To say the healthcare policy landscape is fluid would be a massive understatement. Ongoing debates over federal spending, Medicaid eligibility, and safety-net funding have created unprecedented uncertainty for 340B covered entities. While the ultimate scope and timing of any changes remain unclear, prudent healthcare leaders are developing contingency plans to strengthen their organizations for whatever policy shifts go into effect.
The One Big Beautiful Bill Act presents policy implications that will significantly affect safetynet providers. Projections indicate it could cut federal Medicaid spending by up to $911 billion over ten years. Healthcare coverage for millions of Americans would be impacted as a result.
Understanding the Potential Risks
While there is time before provisions of the OBBA take effect, covered entities should recognize
from emerging political, policy and market trends that that a more challenging operating
environment is not only developing, but has arrived. Healthcare costs continue rising faster than reimbursement rates. Manufacturer restrictions on contract pharmacies have already reduced 340B savings for many providers. Competition from retail clinics, urgent care centers, and telehealth providers continues to intensify.
The most concerning scenario involves what analysts call the “eligibility cliff”. This concept highlights the risk that reduced Medicaid enrollment could push hospitals below the Disproportionate Share Patient percentage thresholds that are required for 340B participation. Even modest changes in patient mix could push providers over the eligibility edge if they are
already operating near these thresholds.
Academic medical centers and large safety-net hospitals are particularly vulnerable due to their size and complexity. A major teaching hospital losing 340B eligibility could lose $50-$100 million in annual revenue, or more. Smaller providers also face significant impacts, only on a smaller scale. For example, rural hospitals may lose millions in savings that are currently
subsidizing essential services.
The Present State of 340B Optimization
Currently, many covered entities aren’t capturing their full 340B potential. Industry analysis suggests the typical FQHC recovers only a small fraction of specialty referral revenue. This means they are missing out on substantial annual savings when patients receive prescriptions from outside providers. Hospitals often struggle with complex compliance requirements, contract pharmacy limitations, and operational inefficiencies that reduce program benefits.
This underutilization highlights a current problem, but also a potential solution. Organizations that optimize their 340B programs now can create stronger financial foundations, regardless of future policy changes. The revenue recovered through improved program management can fund reserves, service expansion, or operational improvements that enhance long-term sustainability.
Strategic Planning Considerations
Smart healthcare leaders are always looking ahead. Not out of fear, but out of opportunity. Approaching the uncertainty of policy changes from a scenario planning perspective is better than seeing it as a crisis response. Modeling various possibilities, from minimal policy changes to significant Medicaid reductions, is how flexible strategies can be developed before they are required.
Revenue diversification is a critical component of this planning process. Organizations that are overly dependent on any single funding source face greater vulnerability to policy changes. Successful diversification might include expanding specialty services, expanding telehealth capabilities, pursuing value-based care contracts, or creating alternative revenue streams that align with the organization’s mission.
Operational efficiency improvements provide another hedge against uncertainty. Organizations with lean operations and efficient processes are simply more durable. They can better absorb revenue reductions while maintaining service levels. This might involve supply chain optimization, labor productivity improvements, or technology investments that reduce
administrative costs.
Partnership development can offer additional strategic value. Collaborations with other providers, managed service organizations, or technology companies can provide access to capabilities and efficiencies that would be too expensive to develop internally. These partnerships become especially valuable when facing resource constraints or operational
pressures.
Building 340B Program Strength
340B revenue is critical for most covered entities, so program optimization should always be a top priority. That is true regardless of upcoming policy changes. Optimization involves several key areas that organizations can address immediately. Compliance infrastructure is a starting point that deserves significant attention. Regulatory complexity continues to increase at a time when oversight appears to be intensifying.
Organizations need robust systems to track eligible prescriptions, manage contract pharmacy relationships, and maintain audit-ready documentation. Compliance failures can result in program suspension or repayment demands that devastate an organization’s finances.
Revenue capture improvements are exciting because they can deliver immediate financial gains. Many organizations miss out on substantial savings due to incomplete specialty pharmacy management, inadequate contract pharmacy networks, or inefficient patient identification systems. Comprehensive program audits often reveal significant revenue recovery opportunities.
Service line integration is a long-term strategy with significant benefits. Instead of referring patients to outside specialists and losing 340B eligibility on the prescriptions, some organizations are bringing those specialty services in-house. This change enhances patient relationships, provides pharmaceutical savings, and can improve care coordination.
Implementation Approaches
Organizations should begin this process with comprehensive assessments of their current 340B performance. This includes analyzing specialty referral patterns, contract pharmacy utilization, compliance processes, and revenue capture rates. Shortly into the assessment, many organizations are shocked to find how much potential revenue they are leaving on the table
through program underutilization.
Partnership evaluation should follow this assessment. Some organizations can benefit from working with specialized management service organizations that offer expertise, technology, and operational support. Others prefer developing those capabilities internally through staff training, system investments, and process improvements.
Timeline considerations also matter significantly. Organizations that begin optimization efforts now can implement improvements gradually while maintaining operational stability. Those who wait until a crisis arises face compressed timelines with limited options for a strategic response.
Moving Forward with Purpose
The healthcare safety net plays a vital role in American communities. It provides care to vulnerable populations that often have nowhere else to turn. Organizations serving this mission deserve stable, adequate funding that enables them to focus on patient care rather than financial survival.
As policy debates continue, covered entities can’t afford to wait for a resolution. They need to act now. The organizations that emerge strongest from whatever challenges lie ahead will be those that use this period of uncertainty to build more resilient, efficient, and sustainable operations. The path forward requires balancing immediate optimization with long-term strategic thinking.
Organizations that strengthen their 340B programs, diversify their revenue sources, and improve their operational efficiency will be better positioned to serve their communities regardless of policy changes. The time for preparation is now, while options remain abundant and implementation can proceed deliberately rather than urgently amid a crisis situation.