From provider shortages to limited infrastructure, rural America’s health crisis demands more than short-term funding fixes, experts caution.
The budget reconciliation act allocates $50 billion in funding for rural healthcare providers through the Rural Health Transformation Program.
The program has five strategic goals:
- Promoting preventative health and addressing root causes of diseases (“Make rural America healthy again”)
- Ensuring sustainable access by helping rural providers become long-term care access points
- Workforce development to improve recruitment and retention of providers
- Fostering innovative care models
- Encouraging technological innovation, including tools for remote care, improved data sharing, cybersecurity, and digital health.
In terms of structure and timeline, the $50 billion will be spread over five fiscal years (FY 2026–2030) at $10 billion per year. Half of the funding will be distributed equally to all approved states; the other half will be awarded based on state-specific metrics and where the greatest potential for impact exists. States must use funds for at least three of several statutorily approved purposes (e.g. chronic disease prevention, tech-enabled care, workforce training, etc.) with oversight to ensure long-term sustainable improvement.
Proponents of the Rural Health Transformation Program say it is intended to help rural providers adapt, modernize, workforce development and improve access to care. Opponents of the bill say that those funds are not enough to offset projected losses.
Pressure and opportunity
Thom Bales, Principal, Health Services Advisory Leader, PwC US believes rural health systems are likely to experience both pressure and opportunity under the OBBBA.
On one hand, reduced revenue from lower drug reimbursements may hit rural hospitals – already operating on thin margins – particularly hard, creating financial strain.
On the other hand, the changes could create a window for more preventive innovation. The incentive to shift from volume to value could encourage the adoption of telehealth, mobile clinics, and community-based prevention efforts, especially if supported by targeted grants or Medicaid waivers. Provisions encouraging domestic drug manufacturing could help stabilize access to critical medications in rural areas, which often suffer from supply disruptions.
“Rural systems will need strategic investment and policy support to adapt effectively to these shifts,” he said.
From the ground up
There is plenty of blame to go around for the lack of attention to rural healthcare problems over the years. “The challenges impacting rural America have not been addressed in a sustainable manner by either Democrat or Republican administrations,” said Thomas Campanella, president, Campanella Consulting, Inc., and professor emeritus of Health Economics, Baldwin Wallace University. “This is due to a number of factors, but mostly because politically rural America did not have a strong enough voice to impact needed policy decisions at both the national and state levels.”
The healthcare industry too has also fallen short in addressing rural health issues. In a LinkedIn blog on the topic, Campanella argues that the healthcare system’s responses to challenges in rural America often amount to temporary fixes (“band-aids”) rather than long-term, systemic solutions. Rural communities face persistent issues – such as limited healthcare infrastructure, provider shortages, low funding, and access barriers – that can’t be solved by short-term grants or temporary programs.
“There needs to be a ground-up approach which starts with the health-related needs of the residents in the rural community,” he said.
Rural communities have common needs, but they are also unique (e.g. Different demographics, size of population, closes urban center, geography, etc.). The need for comprehensive primary care is common across all rural communities. Hospitals need to be right sized for the particular community depending on a number of the unique factors noted previously.
“At a minimum, rural hospitals need to have a functioning 24-hour, 7 day a week emergency room,” Campanella said. Beyond that, the services will vary depending upon the specific needs of the community.
Sustainable support needed
There is no one solution to the multi-faceted challenges facing rural America, but one of the greatest needs is access to primary care. “We need federal and state sustainable support for Federally Qualified Health Centers (FQHCs), Community Health Centers, County Public Health Departments, and Community Health Workers,” Campanella said.
The staffing of the FQHCs and Community Health Centers should include teams of primary care physicians, nurse practitioners, nurses, community health workers, behavioral health specialists, and other providers based upon the needs of the rural community.
History has shown that access to Medicaid is not the silver bullet answer to the health needs of rural America, Campanella said. Over the last 20 years, working-age people living in rural areas are 43% more likely to die from natural causes than in urban areas. Medicaid, in collaboration with other initiatives can make a difference.
“To have a long-term impact on the health of residents in rural America, we need to have sustainable initiatives targeted to rural communities unique needs,” Campanella said.