Jennifer Fisher
Jennifer Fisher serves as a Managing Director at McAllister & Quinn. She works with clients in the healthcare sector to assess their organizational needs and assist them in finding funding opportunities that align with their internal priorities and goals.
What Hospitals and Health Systems Need to Know
Almost half (48%) of rural hospitals operated at a financial loss in 2023, with 92 rural hospitals shuttering within the past decade due to an inability to continue to provide inpatient services, according to the American Hospital Association.
Both Medicaid and rural hospitals are critical resources sustaining the health and wellbeing of small communities and are heavily intertwined, with over 16 million Medicaid beneficiaries living in rural communities.
The Rural Health Transformation Program, often referred to informally as the Rural Health Fund, was created in the Senate version of H.R. 1 (One Big Beautiful Bill Act) to partially offset financial burdens that rural healthcare providers have been projected to face due to cuts in Medicaid and Medicare funding in the budget reconciliation package. The program was accepted in the House and included in the final bill that was signed into law on July 4, 2025. The program will be administered by the Centers for Medicare and Medicaid Services (CMS).
The Rural Health Fund provides funding and technical assistance to states to develop and implement rural health transformation plans to improve access to care, quality of services, financial sustainability, and address social determinants of health in rural areas. Total funding for this program is marked at $50 billion, spanning fiscal years 2026 to 2030.
What Are the Impacts of H.R. 1 Cuts on Rural Hospitals?
In rural areas that rely heavily on Medicaid and Children’s Health Insurance Program (CHIP) funding, hospitals and health systems could see a 21% decrease in Medicaid reimbursement due to provisions within H.R. 1, further straining many rural health systems that already have negative or razor-thin operating margins.
While funding through this program equates to only about 37% of the loss in Medicaid funding in rural areas that is anticipated in H.R.1, this program can help maintain essential services in rural communities. However, reductions in federal Medicaid spending would occur primarily after fiscal year 2030, pointing to a need for further legislation to support acute health system needs after the Rural Health Fund has been depleted.
How Can Hospitals and Health Systems Advocate for Their Needs and Communities?
While hospitals and health systems cannot directly apply for program funding, all 50 states are eligible for funding (U.S. territories and the District of Columbia are not eligible) if a proposal is submitted to CMS by the application deadline, which is yet to be announced. Applications are slated to be available to the states in early September. CMS must approve or deny all applications by December 31, 2025, so it is likely that the deadline for states to submit will be well in advance of that date. In addition, several states have already begun to solicit requests for information from potential partners, with their own response deadlines in the coming weeks, as they develop their program plans and applications to CMS.
Help your State and Health Department Leaders Advocate
McAllister & Quinn encourages rural hospitals to connect with their state legislators and health departments as soon as possible to express concerns about rural health needs and financial considerations, providing them with information about health system priorities—and hard data on potential impacts—so that state leaders are better able to advocate on behalf of healthcare institutions serving rural communities and that they can serve as an effective partners to health systems as applicants and stewards of federal rural health funds.
Please view the below webinar for in-depth program details or reach out to us at information@jm-aq.com.
McAllister & Quinn Quick Talk: Rural Health Transformation Fund Exclusive Webinar
Rural Health Transformation Program: What Hospitals and Health Systems Need to Know
McAllister and Quinn’s on-demand webinar, “Rural Health Transformation Program: What Hospitals and Health Systems Need to Know,” is available for viewing at your convenience. The webinar is part of McAllister & Quinn Healthcare Practice’s Quick Talk series, an on-demand webinar series that serves to provide timely, relevant information in a quick and easy to understand format. Through this 9-minute webinar, McAllister & Quinn Healthcare Practice Managing Director Jennifer Fisher offers key insights on the Rural Health Transformation Fund program purposes and requirements.
