From Safety-Net Hospitals to Stock Portfolio: How Hospitals Capitalize on 340B

gpuckrein
Dec 1, 2025
2 min read

The 340B program was supposed to help hospitals care for low-income and uninsured patients. But over time, it’s turned into something very different. Instead of putting patients first, many hospitals now treat 340B as a major revenue generator – often with little benefit to the communities it was meant to support.

An analysis conducted by Magnolia Market Access reveals that the number of disproportionate share hospitals (DSHs) participating in 340B program has jumped 565% from 2004 to 2023, accounting for more than 75% of the program’s discounted drug purchases – $51 billion in 2023 alone. But despite the growth, hospitals aren’t providing more free or reduced cost care to patients.

The analysis of DSHs entering the program in 2016-2017 reveals three troubling trends:

Investment portfolios soared: financial investments increased 89% per bed in the five years following enrollment. Approximately one-third of every 340B dollar went to stocks, bonds, and other financial instruments.
Uncompensated care declined: Despite unprecedented 340B revenue, hospitals reduced spending on uncompensated care per bed by 22%, including charity care, services for the uninsured, and bad debt relief.
Staffing remained flat: full-time employees per bed stayed essentially unchanged after enrollment, indicating no expansion in workforce or care delivery capacity.

The 340B program continues to operate with minimal oversight and the lack of transparency allows billions in program dollars to be redirected without scrutiny.

Policies that promote appropriate use of the 340B funds are necessary to make sure that these vulnerable patients benefit from these steep drug discounts. Even the Wall Street Journal Editorial Board has called for a major program overhaul, citing Magnolia’s analysis that exposed how the savings are redirected to hospitals financial investments.

If policymakers fail to make meaningful reforms, 340B will remain a financial windfall for big hospitals and their corporate partners rather than the safety-net lifeline Congress intended.

To learn more about how big hospitals capitalize on 340B, visit HERE.

The analysis was conducted by Magnolia Market Access, made possible through support from Community Action for Responsible Hospitals. To access the full report, visit HERE.