Four Hospitals That Take Federal Money To Help Low-Income Patients Do Less To Help Than Those That Don't

A new issue brief published by Pacific Research Institute finds four Michigan hospitals that take federal dollars from a government program to help low-income patients with drug costs assisted fewer at-risk people than hospitals who don’t use the program. The study also found the participating hospitals are more profitable than non-participating hospitals.

The 340B government program is designed to assist patients not eligible for Medicaid or Medicare but still are low income and help pay for prescription medications. Hospitals call this charity care which means they do not expect to be reimbursed for services. This is different than when hospitals expect to be paid for healthcare provided but are unable to collect.

Mid-Michigan Medical Center, Covenant Medical Center, Munson Medical Center, and William Beaumont Hospital are four of 25 304B hospitals sampled in the brief. They all provide below national average charity care compared to hospitals that do not take federal dollars from the 340B program. The 340B hospital’s in the US are 37 percent more profitable than the average of all hospitals (including those classified as 340B) and continues to increase.

All hospitals spent 2.03 percent of its patient revenue on charity care while 340B hospitals spent 1.66 percent.

Mid-Michigan Medical Center’s revenue was $409 million in 2015 and $484 million in 2018, an 18.3 percent increase. The center devoted .22 percent of its net patient revenue, which is the amount of revenue received from all patient care, on charity care. The director has the highest paid salary at $1.2 million in total compensation.

Covenant Medical Center’s revenue was $654 million in 2016 and increased to $703 million in 2019, a 7.5 percent increase. The center spent .09 percent of its net patient revenue on charity care. The president/CEO has the highest paid salary at $1.6 million in total compensation.

Munson Medical Center’s revenue $653 million in 2017 and $704 million in 2019, a 7.8 percent increase. It spent .20 percent of net patient revenue on charity care. The director has the highest paid salary at $1M in total compensation annually.

William Beaumont Hospital’s revenue was $2.9 billion in 2017 and in 2019. It devoted .53 percent of net patient revenue to charity care. The president/CEO is the highest paid salary at $5.9 million in total compensation and the director makes over $2 million.

Wayne Winegarden, author of the issue brief, states, “Despite the program's mission, 340B hospitals are providing less charity care than non-340B hospitals, yet have higher average profitability. This general pattern reflects 340B hospitals in Michigan as well. These outcomes provide additional evidence in favor of fundamental programmatic reforms to reign in the program's many excesses."

None of the hospital’s responded to request for comment.