The Sustainability Gap: Why Rural Health Transformation Program Dollars Won’t Save Rural Healthcare
Federal Medicaid cuts under H.R.1 and expiring ACA subsidies are expected to add $278 billion in uncompensated care over the next decade, and rural hospitals will absorb a disproportionate share of it. Although Congress introduced $50 billion in Rural Health Transformation Program (RHTP) funding to offset these impacts, estimates show that this money will do little to close that gap. With an uptick in rural hospital closures looming closer, health systems have a window of opportunity to support rural care ecosystems before access challenges compound.
This tension framed a recent virtual workshop co-hosted by Philips and the Health Impact Alliance, where workshop participants worked through four shared challenges:
RHTP’s misalignment with rural hospitals’ foundational needs
Sustaining virtual access points to keep care close to home
Workforce innovation
Social drivers of health interventions specific to the rural health context
Discussions centered around one unanswered question: What is actually required to drive sustainable rural health transformation?
Why It Matters:
RHTP was built to fund transformation, not to stabilize the financial starting point most rural hospitals are actually working from. Health systems that understand the limitations of RHTP will also understand that they will need to play a role in building the “bridge” that supports short-term needs for rural hospitals on the way to long-term transformation.
Three Key Conclusions:
1. “Keeping care local” only works if the money stays local too.
Traditional “hub-and-spoke” models don’t lend themselves to sustainability. However, Intermountain Health’s “non-extractive” hub-and-spoke model provides virtual integrated services to less-resourced rural facilities, allowing local hospitals to retain their own billing and revenue rather than routing patients and dollars to an urban hub.
2. Workforce strategy means capacity extension, not just recruitment.
With clinician recruitment still difficult in rural markets, community health workers and navigators are emerging as the more scalable lever, alongside a "broker, don't build" approach to social drivers of health interventions that supplement (not duplicate) the work of trusted local organizations.
3. Rural innovation can be a blueprint for care delivery innovation generally.
As margin and workforce pressures intensify for all health systems, resource optimization becomes increasingly crucial. Sanford Health’s EHR-mined, AI-powered colorectal cancer risk score provides an example of this—using digital innovation to prioritize scarce clinical resources for screening and treating the highest-risk patients while reducing transportation burden for patients that don’t meet the risk threshold.
The Bottom Line:
Rural hospitals don't have a transformation problem so much as a sequencing problem— RHTP assumes a foundation that many facilities don't have time or resources to build first. The health systems making real progress are the ones building a “bridge” to optimize their resources within the context of existing community & care delivery infrastructure. What remains missing is a playbook that supports health systems in doing so.