Stress Test: OBBBA, Rural Fragility, and Innovation

On July 4, 2025, the “One, Big, Beautiful Bill Act” (OBBBA) was signed into law. Its backers hailed it as a vehicle for growth, while critics called it the quiet dismantling of America’s healthcare safety net.

OBBBA slashes Medicaid and ACA subsidies while inflating the deficit with trillions in tax cuts. Millions stand to lose coverage, and safety-net hospitals will face new financial instability. And rural health systems, already stretched to the breaking point, will be tested like never before.

But there is another angle here. There may be a potential inflection point within this sweeping legislation. 

The $50 billion Rural Health Transformation Program (RHTP) is modest compared to the cuts surrounding it, but it forces rural America to do something our broader healthcare system has resisted for decades, and would do well to learn from: innovate out of necessity.

OBBBA is a stress test, and the outcome depends on how we respond.

Why U.S. healthcare is so hard to fix

Let’s level set. America’s healthcare system is expensive, ineffectual, and shaped by counterproductive incentives. We spend nearly twice as much as other high-income nations, yet outcomes lag behind. Chronic disease management, maternal mortality, and life expectancy all tell the same story: high cost, low return.

One reason is the gap between traditional healthcare and health tech. Health tech has shown a willingness to innovate rapidly. But traditional healthcare is bureaucratic and hard to penetrate, lacking the appetite for change that startups take for granted.

This creates a gulf where health tech builds the tools, but traditional healthcare rarely integrates them at scale. Hospitals often operate on 1-2% margins, leaving little room for experimentation. Their structures reward stability over speed and agility, making it extremely difficult to test, adopt, and scale new tech.

I’ve seen this gulf firsthand. As a critical care and pulmonary physician, I’ve worked inside the traditional system, where thin margins and rigid structures leave little space for innovation. And as an entrepreneur, I’ve piloted technology designed to make care more efficient, only to watch hospitals struggle to adopt some very practical solutions.

Consider General Catalyst’s recent $485 million purchase of Summa Health through its Health Assurance Transformation Corporation (HATCo). Summa is a large, nonprofit system in Ohio with hospitals, clinics, and a health insurance arm. HATCo is turning it into a for-profit testing ground for new technologies and care models. 

The fact that a venture capital firm needed to buy an entire health system just to create a testing ground for innovation underscores the scale of the problem. It’s not that hospitals don’t see the value of modern technology; it’s that their operating structures, financial realities, and regulatory obligations make speedy adoption nearly impossible. 

OBBBA widens this gap by destabilizing the system, but it also opens a door.

Rural fragility and the RHTP

Rural hospitals sit at the intersection of thin margins, workforce shortages, and geographic barriers. More than 100 rural hospitals are already at risk of closure, and over 600 are considered vulnerable nationwide. The entire system is fragile.

I think the term rural fragility is apt: a condition where providers operate so close to the edge that even minor shocks can tip them into crisis.

Unlike urban or suburban systems that can lean on diversification and endowments, rural providers lack a cushion. They often don’t have Chief Innovation Officers, CMIOs, or capital budgets for new infrastructure. They rely on outdated digital systems, their patient volume is small, and their payer mix is disproportionately Medicaid and Medicare. The conditions that make them fragile also make them structurally resistant to adopting modern health tech.

The RHTP, carved out in the OBBBA, attempts to intervene at this breaking point. It dedicates $50 billion in grants and incentives over the next decade to help rural providers modernize operations, adopt digital tools, and pilot new care models. While the dollar figure is dwarfed by the trillion-dollar Medicaid cuts surrounding it, the program forces a shift that rural providers can’t avoid any longer.

Critics argue that $50 billion over a decade is a band-aid compared to the scale of Medicaid cuts. They’re right. But the program’s importance isn’t in its raw size. 

Its potential lies in its role as a forcing function, compelling fragile systems to rewire themselves for the future. If necessity is the mother of invention, rural fragility might be the mother of transformation.

Never let a good crisis go to waste

RHTP is significant because of the commitments it forces. The program ties funding to transformation, requiring rural hospitals to upgrade digital infrastructure and enable interoperability, telehealth, and compliance systems. And by subsidizing modernization, it lowers the financial barriers that have kept rural systems from adopting and scaling modern tools.

If deployed wisely, RHTP funds could help rural systems lead in areas where traditional health has lagged:

• Virtual-first care: Rural communities, where distance makes in-person care impractical, could model what virtual-first care really looks like.
• Team-based care as the norm: There are already great examples of team-based care in major medical centers, but rural settings will need to lean on this model as physician shortages have hit them the hardest.
• Modern compliance and quality systems: Rural providers cannot afford armies of administrators. Adopting digital compliance tools and embedding quality assurance into daily work, rather than adding layers of bureaucracy, could make oversight sustainable.
• Right-sized facilities: Not every community needs a full-service hospital. Modular urgent care, chronic disease management, and mobile clinics may serve patients better at lower cost.

Success won’t be found by patching the old system. It’ll be about building something new under pressure.

And if these interventions are deployed well, the ROI could far outweigh the initial investment. Telehealth has been shown to save patients $147 to $186 per visit in avoided travel and lost productivity, while remote patient monitoring programs have delivered a 22% positive ROI and reduced hospitalizations by thousands of dollars per patient.

These are just a fraction of the results that we could see from smart implementation.

The paradox of fragility

What is most vulnerable can also be most transformative. Rural fragility is real, but again, necessity is the mother of invention. Rural providers can’t delay adoption. If they don’t reinvent themselves, they will collapse.

For decades, health tech companies have built tools that promise greater access, efficiency, and quality. But traditional healthcare has always been constrained by operational drag that keeps promising technologies stuck in pilot purgatory, or perceived only as a luxury.

RHTP could change this dynamic by tying survival to modernization. It forces rural systems to open the door that has separated them from the health tech innovators. So the question is: will traditional healthcare adopt the mindset of quick iteration and user-centered design that health tech has embraced for years?

If RHTP succeeds, it could produce lessons for the rest of the country. How to activate teams differently. How to build quality systems without unnecessary red tape. How to make technology the backbone of delivery instead of an optional add-on.

The stakes are very high, but if done right, rural health could shift from being the canary in the coal mine to the proving ground for models that make the entire U.S. healthcare system more efficient and more patient-centered.

The choice that shapes the system

Clinging to our old models is equivalent to waiting for failure. We need to embrace the tools, team structures, and delivery models that this ongoing crisis demands.

RHTP may represent the last best chance for rural America to innovate before the safety net tears completely. For the nation, it could be the blueprint for escaping a system that is overpriced and underperforming.

As a physician, I have seen how crisis redefines the possible. And as an entrepreneur, I believe necessity can cause transformation. But most importantly, as someone who has worked alongside patients, providers, and innovators, I know the ingenuity and resilience in this field.

We’ve been given no choice but to innovate, and it needs to happen soon. Despite the difficulties we’re facing, I remain hopeful that we will seize this moment to build a system that delivers on the promise of healthcare: accessible and compassionate care for all.

Photo: Peshkova, Getty Images

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