WILLOWS, Calif. — Glenn Medical Center has been through a lot in the past year. The hospital shuttered in October 2025, leaving residents in this small Northern California town roughly 75 miles north of Sacramento without a local facility. Then congressional action restored its “critical access” designation, cracking the door back open.
But keeping it open? That’s a much harder problem.
The situation at Glenn Medical has pulled fresh attention to California’s rural hospital crisis, and with it, a federal drug discount program that advocates say is being quietly drained by the very health systems it was supposed to constrain.
The program is called 340B, named for Section 340B of the Public Health Service Act. Congress created it in 1992 with a clear goal: require pharmaceutical companies to sell drugs at steep discounts to hospitals and clinics that serve large numbers of uninsured and low-income patients. Critical access hospitals in rural areas qualify. The idea was straightforward. Hospitals get cheaper drugs, those savings reach vulnerable patients, and the whole system works a little more equitably.
It hasn’t worked out that way.
Julie Gill Shuffield, executive director of Patients Come First-California, argues that the 340B program has instead become a revenue stream for large health systems, not a lifeline for patients. Hospitals, she says, buy drugs at the discounted 340B price and then charge patients and insurers the full market rate, pocketing the difference. The patient who was supposed to benefit from the discount often sees none of it.
The numbers from Minnesota make the point hard to ignore. The state became the first in the country to require 340B reporting when its legislature passed transparency requirements in 2023. The first report came back recently, and it wasn’t pretty. Qualified pharmacies working with participating hospitals spent $1.53 billion purchasing drugs at 340B discount rates in 2024. Those same pharmacies then billed private insurers and government programs $3.04 billion for the same drugs. The excess revenue: about $1.34 billion.
Not savings passed to patients. Revenue.
Shuffield is calling on California to follow Minnesota’s lead and impose its own reporting requirements. The argument isn’t complicated. If hospitals are required to show what they’re doing with 340B discounts, the abuses become visible. Right now, without that transparency, the program’s growth mostly benefits the institutions that have the scale and sophistication to work it.
And those institutions are getting bigger. As smaller rural hospitals like Glenn Medical struggle to survive, care is consolidating into fewer, larger health systems. That consolidation reduces options for patients, especially in places far from urban centers where driving an extra 40 miles to the next hospital isn’t a minor inconvenience. It can be a genuine threat to survival.
The rural hospital problem in California doesn’t have one cause. Thin patient volumes, high operating costs, staffing shortages, and inadequate reimbursement rates from Medi-Cal all play a role. Glenn Medical’s path forward will require short-term funding and, according to Shuffield, serious scrutiny of which programs are actually working.
Still, the 340B piece matters because it’s about money that already exists in the system. Billions of dollars in discounts are already being generated. The question is where they go.
Congress created 340B without meaningful oversight requirements, and the program has grown enormously since 1992. Total 340B drug purchases have ballooned into the tens of billions of dollars annually, making it one of the largest federal health programs most people have never heard of. Without reporting requirements, there’s no way to know how much of that money actually reaches underserved patients versus disappearing into hospital operating margins.
California has the scale to matter here. If the state imposed transparency requirements similar to Minnesota’s, it would cover one of the largest health care markets in the country. That’s a lot of data. And data has a way of changing behavior, especially when executives know legislators are reading the reports.
This commentary was originally reported by CalMatters.
Glenn Medical’s situation is real and urgent. Residents in Willows need a hospital. But Shuffield’s broader point is that the crisis there isn’t separate from the dysfunction in programs like 340B. They’re connected. Rural hospitals close partly because the health care economy concentrates resources in larger systems, and programs meant to help vulnerable patients instead fund that concentration.
Fix the transparency. See where the money goes. That’s the starting point.