A recent report published by the Center for Healthcare Quality and Payment Reform – a national policy center focused on designing and implementing payment systems that support affordable, patient-centered health care – cited that over 500 rural hospitals are at “immediate risk” of closure because of continuing financial losses and lack of financial reserves to sustain operations.

In addition to these 500 instances, over 300 more rural hospitals are at “high risk” of closure due to low financial reserves as well as a high dependence on non-patient service revenue.  In total there are nearly 900 rural hospitals that could potentially shutter their doors in the not-to-distant future. This means that over 40% of all rural hospitals in the country are either at “immediate risk” or “high risk” of closure. Millions of people who live in the areas served by the at-risk hospitals could be directly affected if the hospitals were to close.

There are several conclusions one can draw from these figures and these dire circumstances but indulging that debate for too long could be a luxury we simply do not have time for.  One proven method to provide relief to these hospitals is to implement and support an end-to-end 340B program.  In the simplest terms, the 340B program helps hospitals and clinics that provide care to the most vulnerable patients: the uninsured; the underinsured; people with HIV or AIDS; children with cancer, and more by requiring drug companies to offer medications at a discounted price.

The 340B program requires drug makers participating in Medicaid to sell outpatient drugs at a discount to eligible hospitals and clinics. These savings are intended to go toward increasing and expanding healthcare services for millions of vulnerable patients. Many small and rural hospitals have acknowledged that savings from the 340B program and has been a crucial factor in helping to keep their facilities open.

To take part in the program, covered entities such as hospitals, clinics, health centers, and the like must meet rigorous standards such as treating a high percentage of low-income patients or those living in rural communities. Compliance with the program requires the application of specialized knowledge and expertise. Hospital personnel may choose to stretch and develop their own expertise, or they may choose to work with an outside group – like SpendMend Pharmacy – to ensure compliance and ongoing program eligibility.

In recent months, several drugmakers have dropped out of the program and in doing so they have made program compliance even more difficult, and at the same time, they have further challenged the solvency of rural hospitals. It begs the question, “Should drug companies feel compelled or even obligated to help reverse the budget shortfalls at rural hospitals?” I’m not sure there’s a simple answer. For drug companies, these discounts are a small percentage of the billions spent each year on medicine, but it is a slippery slope when you start mandating pricing limits in a free market.

That said, for hospitals and their patients, these savings are essential as part of the healthcare safety net. It would be nice to think that the companies dedicated to creating the medicine that saves lives would also support the critical pricing strategies that could very well save those same lives. But it’s complicated and I’m not sure it can be fully explored in one blog.

If you or anyone at your facility has questions about properly leveraging the 340B Program or about the repercussions of manufacturers leaving the program, please feel free to contact a SpendMend Pharmacy expert by visiting: https://www.spendmend.com/contact.