Rural hospitals rely on the 340B drug pricing program

September 12, 2023 5:55 am

The 340B Drug Pricing Program was designed to help eligible hospitals provide high-quality care for patients and communities(Mint Images/Getty Images).

According to a recent report, roughly 35% of rural hospitals in Missouri are at risk of closing as a result of inadequate revenue and low financial reserves. This comes as no surprise as hospitals continue to recover from the impact of the COVID-19 pandemic, face an increased demand for care, and still see rising supply and labor costs.

For rural hospitals in central Missouri like Golden Valley Memorial Healthcare (GVMH), this bleak outlook underscores the importance of the 340B drug pricing program, which was designed to help eligible hospitals like GVMH provide high-quality care for our patients and communities.

Through this vital program, hospitals treating large numbers of uninsured or low-income patients can access pharmaceuticals at a lower price and use the savings to help fund a range of services and offerings, from generous financial assistance to innovative care programs for patients. Without 340B savings, hospitals like ours would have to take extreme measures just to keep our doors open to the largely rural, underserved communities that we serve.

Rural hospitals typically treat a sicker, older, and lower-income patient population compared to hospitals in urban and suburban settings.

At GVMH, for example, 80% of our patients access their healthcare coverage through Medicare and Medicaid, with only 20% being covered by commercial insurance plans. While we are proud to provide care to beneficiaries of these vital safety-net programs, the fact is that Medicare and Medicaid reimburse hospitals at a lower rate than commercial insurers—and far less than the true cost of providing care and services. That makes the savings we see through the 340B program all the more essential in helping to sustain our operations.

Additionally, savings from the 340B program help rural hospitals like GVMH support an array of healthcare services that we may not otherwise be able to offer.

Our ability to access discounted pricing on high-cost oncology drugs through the 340B program, for example, is essential in enabling us to provide medical oncology services. These savings allow us to provide generous financial assistance, so we don’t have to turn away anyone based on their ability to pay.

Without the 340B program, it would be extremely challenging, if not impossible, to continue providing oncology services at scale—which could force GVMH to reduce these services, threatening access to critical care for many rural cancer patients. Moreover, savings from the 340B program have also enabled GVMH to subsidize 100% of our diabetes program, which not only provides valuable patient education and counseling but also helps patients access life-saving medications for free or at a reduced cost.

As a rural hospital, GVMH also relies on 340B savings to ensure access to ambulance services and maternity care. GVMH’s ambulance services are a critical part of the local healthcare infrastructure, responding to 911 emergencies and patient transfer needs. However, GVMH does not receive any tax subsidy for its ambulance system, meaning it relies on the support of the 340B program to ensure access to this crucial service.

Similarly, GVMH plays a key role in ensuring access to high-quality maternity care across its rural service areas. Missouri’s maternal mortality rate outpaces the national average, with 75% of maternal deaths considered preventable.

With the support of the 340B program, GVMH has been able to help address these trends and provide support to rural patients throughout their pregnancies, during childbirth, and throughout their postpartum journeys. Each year, GVMH delivers 350 babies on average, making it a critical resource for Missouri’s rural patients. Without GVMH and the 340B program, many patients would have to drive over 90 minutes to the nearest birthing center.

Finally, the 340B program is fundamental in helping small, locally-owned pharmacies provide access to discounted drugs for the patients we serve. Contract pharmacy arrangements through the 340B program help ensure rural patients can access the medications they need closer to home. That partnership helps ensure patient access while supporting local pharmacies, which are an essential part of the healthcare landscape in rural communities.

As rural hospitals continue to face numerous challenges—from rising medical costs and ongoing workforce shortages to increased demand and rising administrative burdens—the 340B program plays a vital role in connecting patients to the care they need when they need it.

Congress and the federal government must do more to protect and preserve the 340B drug pricing program so rural hospitals can continue serving our patients and communities for generations to come.

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