Do drug discount savings go to hospital CEO bonuses?

Sen. Chuck Grassley (R-Iowa), who has been closely investigating nonprofit abuses, expressed worries about the generous bonuses CEOs receive from hospitals that benefit from a federal discount drug program designed to aid poor and uninsured patients, reported the Charlotte Observer.

Grassley fears some hospitals are receiving large profits from the 340B program at the expense of Medicare, Medicaid and private health insurance, the senator announced last week.

His reaction arose from a recent report by Kaiser Health News and ABC News that highlighted how bonuses for nonprofit hospital executives valued financial performance over quality of care.

The KHN report exposed dramatic examples of revenue-driven bonuses, including Michael Tarwater, CEO of Charlotte, N.C.-based Carolinas HealthCare system, who received a $2.8 million bonus last year.

Carolinas HealthCare System is one of the three North Carolina hospital systems Grassley observed as part of his investigation into the 340B program. Research undertaken by Grassley's staff found all but one health system discussed in the Kaiser Health News article has at least one 340B-eligible hospital.

"If some 340B-eligible hospitals have significant money available for executive bonuses, that raises questions about how they allocate their resources," Grassley said in the announcement. "Are they doing everything possible to help uninsured patients receive healthcare, including affordable prescription drugs?" 

Grassley has contacted Health Resources and Services Administration, various hospitals and Kaiser Health News. He plans to continue taking actions to solve this issue to ensure 340B savings are passed along to indigent patients, not executive bonuses.

For more:
- read the Charlotte Observer article
- here's Grassley's announcement
- check out the KHN report