As states finalize plans to administer billions of dollars through the federal Rural Health Transformation Program, rural hospital leaders are beginning to articulate what they hope the funds will enable, from shoring up fragile service lines to building long-term infrastructure that could determine whether their organizations remain viable.
CMS awarded $50 billion across all 50 states through the five-year program, which runs from 2026 through 2030. The initiative is intended to strengthen access, infrastructure and workforce capacity in rural communities. While state allocation plans vary and many are still awaiting federal approval, hospital executives are already thinking carefully about how the dollars could be used to support sustainability rather than short-term relief.
Across interviews, a consistent picture emerges: rural hospitals are prioritizing workforce stabilization, access to specialty and maternal care, technology and data infrastructure, and regional partnerships, with an emphasis on investments with an enduring impact.
Workforce remains the foundation
For many rural hospitals, workforce challenges sit at the center of transformation planning. Kelly Macken-Marble, CEO of Osceola Medical Center in Wisconsin, said early signals from the state suggest funds will be directed toward workforce, technology and rural partnerships. While details on grant mechanics are still emerging, hospital leaders are optimistic, particularly if funding can support recruitment, retention and collaboration rather than isolated programs.
“We are encouraged about the opportunity, specifically in the area of technology and innovation,” she said. “Grants for workforce and rural partnerships look to be focused on bringing together multi-sector partners. I’m hopeful that we will have the opportunity to be included in those partnerships as the grant process develops.”
In Oklahoma, workforce development is one of six pillars the state has outlined for its Rural Health Transformation Fund. Tom Vasko, CEO of Shattuck, Okla.-based Newman Memorial Hospital, said the state is prioritizing long-term capacity building, including efforts to grow and retain the next generation of rural healthcare workers.
“At Newman Memorial, we view the Rural Health Transformation Fund as a catalytic opportunity to accelerate work that is already underway, such as strengthening access, sustainability and quality of care for the communities we serve across Northwest Oklahoma,” he said. “While final allocations have not yet been determined, we anticipate pursuing targeted, initiative-aligned funding rather than a single lump sum award, with potential support spanning several million dollars over multiple years as programs are phased and scaled.”
Mr. Vasko aims to deploy funds across all six of the state’s priority areas, including telehealth and preventive care as well as chronic disease management. He also plans to facilitate more regional collaboration for reduced duplication and improved access across the hospital’s large service area.
“We also anticipate leveraging resources to grow and retain the next generation rural workforce, invest in data, analytics and health information exchange capabilities, and continue our transition toward value-based, outcomes-driven care models,” he said. “Newman’s approach is grounded in sustainability. Transformation dollars would be used primarily for startup, infrastructure, workforce onboarding and capability building, with clear pathways to long-term visibility through billable services, operational efficiencies and regional partnerships.”
Strengthening the talent pipeline
Rebecca Napier, vice president of finance and administration at the University of New Mexico Health Sciences Center in Albuquerque, is thinking about the workforce as well. The university submitted a proposal for funds that would strengthen its training programs and future talent pipeline.
“As a university, we have trained a disproportionate number of physicians in our state and as you have individuals who go through medical school and residency, if they do both at your institution, they’re more likely to stay here,” she said. “If they have a tie to the community, they are far more likely to stay here. We are heavily vested in really growing our own healthcare workers, whether it’s nurses or physicians or pharmacists or population health workers.”
The University of New Mexico is planning to double the number of students and graduations through 2035. The process will include new faculty structures and allocating efforts to provide clinical experiences and educational opportunities for more medical professionals.
“Making it all come together in a harmonious way is incredibly important because if we don’t grow our healthcare workforce, our healthcare access problem will never be solved,” she said. “Buildings don’t take care of patients. People do. That’s where we really make sure that we’re doing our part, and the education piece of that is a huge part of it, in addition to one of the larger clinical delivery systems in the state.”
Ms. Napier also said the funds may be used to address healthcare access needs, behavioral health and addiction services, which are critical in the state.
Maternal health and specialty access rise to the top
Rural hospital leaders also see the funds as a potential lifeline for service lines that have been difficult to sustain in rural settings, particularly maternal health. Brian Sponseller, CEO of Carolina Pines Regional Medical Center in Hartsville, S.C., said his hospital proposed several maternal health initiatives during the state’s initial request for ideas.
“There are three counties between us and North Carolina that have no maternal care, no OB, nothing,” Mr. Sponseller said. “What we proposed was starting a family residency program with an OB focus within our family medicine group.”
Pregnant women living in rural communities often are low income and aren’t able to take time off of work to travel long distances for monthly appointments; that puts them and their babies at risk. New technologies coming out allow remote monitoring of pregnant women at a cost and time savings for them, and it could drive down mortality rates. Then, the family medicine physicians with an OB background and training could staff rural clinics and have the expertise to serve pregnant women as well as other patients.
Raymond Hino, CEO of Bandon, Ore.-based Southern Coos Hospital & Health Center, said leaders in Oregon have a similar focus.
“I know that many of the rural hospitals that are struggling to keep obstetrics care in their communities will plan to apply for funding to support local access to obstetrics,” Mr. Hino said.
Regional partnerships and shared infrastructure
Another common theme is collaboration, not just between hospitals, but across regions and sectors. Mr. Hino said Oregon’s planning process has emphasized regional initiatives and shared infrastructure, with funding expected to be distributed in phases.
Under the state’s approach, early “catalyst” grants would support shovel-ready projects, while later phases would focus on larger regional efforts designed to improve sustainability and coordination.
Southern Coos plans to apply for startup funding to support the creation of an Oregon clinically integrated network, an effort involving independent rural hospitals. Much of the planning work has already been completed and the group believes it could be ready to launch quickly if funding is approved.
“We feel that we will be ready to ‘go live’ with an Oregon CIN before Oct. 1, 2026,” he said.
The state’s planned oversight structure is an encouraging sign for collaboration. Oregon intends to administer the program through its Rural Health Coordinating Council, which includes representation from rural hospitals, EMS, primary care providers and clinics.
“We are encouraged that rural stakeholders will be involved to help ensure that funds are used for areas of need for our rural providers and their patients,” he said.
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