Virginia Hospital’s Exploitation of Drug Program
November 27, 2022
Bon Secours Mercy Health, one of the largest nonprofit healthcare chains in the United States, maintains some of the greatest profit margins seen in domestic hospitals. The chain gains its wealth from its 50 domestically located hospitals, all of various states and conditions [1]. Specifically, one of their hospitals in Virginia, Richmond Community, is often referred to as a “struggling hospital”, due to being located in an impoverished area. Reflecting its location, the hospital itself contains only a destitute emergency room and a psychiatric ward, lacking specialized branches or advanced medical technology. Despite its indigent state, Richmond Community has managed to generate around 100 million dollars annually [1]. Recent inquiries and evidence from financial data have led investigators to believe that this success comes from its federal drug program.
This federal program, called 340B, was created in 1992 and allows poorer communities to purchase drugs at a lower cost, with insurance paying for the majority of the price [1]. Due to Richmond Community’s majority of poor patients, the hospital is able to buy drugs at around half of their set price. Sources show how much of Bon Secours Mercy Health’s profits are attributed directly to this program, through the chain laundering money from poorer locations to their wealthier establishments. Furthermore, the program states that hospitals do not have to disclose their profits from discounted drugs or utilize these funds to improve their program, allowing for easy abuse of the policy [2].
Moreover, Bon Secours Mercy Health’s title as a “nonprofit” has allowed it to avoid federal taxes, gaining even more revenue for the company. Just last year, the chain and its 50 United States hospitals generated a whopping 1 Billion dollars [1]. According to the New York Times, “It avoids at least $440 million in federal, state and local taxes every year that it would otherwise have to pay” [1]. Many other nonprofit organizations, which include more than half of current United States hospitals, utilize both their ability to avoid taxes and program 340B to accumulate larger profits.
In response to allegations, A Bon Secours spokesperson recently claimed that their funds are put towards investment of programs and renovation – yet the current state of the Richmond Community hospital begs to differ [3]. Bon Secours’ issues are just an example of the overwhelming abuse of 340B. The lack of transparency of the program has created a myriad of lawsuits in recent years, calling for more investigations of the apparent abuses of the federal system.
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