I LOVE 340B
A nonprofit hospital administrator’s thank-you note to the program that turned a discount into a tower.
I love 340B.
Let me count the ways!You know it started as a program to help vulnerable patients afford their medicine.
Beautiful.
Then I found the spread.
IN TODAY’S ARTICLE:
How an $81.4 billion “discount” program collects roughly $66 billion in spread before a single patient sees a dollar.
The Santa Fe cancer patient billed $22,700 for a drug her hospital bought for about $2,700, then pursued the balance.
The one test every hospital defending 340B fails on purpose.
Glossary at the bottom of today’s article.
And I have not stopped saying thank you since.
I am a nonprofit hospital administrator.
People write angry things about this program.
Investigators.
Employers.
The occasional senator who actually read the numbers.
I write grateful ones, because I know exactly what my balance sheet would look like without it. So consider this a fan letter.
THANK YOU FOR THE SPREAD
Let me explain the gift, because most people at the ribbon cutting never see it.
I buy the drug at the 340B discount.
I collect from the commercial plan at the regular rate.
I keep the difference.
The patient still has a deductible. The employer still gets the renewal increase. The manufacturer still gets blamed. I still get a new tower.
And none of it is automatic except the part that matters to me.
The patient does not automatically get the discount. The employer does not automatically get the discount. The plan does not automatically get the discount. The premium does not automatically go down.
The only automatic thing in the entire program is my margin.
Put a number on the gift. In 2024, covered entities bought $81.4 billion in drugs at the 340B price. At list price, those same drugs ran about $147.8 billion. The difference, roughly $66 billion, is the spread.
That is no rounding error.
That is the money collected.
And nobody can make me say which patient it reached.
Thank you Congress!
Thank you for 340B!
THANK YOU FOR THE MISSION LANGUAGE
Here is the part I am almost embarrassed to love this much.
I do not have to pass the savings to the patient. I do not have to pass the savings to the employer. I do not have to lower a premium. I do not have to prove the vulnerable patient ever saw a dollar.
I just say access. I put community benefit in the annual report. And everyone nods like I am running a soup kitchen with oncology margins.
That is the genius of it.
Charity language on top.
Monopoly economics underneath.
The word mission stretched across the difference like a ribbon.
Thank you for giving a balance sheet strategy the vocabulary of a soup kitchen.
$66 billion moved last year on a discount you paid for and never saw.
The hospitals know exactly where it went.
The only open question is whether you do.
