Rural Health Transformation Program: What States and Counties Need to Know to Optimize New Funding

The Rural Health Transformation Program (RHTP) is more than a funding bill: It’s a $50 billion lifeline for rural hospitals on the brink of collapse, and time is running out to be positioned for success. With closures accelerating and communities already losing access to care, the countdown to FY 2026 is not far off. States, providers and technology partners that act now will define the future of rural health for decades; those that delay may leave billions untapped and lives at risk. 

Here’s what’s at stake:

• Total funding: $50 billion over five years (FY 2026–2030).
• Distribution model:
  • 50% split evenly among all states that apply and are approved.
  • 50% awarded competitively, based on application scoring criteria.
• Scoring factors include:
  • Degree of ruralness and population need.
  • State policies that support rural healthcare access and equity.
  • Quality and ambition of proposed use of funds.
• Application process:
  • States must submit a single transformation plan to the Centers for Medicare & Medicaid Services (CMS).
  • Plans must demonstrate statewide impact, not just benefits for one region or hospital.
  • Commitments include measurable outcomes, 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, demonstrate readiness to deliver results and proactively position solutions within the state’s funding strategy.

Challenges as catalysts: Leveraging technology to reimagine rural healthcare

Although the RHTP offers opportunities, some organizations may face challenges in the proposed use of funding without proper systems in place:

• Low patient volumes and shifting care models: Many rural hospitals are challenged with thin margins and inefficient operations in low-volume settings, ultimately putting entire communities at risk of losing access to care. Low “headcount” doesn’t mean low impact if hospitals can track, engage and manage patients across the continuum, even outside the four walls. The RHTP could help augment that for organizations prepared to leverage real-time insights on their existing populations to make better decisions leading to greater impact. 
• Rural workforce shortages: If shortages persist without intervention, clinicians will remain overstretched, burnout will rise and access to timely care will worsen. Organizations can leverage AI-supported workflows and the support of external care navigators that extend clinician reach and reduce administrative burden. By leveraging existing provider networks and the support of trusted partners, organizations can do more with less.
• Financial instability: Many rural hospitals may remain locked into a cycle of dependency on stopgap subsidies, with closures accelerating as inpatient volumes decline. Organizations can move beyond this fragile model by leveraging data-driven insights and value-based care alignment tools that improve operational sustainability. With workflow augmentation and care coordination platforms, hospitals can shift toward outcomes-based models that reduce financial risk and promote long-term solvency.
• Digital divide: Failing to address broadband gaps, cybersecurity risks and low digital literacy will widen disparities and leave rural communities unable to participate in modern payment reform or care coordination models. Organizations can bridge this divide through technology-enabled care navigation, interoperable solutions and cybersecurity-ready platforms. These tools allow rural providers to integrate seamlessly into value-based networks and deliver patient-centered care, even in resource-constrained environments.
• Chronic disease management: Relying on traditional, fragmented systems leaves rural patients with chronic and behavioral health conditions vulnerable to gaps in care, preventable complications and higher costs. Providers can combat this risk by leveraging workflow tools that integrate physical and behavioral health data into one seamless platform, ensuring holistic care delivery. With real-time data and navigation support, organizations can scale prevention and management programs that keep patients engaged, healthier, and out of crisis.

The most competitive proposals will leverage new and emerging technologies for greater real-time access embedded directly in existing workflows, and strengthen partnerships for care coordination with curated, engaged networks. Provider organizations and governments must demonstrate ROI, interoperability and measurable outcomes. They will need technology partners who can scale quickly, integrate into existing networks and provide a clear path to sustained improvements.

The future of rural healthcare

The RHTP is an opportunity to reshape rural healthcare for the next generation by building sustainable health ecosystems that balance prevention, acute care, and community-based services. Even in smaller-scale rural settings, there is growing momentum around adopting AI and advanced analytics, enabling providers to deliver more efficient and precise care. At the same time, public-private partnerships will be critical in maximizing economies of scale and sharing best practices across regions. Together, these efforts can establish rural communities as innovation testbeds for value-based care models, generating lessons that have the potential to inform reform efforts nationwide.

For states and counties, the RHTP represents both a lifeline and a mandate: invest in infrastructure, workforce and care models that deliver lasting impact. The opportunity is not only to stabilize rural healthcare, but to reimagine it for the future. 

Photo: JJ Gouin, Getty Images

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