The Rural Health Crisis Requires More Than Money—It Demands Strategy
Sixty million Americans depend on rural hospitals and clinics for their care, yet these facilities are disappearing at an alarming rate. Emergency funding has repeatedly failed to stop the bleeding because it treats symptoms, not causes.
The new $50 billion Rural Health Transformation Program offers states and the people who depend on care in rural communities an unprecedented chance to fundamentally reimagine how rural care works.
Hospital and Clinic Closures
The wave of rural hospital closures isn't just about money; it's about outdated payment models that don't reflect rural realities. States have faced repeated pressure to invest significant time, energy, and resources into hospital stabilization, only to watch some of those same facilities close within two years because the fundamental economics and infrastructure didn't change. More than 100 rural hospitals nationwide have closed in the past decade, and close to half of the remaining facilities lost money in 2024.
Closures disproportionately affect obstetric services, emergency care, and specialty care. Only 42% of rural hospitals still provide maternity care, leaving patients without local options and with longer travel times. Overall, the biggest mistake we see is states designing programs for rural hospitals as they exist today rather than what they need to become.
Workforce Shortages
Many state workforce strategies focus on recruitment, but retention is also a large contributing factor. Hiring more providers without addressing why they leave, including isolation, limited career growth, and unsustainable call schedules, creates an expensive revolving door and jeopardizes the continuity of care for patients.
Over 90% of rural counties face primary care provider shortages, but states seeing success are creating "hub-and-spoke" models where rural providers maintain connections to urban health systems for professional development and backup coverage. Limited financial incentives and training programs make recruitment difficult, but innovative community-based roles and expanded loan repayment programs can close critical staffing gaps when designed strategically.
Access
States have often used telehealth expansion as a rural access solution, but without addressing core infrastructure challenges to better coordinate care, these efforts may risk digitizing fragmentation. Over 20% of rural areas lacked broadband coverage in 2020 compared with less than 2% in urban areas, but connectivity is only part of the equation.
Real and sustainable transformation is possible when we integrate digital solutions with existing care relationships and community partnerships. Rural residents face long travel times and limited transportation options, but the most successful programs do more than add technology; they fundamentally redesign care delivery around community needs.
The Rural Health Transformation Program
The Rural Health Transformation Program was established as a federal investment to strengthen and modernize rural health care. The program provides $10 billion annually over the next five years, for a total of $50 billion in funding. Half of these dollars will be distributed equally among all participating states, while the other half will be awarded competitively - creating a call to action for states to get ambitious about their goals and approach to secure better care for rural populations.
CMS will base competitive allocations on criteria including rural population, the number and condition of rural health facilities, and demonstrated needs, but they are really looking for states that can show how they’ll create sustainable transformation.
States will apply through a Notice of Funding Opportunity, with applications due in early November to allow funds to be awarded by January 2026. See our blog on the Rural Health Transformation Program for additional information.
The Rural Health Transformation Fund introduces a new federal approach to partnering with states on rural health. Rather than relying solely on legacy payment models, the funding provides flexibility for states to pursue locally informed strategies aimed at improving access, sustainability, and quality of care in rural communities.
While CMS has yet to announce the application process details, state Medicaid agencies should begin preparing now to develop comprehensive applications that demonstrate how they'll improve rural access, recruit clinicians, and leverage technology.
Paths to Sustainable Transformation
States can use the Rural Health Transformation Fund to implement reforms that strengthen rural health systems and expand access. Strategies for states include:
Transforming payment approaches to create stability and support long-term sustainability.
Expanding workforce pipelines and strategies that address shortages across primary, specialty, and community-based care.
Integrating technology and digital infrastructure as part of comprehensive care delivery, rather than as standalone projects.
Building community partnerships across hospitals, clinics, and public health agencies to strengthen coordination and preventive care
Looking Forward
Rural communities deserve access to stable, high-quality health care, but achieving it requires more than good intentions and federal dollars. States have an opportunity to use this moment not just to stabilize struggling hospitals but to reimagine rural care delivery entirely.
The most successful applications will pair some financial relief with long-term strategies that create resilient rural systems of care. They'll show how rural care can be redesigned around community needs, not outdated assumptions, and prove that with the right strategy, rural health systems can thrive, not just survive.
Coral Health Advisors transforms state applications into winning strategies. We help you navigate CMS criteria, design compelling care models, and build proposals that secure maximum funding. With applications due in November, every day counts. To connect on how Coral can support your state or organization, contact Trevor Abeyta at tabeyta@coralhealthadvisors.com.