This research aimed to assess the association between 340B participation and hospital consolidation, system market share and outpatient-driven profit margins. Johnson & Johnson and academic co-authors used a variety of hospital-level data sources and calculated market share, tracked merger activity and built a commercial price model from the data.
The research shows that hospital consolidation is strongly associated with 340B participation and higher hospital profits. The analysis found that nonprofit hospitals with greater local market share and those affiliated with larger health systems were significantly more likely to participate in the 340B program.
Hospital scale and large health system affiliation, especially through consolidation, play a critical role in enabling access to, and maximizing financial gains from the 340B program. The program disproportionately rewards system-affiliated hospitals, which are positioned to expand and consolidate further.
As the financial windfalls of 340B continue to grow, concerns persist about whether 340B profits are being passed on to patients. Increased transparency and accountability from 340B covered entities is necessary to ensure that the program serves its original purpose and is not driving misaligned outcomes.
This research was funded by Johnson & Johnson and conducted in collaboration with Dr. Neal Masia of Health Capital Group, EntityRisk, and Columbia University, and Prof. Darren Filson of Claremont McKenna College. For full details on the study design, methodology, and limitations, see: Masia N, et al. “Does the 340B Program Encourage and Reward Non-Profit Hospital Consolidation?” Poster presented at ISPOR, Montreal, Quebec, Canada, May 13-16, 2025. https://www.ispor.org/docs/default-source/cti-meeting-21021-documents/d77c9631-596b-47d7-91b8-b2c76d73d2c3.pdf?sfvrsn=de1f7c5b_0