Public, not nonprofit hospitals use 340B to expand services

A new study published in JAMA Health Forum finds participation in the 340B Drug Pricing Program helps public but not nonprofit hospitals sustain unprofitable service lines, like psychiatric services.

The 340B program helps safety-net providers stretch federal resources through discounts on approved outpatient drugs. Through these discounts provided by pharmaceutical companies, the federal program aims to improve access for eligible patients and support the delivery of more comprehensive services.

Participation in the 340B program has increased substantially over the past two decades. However, critics have argued that safety-net hospitals have not expanded access and/or provided more services in response to 340B savings.

The JAMA Health Forum study conducted by researchers at the University of Arkansas and University of Colorado analyzed over 2,150 general acute care hospitals to determine how certain types of hospitals are using 340B savings. They used data on both participating and non-participating hospitals from the American Hospital Association (AHA) Survey from 2010-2019.

The data showed that public hospitals participating in the 340B program from 2012 to 2018 were more likely to increase unprofitable service line offerings than those that never participated in the program. Service provisions at nonprofit hospitals were largely unaffected by the program, except for an expansion of oncologic service offerings, researchers reported.

Public hospitals were associated with some significant increases in substance use and inpatient psychiatric services, which researchers deemed notable because of concerns around service closure across the US and the increasing prevalence of substance use disorders and mental health conditions.

“These findings suggest that 340B participation may enable public hospitals to sustain unprofitable, yet essential services. This finding is concordant with the underlying mission of the 340B program to subsidize comprehensive services for patients who need safety net services,” researchers wrote.

They explained that participation in the 340B program likely lowered the pharmaceutical expenses of services reliant on hospital-based therapeutics. Public hospitals then used the financial benefits to sustain unprofitable service lines.

However, they also emphasized that the 340B program was not linked to an increase in services at nonprofit hospitals as “there was no meaningful change in unprofitable service provisions at nonprofit hospitals” even when researchers stratified hospitals by geographic area, critical access hospital designation and Social Vulnerability Index.

“Given that the US is reliant on hospitals to provide safety net services to patients who have low income and are uninsured, sustaining access to services is needed to improve population health and reduce disparities in outcomes,” researchers stated.

They recommended increased regulatory oversight and 340B program transparency to hold nonprofit hospitals accountable for using savings derived from pharmaceutical discounts. Although, they noted that increased regulation or compliance complexity may deter smaller or low-resourced hospitals from participating and benefiting from the program, indicating a need policy discussion around differences in program savings.

An invited commentary also published in JAMA Health Forum underscored the need for policymakers to consider options for 340B program reform.

“Mounting discussions of the 340B program demand a better understanding of who benefits from the program and how. These findings may allow policymakers to maintain program eligibility for the hospitals that use 340B revenue to provide safety net care and scale back participation for those that do not,” wrote Claire McGlave, MPH and Sayeh Nikpay, PhD, MPH, both from the Division of Health Policy and Management at University of Minnesota’s School of Public Health.

Acknowledging how different types of hospitals use the services can help policymakers make decisions about the program as it receives more scrutiny from healthcare industry stakeholders and regulators, they explained.