340B hospitals trail peers on charity care spending: report
- 340B hospitals spent 2.16% of operating expenses on charity care.
- Non-340B hospitals spent 2.82%, the Pioneer Institute analysis found.
- Hospitals bought $100 billion worth of 340B drugs last year.
- The American Hospital Association called the report misleading.
MASSACHUSETTS, UNITED STATES — Hospitals in the 340B drug discount program spent 2.16% of their operating expenses on charity care, compared with 2.82% at non-340B hospitals, in a new analysis that adds to scrutiny of how hospitals use their drug discount savings.
Spending on charity care for uninsured patients showed a similar gap, at 1.6% of operating expenses for 340B hospitals versus 2.26% for others.
Report challenges 340B hospitals’ charity spending
The analysis comes from the Pioneer Institute, which Healthcare Dive described as a conservative think tank, and CancerCare, a nonprofit that provides free support and services to cancer patients.
The report compared thousands of hospitals using cost data from the Centers for Medicare and Medicaid Services (CMS) for the first quarter of 2025.
Created by Congress in 1992, the 340B program lets safety-net providers buy outpatient drugs at discounts of 25% to 50% and keep the savings, though hospitals are not legally required to spend them on charity care.
The report said there is an implicit expectation that 340B hospitals will use the money saved on drugs to help vulnerable patients.
Hospitals and outpatient facilities purchased $100 billion worth of 340B drugs last year, a nearly 23% increase from the year before, Healthcare Dive reported.
“The 340B program is intended to strengthen the healthcare safety net,” the report stated. “A program with that purpose should demonstrate, in measurable terms, that its financial benefits align with vulnerable patients’ needs.”
Hospitals point to wider community benefits
The report called for greater transparency, auditable reporting of 340B revenue and a requirement that 340B hospitals provide more charity care than non-340B hospitals.
The American Hospital Association (AHA) pushed back, saying 340B hospitals support patients in other ways.
By the AHA’s own metrics, 340B hospitals have provided nearly $100 billion in total community benefits.
Lawmakers and the Trump administration have both expressed interest in reforming 340B, and the Department of Health and Human Services (HHS) has proposed cutting Medicare payment rates for the program next year.
“This report is another in a long line of misleading studies that wrongly singles out charity care as the only way to measure how hospitals provide for their patients and communities,” said Bharath Krishnamurthy, director of pharmaceutical policy at the AHA.
For hospital finance leaders, auditable 340B reporting would add documentation work to revenue cycle teams that already manage medical billing and payer compliance.
Health systems preparing for that scrutiny can weigh in-house reporting against healthcare outsourcing support, comparing options among the top U.S. healthcare outsourcing companies before new rules arrive.
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