The nation's largest hospitals that participate in a federal drug discount program spend less on charity care than their smaller counterparts, despite receiving billions in discounted medications meant to help low-income patients. A new analysis published by Pioneer Institute in September 2026 examined the top 51 hospitals in the 340B drug discount program and the top 25 academic medical centers by operating expenses. The findings reveal a troubling pattern: institutions with access to the deepest discounts are providing the least charity care as a share of their budgets.
Among the top 51 hospitals participating in the 340B program, the majority delivered less charity care than the average non-340B hospital in their state, and an even larger share fell below the average 340B hospital in their state. When measured against the national average for all 340B hospitals, 80% came up short. The pattern was even more pronounced among academic medical centers: 60% provided less charity care than their state's average non-340B hospital, while 84% trailed behind their state's average 340B hospital. Nearly all academic medical centers—98%—failed to meet the national 340B hospital average for charity care spending. The 340B program, originally designed to support safety-net hospitals serving disproportionate numbers of low-income patients, has grown into a $100 billion enterprise that now exceeds Medicaid in net drug spending.
The analysis raises pointed questions about where the savings are going. According to the Pioneer Institute report, a separate study by Milliman found that outpatient drug costs billed to insurance were significantly higher at 340B hospitals compared to non-340B hospitals, and this gap persisted even when comparing 340B teaching hospitals to non-340B teaching hospitals. The report notes that this cost difference suggests 340B hospitals are capturing the benefit of their drug discounts by generating a profit margin with insurers. "However, if they aren't passing their discounted prices to patients with minimal charity care, then where is the difference going?" the authors write.
The report attributes the disparity to a fundamental lack of transparency in how these institutions use their savings. The federal 340B program was introduced to aid safety-net hospitals—institutions serving a disproportionate share of low-income patients—through access to heavily discounted drugs at manufacturers' expense. But as the program has ballooned, questions have mounted about whether its largest participants are directing those savings to the intended beneficiaries. The IRS defines charity care as free or discounted health services provided to people who meet an organization's financial assistance criteria and can't pay for all or part of their care. Pioneer's analysis standardized comparisons by presenting charity care as a percentage of operating expenses, allowing apples-to-apples evaluations regardless of hospital size.
The report concludes that greater transparency in how these savings are deployed remains long overdue. For now, it's impossible to know where the difference between discounted drug acquisition costs and the higher prices billed to insurers is being allocated. The disparity between the charity care levels of the largest hospitals and academic medical centers compared to the rest of the nation carries real costs for patients who don't receive the financial relief the program was designed to deliver.