Rural Health Transformation Initiative: What states and counties need to know to optimize new funding

The Rural Health Transformation Program (RHTP) is more than just a funding bill: It's a $50 billion lifeline for rural hospitals on the verge of collapse, and time is running out for success. As closures accelerate and communities have lost access to care, the countdown to fiscal year 2026 is not far away. Countries, providers and technology partners who act now will determine the future of rural health for decades; those delays could leave billions of people without access and at risk.

Here's what's at stake:

• Total funds: $50 billion over five years (fiscal years 2026-2030).
• Distribution model:
  • 50% is allocated to all states that apply and are approved.
  • 50% awarded competitively based on application scoring criteria.
• Scoring factors include:
  • Rurality and population needs.
  • National policies that support rural health care access and equity.
  • The quality and ambition of the proposed use of funds.
• Application process:
  • States must submit a single transformation plan to the Centers for Medicare and Medicaid Services (CMS).
  • Plans must demonstrate statewide impact, not just benefit to one region or hospital.
  • Commitments include measurable results, clear timelines, budget milestones and stakeholder engagement.

Every state will apply, but priorities and competitiveness will vary. Vendors and provider partners must align with each state’s vision, Demonstrated readiness to deliver results and proactively position solutions within state funding strategies.

Challenges as Catalysts: Using Technology to Reimagine Rural Healthcare

Despite the opportunities RHTP provides, without systems in place, some organizations may face challenges with the proposed use of funds:

• Low patient volumes and shifting care models: Many rural hospitals face the challenge of operating on thin margins and operating inefficiently in low-volume environments, ultimately putting entire communities at risk of losing care. If hospitals can track, engage, and manage patients across the entire continuum—even beyond the four walls—lower “headcount” doesn’t mean less impact. RHTP can help enhance this capability for organizations that are ready to leverage real-time insights into their existing populations to make better decisions for greater impact.
• Rural labor shortage: If shortages persist without intervention, clinicians will continue to be overwhelmed, burnout will increase, and access to timely care will worsen. Organizations can leverage AI-powered workflows and support from external care navigators to expand clinician reach and reduce administrative burden. By leveraging existing provider networks and support from trusted partners, organizations can do more with less.
• Financial instability: Many rural hospitals may remain stuck in a cycle of dependence on temporary subsidies, with closures accelerating as hospitalizations decline. Organizations can move beyond this fragile model with data-driven insights and value-based care adjustment tools to improve operational sustainability. Through workflow enhancements and care coordination platforms, hospitals can move to an outcomes-based model to reduce financial risk and improve long-term solvency.
• Digital divide: Failure to address broadband disparities, cybersecurity risks, and low digital literacy will widen disparities and prevent rural communities from participating in modern payment reforms or care coordination models. Organizations can bridge this gap with technology-enabled care navigation, interoperable solutions, and cybersecurity-ready platforms. These tools enable rural providers to seamlessly integrate into value-based networks and deliver patient-centered care, even in resource-limited settings.
• Chronic disease management: Reliance on traditional, fragmented systems leaves rural patients with chronic and behavioral health issues vulnerable to care gaps, preventable complications and higher costs. Providers can address this risk by leveraging workflow tools that integrate physical and behavioral health data into a seamless platform to ensure comprehensive care. With real-time data and navigation support, organizations can scale prevention and management programs to keep patients engaged, healthy, and out of crisis.

The most competitive proposals will leverage emerging technologies to embed directly into existing workflows, enabling better real-time access and enhancing care coordination partnerships with carefully curated participating networks. Provider organizations and governments must demonstrate ROI, interoperability, and measurable outcomes. They need a technology partner that can scale quickly, integrate into existing networks, and provide a clear path for continuous improvement.

The future of rural healthcare

RHTP is an opportunity to reinvent the next generation of rural health care by building a sustainable health ecosystem that balances prevention, acute care and community services. Even in smaller, rural settings, momentum is growing for the adoption of artificial intelligence and advanced analytics, allowing providers to deliver more efficient and precise care. At the same time, public-private partnerships are critical to maximizing economies of scale and sharing best practices across regions. Taken together, these efforts can establish rural communities as innovative testbeds for value-based care models and generate lessons that have the potential to inform reform efforts nationwide.

For states and counties, RHTP represents both a lifeline and a mission: investing in infrastructure, workforce, and care models to make a lasting impact. The opportunity is not only to stabilize rural health care but to reimagine it for the future.

Photo: JJ Gouin, Getty Images

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