340B hospital charity care levels still abysmal despite growth in safety-net program

AIR 340B
3 min readMar 25, 2022

With the unparalleled effects of the COVID-19 pandemic, it makes sense that health care is a top concern for Americans. The virus has wreaked havoc in all corners of the nation. People young and old have all experienced disruption to their livelihoods, but the pandemic has disproportionately impacted underserved communities, making safety-net programs even more critical to addressing health inequities. At the same time, many of these safety-net hospitals that should be champions of vulnerable patients through charity care are instead actually providing less care than even their for-profit counterparts — a clear sign that something is terribly wrong.

Nearly three decades ago, the 340B Drug Pricing Program was established to help qualifying entities — including federally qualified community health centers and certain hospitals such as disproportionate share hospitals (DSH) — provide free or discounted care to vulnerable, uninsured and/or low-income patients. These entities receive a substantial discount on outpatient medicines, averaging 59%, are then expected to reinvest the savings back into the community, in turn helping to improve health outcomes. With the 340B program growing exponentially from $9 billion in 2014 to $38 billion in 2020, one would think vulnerable patients are seeing the benefits. Unfortunately, evidence continues to show that isn’t the case.

In a recently released report by the Alliance for Integrity and Reform of 340B (AIR340B) that analyzes charity care levels at 340B DSH hospitals, findings remain the same: despite generating more and more revenue from the 340B program, most participating 340B hospitals provide very low levels of charity care. In fact, 1 in every 4 hospitals provide charity care that represents less than 1% of their total operating costs. This troubling data should make policymakers on both sides of the aisle raise an eyebrow and ask: if the program is growing at an exponential rate, why aren’t we seeing increased benefits for patients? It’s clear the program is not working for vulnerable Americans as it should be, including those in medically underserved areas (MUAs) where many need extra support.

The latest report found 65% of 340B DSH hospitals fall below the national average for all hospitals (including for-profit hospitals) in providing charity care to patients and just 29% of 340B DSH hospitals accounted for 80% of the total charity care provided by all 340B DSH hospitals in 2019. In short, despite 340B DSH hospitals’ participation in a safety-net program aimed at supporting vulnerable patients, their below-average charity care levels paint a different picture. And, at the same time, the majority of them aren’t even located in MUAs where these patients live and access health care. Considering there is no requirement for hospitals to demonstrate how they use 340B savings to help vulnerable patient populations, there is no method to hold DSH hospitals accountable and ensure they aren’t exploiting the program for financial gain.

Unfortunately, the findings in this report are not new nor surprising — but they showcase a dire need for our policymakers in Washington to ask themselves who is truly benefiting from the 340B program. Report after report has produced data that 340B entities, not patients, reap the benefits of the program, proving that fixing 340B needs to be part of the larger health care debate, especially as we seek ways to address health inequities.

To restore a critical safety-net and improve health outcomes for America’s patients, we need commonsense transparency measures to hold 340B DSH hospitals accountable. Further, Congress and the Biden Administration must take a hard look at the current eligibility requirements for hospitals and how 340B hospitals are using the savings from the program. If we truly want to address challenges to accessing life-saving treatments and affordable care for all Americans, improvements to the 340B drug pricing program need to be included in the current conversation.

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Former Congressman Bob Dold is a spokesperson for the Alliance for Integrity and Reform of 340B (AIR340B), a coalition of patient advocacy groups, clinical care providers, and biopharmaceutical innovators dedicated to reforming and strengthening the 340B program.



AIR 340B

The Alliance for Integrity and Reform of 340B. Put Patients First: Preserve Access, Protect the Program and Provide Greater Oversight