National and Minnesota Report
We thought one aspect of the pandemic worth-noting would be the corporate greed evident from the hospitals. As we wrote prior about the Mayo Clinic, which offered a pittance to its nurses and staff. Read our prior article Nurses Great Resignation Underway at Mayo
We see how this greed can harm all aspects of our country if we don’t keep a close eye on it. Massive companies are always looking for new ways to push their agenda in Congress and take advantage of our bloated federal government, but also in the state legislatures.
Even in healthcare, an extremely vital service to everyday people, greedy hospital corporations have found ways to manipulate the system to take more than their fair share. It has come to my attention that these massive hospitals are actively taking advantage of the 340B Drug Pricing Program, a program designed by the federal government to assist hospitals that provide charity care to low-income and uninsured patients. 340B was only supposed to provide discounts on prescription drugs to a small group of charity care hospitals, but it’s gotten way out of hand.
The problem with the 340B program is its vague eligibility criteria and lack of explicit definitions of how savings should be used. Hospitals saw these loopholes and did whatever they could to qualify themselves as sham “nonprofit” hospitals. They began greedily buying up community care centers that were not originally 340B eligible and converted them into offsite hospital outpatient departments. This allowed them to sneakily qualify as 340B eligible under the program’s vague criteria, and the 340B program went from covering 90 charity care hospitals to more than 2,000, with very few actually using the savings for charity care.
In 2021, the Pacific Research Institute’s (PRI) Center for Medical Economics and Innovation studied exactly how much damage had been done by the alarming growth of the 340B program. PRI compared 340B hospitals to non-340B hospitals across 8 different states and found that not only do “non-profit” 340B hospitals make 37% more in profits compared to the average of all hospitals, but these 340B hospitals that are supposed to provide charity care give 22% less of their net patient revenue to charity care than all hospitals.
Among the hospitals PRI studied, three were in our home state of Minnesota: Essentia Health, St. Cloud Hospital, and Regions Hospital. All entities generated hundreds of millions in revenue and paid their executives huge salaries but spent shockingly low amounts on actual charity care. Essentia Health raked in $11.9 million in annual profit and paid top executive David Herman nearly $1.7 million for FY 2019, while their hospital, St. Mary’s Medical Center in Duluth, spent only 0.73 percent of their net patient revenue on charity care. St. Cloud Hospital made $118 million in profit for FY 2019 and paid their top executive Craig Broman $1.4 million yet spent a measly 0.03 percent of their net patient revenue on charity care. Regions Hospital made $26.5 million in annual profit and paid their top executive Andrea Walsh $2 million in compensation in FY 2018, while only spending 1.19 percent of their net patient revenue on charity care. It’s despicable that rich hospital corporations can take advantage of poorly run federal programs and line their pockets with the savings instead of using them to help needy patients.
340B’s unchecked rapid growth has gone on for far too long. We must downsize this program and make sure that discounts are going only to hospitals that provide real charity care, not sham nonprofit hospitals looking to take advantage of big government bureaucracy. For the sake of our low-income and uninsured patients, Congress needs to swiftly reform the 340B program and close any loopholes.