Study: Virginia Hospitals Use Federal Drug Discount Profits for Investments, Not Patient Care

WASHINGTON, D.C. (Jan. 29, 2026) -- Virginia's 340B hospitals invested nearly five times more in stocks and bonds than non-340B hospitals, netting millions off the federal drug discount program, according to a new analysis by Dr. Lisa Grabert, a health policy researcher at Marquette University and former senior House Ways and Means Committee aide.

"The 340B program isn't working for the Virginia families it was designed to help," Grabert said. "Too many of the state's disproportionate share hospitals are using the program to boost profits rather than expand access to care for vulnerable patients."

The 340B Drug Pricing Program allows safety-net hospitals to buy deeply discounted drugs and bill insurers at higher rates, with the expectation that resulting profits will be reinvested in care for low-income and uninsured patients.

Grabert's analysis finds that Virginia's disproportionate share hospitals sell 340B drugs at steep markups and funnel the profits into Wall Street investment portfolios instead of reinvesting in their communities.

The findings align with a 2022 New York Times investigation into exploitation of the 340B program by a major nonprofit hospital system in Virginia. Her analysis draws on publicly available data on Virginia hospitals' revenue growth, investment activity, charity care, and workforce.

Among Grabert's key findings:

• Hospitals use 340B as a profit engine.

  • Virginia’s 340B hospitals reported average patient revenue 59% higher than non-340B hospitals.

  • These hospitals netted an average of $839 million in revenue -- more than triple the $254 million reported by non-340B hospitals.

• 340B profits are funneled into Wall Street portfolios.

  • Virginia's 340B hospitals invested an average of 119% more revenue into stocks and bonds than non-340B hospitals.

  • 340B hospitals invested an average of $84.8 million, compared with just $17.8 million by non-340B hospitals.

• 340B dollars are not reaching low-income and uninsured patients.

  • Despite higher revenues, Virginia's 340B hospitals dedicated only 1.53% of net patient revenue to charity care, compared with 1.85% at non-340B hospitals.

• 340B dollars are not reinvested in frontline caregivers or the hospital workforce.

  • Pay rates for employed, contracted, and total workers at Virginia's 340B hospitals were no higher than at non-340B hospitals.

  • Virginia’s 340B hospitals relied on 145% more contract workers (including agency nurses), on average, compared to non-340B hospitals.

"It's concerning to see so many Virginia hospitals using the 340B program to pad their margins instead," said Dr. Mike Kapsa, a member of the board of directors of Community Action for Responsible Hospitals, a nonprofit coalition that sponsored Dr. Grabert's analysis. "This research underscores the need for serious reform."

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To read a fact sheet summarizing the analysis, visit https://carh.info/vahsw.

To read Dr. Grabert's research, visit https://carh.info/vaanalysis.