Does the 340B Program Encourage and Reward Non-Profit Hospital Consolidation?
Author(s)
Neal Masia, PhD1, Ulrich Neumann, BA, BSc, MA, MBA, MSc2, Silas Martin, MS2;
1Health Capital Group, LLC, Princeton, NJ, USA, 2Johnson and Johnson, Titusville, NJ, USA
1Health Capital Group, LLC, Princeton, NJ, USA, 2Johnson and Johnson, Titusville, NJ, USA
Presentation Documents
OBJECTIVES: To estimate differences between pre- and post-consolidation behavior and performance for 340B and non-340B non-profit hospitals, including propensity to merge, commercial price comparisons between hospitals, and differences in 340B contract pharmacy and child site activity.
METHODS: We built a database on hospital mergers, 340B entity characteristics (including child site and contract pharmacy activity) and hospital commercial prices by combining Medicare Cost Report data, HRSA's OPAIS database and hospital transparency pricing data. We analyzed hospitals that merged into larger systems or were acquired from 2017-2021 and compared them to non-merged hospitals in and out of the 340B program. We examined financial performance (controlling for case/payer mix) and 340B activity (e.g., child sites, contract pharmacies). We also compare 2023 commercial pricing to assess whether acquired 340B hospitals have greater pricing power than non-acquired and non-340B hospitals.
RESULTS: We identified over 1000 hospitals which were either acquired, joined a larger system, changed ownership or otherwise consolidated from 2017 through 2021. Our preliminary results indicate that acquired 340B hospitals charge significantly higher commercial prices than both acquired non-340B hospitals and non-acquired 340B hospitals. Results regarding a) differential financial performance over time, including charity care and operating margins and b) differences in child site and contract pharmacy activity across our groups will be updated as this work progresses.
CONCLUSIONS: The 340B program creates incentives for hospital consolidation and special opportunities for hospitals that have consolidated. Hospital consolidation is well known to increase commercial hospital prices, but this effect appears to be amplified by the 340B program in ways not previously investigated. Policymakers concerned about the impacts of hospital consolidation on healthcare spending may see 340B reform (e.g., increased transparency, refined eligibility criteria) as an opportune way to mitigate these effects without resorting to hospital breakups or disrupting the healthcare delivery system.
METHODS: We built a database on hospital mergers, 340B entity characteristics (including child site and contract pharmacy activity) and hospital commercial prices by combining Medicare Cost Report data, HRSA's OPAIS database and hospital transparency pricing data. We analyzed hospitals that merged into larger systems or were acquired from 2017-2021 and compared them to non-merged hospitals in and out of the 340B program. We examined financial performance (controlling for case/payer mix) and 340B activity (e.g., child sites, contract pharmacies). We also compare 2023 commercial pricing to assess whether acquired 340B hospitals have greater pricing power than non-acquired and non-340B hospitals.
RESULTS: We identified over 1000 hospitals which were either acquired, joined a larger system, changed ownership or otherwise consolidated from 2017 through 2021. Our preliminary results indicate that acquired 340B hospitals charge significantly higher commercial prices than both acquired non-340B hospitals and non-acquired 340B hospitals. Results regarding a) differential financial performance over time, including charity care and operating margins and b) differences in child site and contract pharmacy activity across our groups will be updated as this work progresses.
CONCLUSIONS: The 340B program creates incentives for hospital consolidation and special opportunities for hospitals that have consolidated. Hospital consolidation is well known to increase commercial hospital prices, but this effect appears to be amplified by the 340B program in ways not previously investigated. Policymakers concerned about the impacts of hospital consolidation on healthcare spending may see 340B reform (e.g., increased transparency, refined eligibility criteria) as an opportune way to mitigate these effects without resorting to hospital breakups or disrupting the healthcare delivery system.
Conference/Value in Health Info
2025-05, ISPOR 2025, Montréal, Quebec, CA
Value in Health, Volume 28, Issue S1
Code
HPR56
Topic
Health Policy & Regulatory
Topic Subcategory
Reimbursement & Access Policy
Disease
No Additional Disease & Conditions/Specialized Treatment Areas