30 Jul Is the 340B Program Fulfilling Its Promise? New Research Raises Important Questions About Health Equity
By the Health Equity Collaborative
The 340B Drug Pricing Program was created more than three decades ago with a straightforward goal: help safety-net providers stretch limited resources so they can better serve low-income and uninsured patients.
Today, the program has grown into one of the largest federal healthcare programs, with thousands of participating hospitals and clinics purchasing outpatient medicines at deeply discounted prices. But as the program has expanded, an important question has become increasingly difficult to answer:
Are these financial benefits translating into greater access to care for the communities the program was designed to serve?
A new Health Equity Collaborative analysis examines the growth of the 340B Program between 2015 and 2024 and evaluates whether participating hospitals are expanding services that are often financially challenging—but essential—for vulnerable populations. Our findings suggest the answer is more complicated than many assume.
The Program Has Grown Rapidly—But Where Has It Grown?
Between 2015 and 2024, the number of U.S. counties with a 340B hospital increased by 29 percent, while the total number of participating hospitals grew by 35 percent.
Much of that expansion came from nonprofit hospitals.
When we examined where nonprofit hospitals entered the program during the study period, we found that 64 percent of newly participating counties were classified as socioeconomically advantaged or moderately advantaged, based on the Centers for Disease Control and Prevention’s Social Vulnerability Index.
That finding matters because the 340B Program was established to strengthen the nation’s healthcare safety net. If growth is occurring disproportionately outside the communities facing the greatest socioeconomic challenges, policymakers should ask whether the program’s incentives remain aligned with its original purpose.
Not All 340B Hospitals Behave the Same
One of the most significant findings from our research is the clear distinction between public and nonprofit hospitals.
Using a difference-in-differences analysis, we evaluated whether hospitals expanded unprofitable services after joining the 340B Program. These services—including outpatient psychiatric care and other high-need specialties—are often difficult to sustain financially but are critical to underserved communities.
Our analysis found that public hospitals were more likely to expand outpatient psychiatric services after joining the program.
For nonprofit hospitals, however, participation in the 340B Program was not associated with an increase in unprofitable services.
This distinction is important. Public hospitals often operate under greater governmental oversight and accountability, while nonprofit hospitals have significantly more discretion over how resources are allocated. The differing outcomes suggest that governance and accountability may influence how hospitals use the financial benefits generated through the program.
Child Site Expansion Tells a Similar Story
The analysis also examined “child sites”—hospital-owned outpatient facilities that can participate in the 340B Program under a parent hospital.
Here, the pattern remained consistent.
Nearly 70 percent of counties with child sites affiliated with hospitals that joined the 340B Program between 2015 and 2024 were located in socioeconomically advantaged or moderately advantaged communities.
Previous research has documented that hospitals frequently acquire outpatient practices in areas with larger commercially insured populations. Our findings suggest that this pattern has continued as the program has expanded.
Why Transparency Matters
The 340B Program generates substantial financial value for participating hospitals because they purchase outpatient medicines at discounted prices while often receiving standard reimbursement from insurers.
Yet hospitals generally are not required to publicly report how much revenue they generate through the program or how those dollars are spent.
That lack of transparency makes it difficult for policymakers, researchers, and patients to evaluate whether program resources are being directed toward expanding care for low-income and underserved populations.
Transparency is not about limiting the program. It is about ensuring that one of the nation’s most significant healthcare investments is achieving its intended purpose.
A Stronger 340B Program Starts with Accountability
The Health Equity Collaborative believes the 340B Program plays an important role in supporting healthcare providers that care for vulnerable patients. The question is not whether the program should exist, but whether its incentives are sufficiently aligned with its mission.
Based on our findings, we recommend three reforms:
- Increase transparency. Require covered entities to report the financial benefits they receive through the 340B Program and how those resources are invested in patient care.
- Strengthen oversight. Require the Health Resources and Services Administration (HRSA) to collect and publish the governmental contracts nonprofit hospitals rely upon to qualify for the program, providing greater public accountability.
- Modernize eligibility requirements. Reevaluate hospital eligibility using measures that better reflect a provider’s commitment to serving vulnerable patients, including charity care, uncompensated care, Medicaid-related financial losses, and other indicators of true safety-net activity.
Health Equity Requires More Than Good Intentions
Programs designed to reduce disparities should be measured by results.
As healthcare costs continue to rise and federal resources become increasingly constrained, ensuring that safety-net programs deliver meaningful benefits to underserved communities is more important than ever.
Our latest research contributes new evidence to an important national conversation. The findings suggest that while public hospitals appear to use the 340B Program to expand certain high-need services, nonprofit hospitals are generally not expanding unprofitable care or concentrating growth in the nation’s most vulnerable communities.
The Health Equity Collaborative believes policymakers should use evidence—not assumptions—to guide the next generation of 340B reforms. By improving transparency, strengthening accountability, and ensuring that program incentives support patients with the greatest need, we can help the 340B Program better fulfill the mission it was created to achieve.
Read the full white paper to explore the complete methodology, data, findings, and policy recommendations behind this research.