep discounts, averaging 53.4% off wholesale acquisition cost, while billing insurers at standard reimbursement rates. The entity keeps the difference. The program doesn’t require entities to report how they use those funds or to spend them on low-income patients.
Where Did the Growth Happen?
Between 2015 and 2024, the number of hospitals in 340B grew 35%, from 1,991 to 2,682. The number of counties with a 340B hospital grew 29%. Nonprofit hospitals drove most of that growth, and 64% of the counties where a nonprofit hospital newly joined were socioeconomically advantaged or moderately advantaged, based on the CDC’s Social Vulnerability Index.
The report points to incentives as the likely explanation. 340B generates the most revenue for hospitals with many commercially insured patients, whose insurers reimburse at full rates. Eligibility, meanwhile, rests on an inpatient measure, so a hospital can serve more commercially insured outpatients without jeopardizing its status.
Why Do Public and Nonprofit Hospitals Look So Different?
Public hospitals tell a different story. Of the counties where public hospitals newly joined 340B, 54% were socioeconomically disadvantaged. The growth rate for public hospitals in disadvantaged counties was 30%, more than double the 13% rate in advantaged counties. Public hospital participation was also associated with an 8% higher likelihood of offering outpatient psychiatric care. Nonprofit hospitals showed no comparable increase in unprofitable services.
The report suggests oversight may play a role. Public hospitals answer to government owners and have highly transparent finances, while nonprofits face less scrutiny. It’s a hypothesis worth testing, and it points directly to the report’s recommendations.
Child sites are outpatient facilities affiliated with a 340B hospital that can also access discounted drug pricing. The report found that 69% of counties with child sites tied to newly enrolled hospitals were advantaged or moderately advantaged. In advantaged counties, there were about 2.8 child sites for every newly participating hospital, compared with about 2.2 in disadvantaged counties.
The distinction between acquiring and opening a site is important. When a hospital buys an existing clinic, the clinic was already serving patients, so the community gets no new access to care. But the acquired site can now generate 340B revenue. Only a newly opened site expands where patients can get care, which is why counting child sites alone can overstate the program’s reach.
What Should Policymakers Do?
The report makes three recommendations:
- Increase transparency. Covered entities should report the funds they generate from 340B, net of drug acquisition costs.
- Publish government contracts. Nonprofit hospitals must have a contract with a state or local government to provide care to low-income residents, or hold formal governmental powers, to qualify. HRSA should collect and publish these contracts, following the GAO’s 2019 call for stronger oversight.
- Reevaluate eligibility. The report recommends replacing the DSH threshold with a more holistic review that considers charity care and financial losses from Medicaid patients.