Dynamic Hubbard models are extensions of the conventional Hubbard model that take into account the fact that atomic orbitals expand upon double occupancy. It is shown here that systems described by dynamic Hubbard models have a tendency to expel negative charge from their interior to the surface, and to develop charge inhomogeneity and even phase separation in the bulk. These effects are associated with lowering of electronic kinetic energy. We propose that these models may explain the charge inhomogeneity and negatively charged grain boundaries observed in cuprate oxides and other materials.