New report adds to questions about nonprofit status of 340B hospitals

Nonprofit hospitals participating in the 340B program are expected to provide higher levels of charity care and community benefit, but a new analysis questions whether that is in fact happening. The analysis examined the operating margins and charity care levels of 340B hospitals, finding financial wellness did not translate to 340B hospitals providing high levels of free or reduced cost care to vulnerable patients.

1. 340B hospitals are making more. One fifth of 340B hospitals had operating margins of nearly 21% in 2021. For comparison, the average among non-340B hospitals was about 6%.
   
   
2. 340B hospitals are charging patients more. On average, prices for commercial patients are higher at 340B hospitals than non-340B hospitals. This complements another analysis that found the average costs per prescription for a patient was more than 150% greater at 340B hospitals than the cost per prescription at non-340B hospitals.
   
   
3. 340B hospitals are providing very little charity care. The top performing 340B hospitals collected nearly $10 in profit for every $1 they invested in charity care in 2021.
   
   
4. 340B hospitals that are the most profitable provide the least amount of charity care. One fifth of 340B hospitals account for 85% of all 340B hospitals’ profits but just 24% of all 340B hospitals’ charity care.

As policymakers continue to deliberate on reining in health care costs and helping patients better afford their care, they should factor in the increasing role hospitals — especially those that participate in the 340B program — play in determining the cost of medicine. 

Fixing the 340B program can meaningfully improve patients’ ability to access and afford their medicines if Congress takes a comprehensive approach. This includes ensuring the program reaches low-income or otherwise vulnerable patients, the intended beneficiaries of the program; strengthening eligibility requirements so only true safety-net providers participate in the program; and instituting stronger accountability measures throughout 340B to keep the program on track. Learn more here.

View the full analysis here.