Making the case: States, hospitals pitch for $50B rural health program

States have taken different approaches in their applications to the federal government’s new $50 billion Rural Health Transformation Program.

Congress and the Trump administration created the program as part of the sweeping tax and spending package over the summer. The government will award the money over the next five years.

The U.S. Department of Health & Human Services says half of the money will be divided evenly among states with approved applications. The Centers for Medicare & Medicaid Services will award the other half on a competitive basis.

(See an explainer on the federal program in this video. The story continues below.)

Chief Healthcare Executive® reached out to state hospital associations and state governments to see how they approached the new program. States didn’t have much time to prepare their pitches. The government set a Nov. 5 deadline for all applications, and the health department says it will announce the recipients before the end of the year.

Here is a roundup from several states.

Florida

The Florida Agency for Health Care Administration said its application focused on workforce development, expanding primary care, and expanding specialty care through technology investments. The plan also calls for focus on nutrition and promoting healthy lifestyles.

Mary Mayhew, president and CEO of the Florida Hospital Association, told Chief Healthcare Executive® that her group supports efforts to keep people healthy. But she also says she hopes rural hospitals get some of the help they need. Rural hospitals get insufficient support from Medicare and Medicaid, and pending cuts to Medicaid are going to pose more challenges.

“The dollars from the grant are incredibly important, but the sustainability of resources for rural hospitals is about equitable Medicaid reimbursement rates, the commitment by Medicaid to improve reimbursement rates to more adequately cover the cost of care,” Mayhew said.

“A grant, by its very nature, ends, and the state is very concerned about long-term sustainability with any of these projects beyond the life of the grant,” Mayhew says. “Rural hospitals have been struggling for a very long time, much of it related to Medicaid and Medicare reimbursement rates. That is fundamentally what creates the financial challenge for rural hospitals.”

• Read more: Strategies for the $50B rural health fund

Indiana

Indiana is ready to capitalize on this opportunity to have a lasting impact on health outcomes for rural Hoosiers, said Lisa Welch, media relations coordinator for the Indiana Department of Health.

More than a quarter of Indiana’s residents live in rural areas, and they face challenges with access to care, Welch said.

“Indiana’s plan is to focus on improving access to care through better use of technology, innovative care models, growing the healthcare workforce, and providing grants to regional partners recognizing that rural communities across the state have specific insight into their own needs, which strengthens their ability to implement specific local solutions,” Welch said via email.

Kansas

The Kansas Hospital Association worked in concert with state officials and other providers on the state’s application to the federal program, says Cindy Samuelson, senior vice president of public relations for the Kansas Hospital Association.

“We as an association, were at the table soliciting ideas from hospitals on how these funds could be used, and so they were working with us very closely the entire time,” Samuelson tells Chief Healthcare Executive®.

The Kansas application for federal funds is “competitive,” Samuelson says.

In its bid, Kansas aims to expand prevention programs and improve access to primary care, “and that includes hospitals as part of that primary care bucket,” she says.

Building a sustainable workforce was “a big part of our application,” she says.

The state also said it aims to harness data and technology with the funding.

Ohio

The Ohio Department of Health took the lead on the state’s application to the federal government. The Ohio Hospital Association formed a committee to make recommendations to the state government on the plan, said John Palmer, the association’s director of media relations.

“We are grateful to the Governor’s administration for giving us an opportunity to provide input on behalf of all the rural hospitals and the communities they serve in Ohio,” Palmer said in an email.

The hospital association said it advised the state about the need for investments in rural hospitals to support staffing, technology, and virtual specialty consultations.

Many of Ohio’s rural hospitals are struggling. In 2024, nearly three quarters (72%) of the state’s rural hospital had an operating margin of zero or less, according to the association. A rural hospital in Ohio, Community Memorial Hospital in Hicksville, closed last year.

Pennsylvania

The Keystone State boasts one of America’s largest rural populations.

Nicole Stallings, president and CEO of the Hospital + Healthsystem Association of Pennsylvania, urged state officials to support efforts to train providers to work (and stay) in rural areas. In a letter to state officials, she also recommended pushing for targeted financial support for investments to modernize facilities and support telehealth and virtual nursing programs to improve the delivery of care.

While the funding is critical, Stallings said rural hospitals need more regulatory flexibilities in order to innovate.

The Pennsylvania Department of Human Services prepared the state’s application.

A department spokesman said via email that the state’s plan was in line with the federal government’s goals, including efforts to “preserve and improve access to essential health services and make foundational investments in technology to support sustainable high-quality, evidence-based care driven by innovation and investments in workforce development.”

Washington State

The Washington State Hospital Association worked with the governor’s office on the state’s proposal, said Kelly Akers, a spokesperson for the group.

“When it comes to priorities, WSHA is focused on ensuring rural hospitals get support in key areas like cybersecurity, AI and financial sustainability. We're also looking closely at workforce solutions, especially ones that are scalable and easy to implement for smaller facilities,” Akers said via email.

The association hopes to tap into funding to streamline operations, and work with statewide healthcare goals in hopes of improving patient care in rural communities, Akers said.

About 70% of Washington state’s hospitals are losing money from operations, the association said earlier this year.

Wisconsin

The Wisconsin Hospital Association has been pressing the state’s government to use program funds to provide direct payments to rural hospitals to address specific needs. The association has also stressed that when the state gets funding from the federal program, it should utilize a simple distribution model “with minimal paperwork.”

The hospital group has also emphasized that there isn’t a one-size-fits-all approach to addressing healthcare challenges in rural Wisconsin.

Deb Standridge, deputy secretary of the Wisconsin Department of Health Services, met with the hospital association late last month to discuss the application.

“We recognize the role hospitals play and how important hospitals are going to be as we put this jigsaw puzzle together,” Standridge said at the meeting.

Texas

The Lone Star State is home to more than 150 rural hospitals.

In a letter to Texas officials about the federal program, John Hawkins, president and CEO of the Texas Hospital Association, said the group is aligned with state officials on focusing on “sustainable efforts.”

Hawkins suggested “choosing concepts that are self-sustaining and address one-time needs, or at least do not create ongoing state and local funding obligations.”

Texas hospitals are also pushing for transparency in how the state will distribute funds from the federal rural health program. Hawkins called for simple applications and reporting requirements.

“Complex bureaucratic processes or excessive paperwork could increase hospitals’ costs of implementation and even delay or prevent health care facilities from getting the support that Congress intended,” Hawkins said in the letter.

Virginia

The Virginia Hospital & Healthcare Association offered guidance to state officials on the application, says Julian Walker, the group’s vice president of communications.

“Our association, working hand in hand with our members, put together a robust package of ideas for proposals to support, strengthen and enhance rural health access and delivery, and those concepts have been shared with our counterparts in state government,” Walker tells Chief Healthcare Executive®.

The association stressed initiatives that mesh with the administration’s goals, such as developing a stronger workforce in rural areas, improving access to care, and technology innovation. Walker notes these are areas the association and state officials have been working to address as well.

Virginia has 28 rural hospitals, and more than one-third (36%) of the state’s rural hospitals had negative operating margins in 2022, according to the association.

Nearly three quarters (73%) of Virginia’s patients in rural hospitals are on Medicare and Medicaid, which don’t fully reimburse the cost of care, the association notes.