The CA crisis in rural health care is a chance for transparency

By Julie Gill Shuffield, especially for CalMatters

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California’s rural hospitals face multiple, steep challenges in ensuring patients have access to care. Glenn Medical Center at Willowslocated 75 miles north of Sacramento, is at the center of this access crisis.

Although it closed its doors in October 2025, Glenn Medical has since restored its status as a “critical access” facility through an act of Congress. This is just the beginning of the discussion on how to keep the doors of this struggling rural hospital open. Cancel the closing is complex and will involve short-term financing.

As decision makers grapple with the challenge, it is important to see which programs are working and which require greater oversight and transparency.

One key place to look is the federal 340B program.

The 340B program was established in 1992 with the intention of benefiting the most vulnerable, underserved patients who cannot afford health care. Section 340B of the Public Health Act requires pharmaceutical manufacturers to sell drugs at a discount to healthcare organizations that serve large numbers of uninsured and low-income patients. This includes critical access hospitals in rural areas.

But the 340B program’s lack of transparency has allowed it to fall prey to big players in the health care system, such as hospitals and large insurers.

As the program has grown, it has become a flashpoint in the battle over rising drug costs and their impact on hospital budgets. Without congressional oversight, this program will continue to fail the neediest patients.

The concept of the 340B program is simple—hospitals are able to use drug rebates on behalf of the medically underserved population. One would think that the cost of drugs would come down for these patients.

But often the savings don’t trickle down to patients. In fact, hospitals are abusing the program buy with big discount prescription drugs and instead charge patients and insurance companies inflated prices and pocket the difference.

Amid the national debate over 340B, Minnesota in 2023 took the bold step of becoming the first state to implement reporting requirements for participating hospitals. His legislature recently received first report 340Bwhich showed that qualified pharmacies used by hospitals were buying drugs at discounted prices, then charging patients full price.

In 2024 qualified pharmacies there spent $1.53 billion buying drugs and then billing private insurers and government programs $3.04 billion, resulting in about $1.34 billion in additional revenue.

The projected savings line the pockets of hospitals.

As local regional hospitals continue to close, care is increasingly concentrated in the hands of a small number of large health systems. This consolidation reduces the number of providers who can treat patients and exposes a troubling reality—rebates designed to support vulnerable demographics often fail to reach them.

Actually only 35% of 340B hospitals they are even located in areas with insufficient medical care. Yet the remaining 65% of these hospitals continue to receive the rebates, while many low-income communities across the country see little or no benefit.

Addressing the rural health care crisis will require greater transparency in how these rebates are used, ensuring that savings go to facilities that actually help underserved communities.

Progress has been made in uncovering the many factors leading to the increasing unaffordability of health care and widening health disparities. A closer look at the complex web of financial flows is long overdue. Rural Californians need this help now. Their health and lives depend on it.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.