The Rural Health Transformation (RHT) Fund – Seizing a Once-in-a-Generation Opportunity

Framing the Moment

Rural America stands at a crossroads. Sixty million people live in rural communities, where mortality rates are 23%¹  higher than urban areas and nearly half of hospitals operate at a loss. At the same time, the rural health sector is weighed down by legacy systems, outdated operating models, and inefficiencies that drain $100+ billion each year.²

The Rural Health Transformation (RHT) Fund represents a once-in-a-generation opportunity to change this trajectory. Done right, it can move beyond temporary relief to drive lasting improvements in care delivery, access, and the long-term viability of rural hospitals and communities. Success will require clear priorities, stakeholder alignment, and a rollout strategy that balances immediate stabilization with bold, systemic transformation.

Past Lessons Learned 

Past federal programs, such as the Medicare and Medicaid EHR Incentive Programs (“Meaningful Use”), highlight the risks of misaligned funding. While the initiative accelerated crucial adoption of electronic health records for rural hospitals, it also added steep IT costs to already thin operating margins.³ In rural markets specifically, other reimbursement-based programs have been constrained by low patient volumes, ultimately falling short of stabilizing providers’ economics. These lessons underscore the importance of ensuring that future investments—such as the RHT Fund—are linked to outcomes, provider realities, and long-term sustainability. The RHT Fund is a rare chance at a major systemic transformation, but only if it does not repeat these past mistakes. To succeed, RHT funding must:

• Deliver durable improvement rather than simply filling short-term financial gaps
• Avoid the creation of new private industries that siphon profits from providers 
• Expand clinical and workforce capacity through technology that increases services without proportional costs
• Drive transformation, with technology as a lever for care model redesign, operational efficiency, and financial health—not another procurement exercise

Persistent Realities in Rural Health

Rural providers operate under structural constraints that have long defined the realities of care delivery—and today those constraints are pushing the system toward a breaking point. Chronic financial fragility, limited capacity, and misaligned incentives combine to undermine stability, restrict access, and stall modernization. These are not isolated issues, but reinforcing dynamics that make it harder for rural hospitals and clinics to survive, let alone thrive. Understanding these realities is essential to shaping an investment strategy that delivers lasting impact. They include:

Economic fragility. Nearly half⁴ of rural hospitals operated at a loss in 2024. Low patient volumes and payer mixes dominated by Medicare and Medicaid leave thin or negative margins, making it hard to invest or adapt.⁵

Workforce shortages. Only one in ten⁶ physicians practice in rural areas, despite one in five Americans living there. More than half of rural providers are over age 50, pointing to a projected 23%⁷ decline by 2030. High turnover, recruitment challenges, and leadership instability leave clinicians stretched across multiple roles.⁸

Technology and interoperability barriers. Nearly 25% of rural Americans lack broadband meeting FCC benchmarks, (vs. 1.5% in urban areas)⁹ limiting telehealth, remote monitoring, and data exchange. Steep upfront and ongoing costs, limited IT staffing, and non-interoperable EHRs create silos and stall adoption of modern tools.

Outdated infrastructure: Rural hospitals face disproportionally high fixed-to-total cost ratios of 85–95% (vs. 73–78% in metro hospitals)¹⁰. Occupancy averages just 37% (vs. 62% urban)¹¹, and more than half of rural ED visits could be treated in lower-acuity settings. Legacy facilities inflate costs and divert resources from modernized, right-sized care models.

High-Impact Investment Themes

Drawing on deep operational experience in rural markets nationwide—including partnerships that serve more than 100,000 rural seniors and collaborations with provider organizations representing nearly 3,000 clinicians—Homeward has seen firsthand both the barriers and the breakthroughs in rural health. The lesson is clear: without bold structural transformation, rural providers will remain trapped in a cycle of fragile economics, workforce shortages, and outdated systems. The RHT Fund is a rare chance to break that cycle. To seize this opportunity, states must prioritize targeted technology-enabled investments that deliver durable, system-level improvements in three areas: building integrated technology infrastructure, right-sizing facilities through digital tools, and creating a digitally empowered workforce.  

1. Building Integrated, Rural-Ready Technology Infrastructure 

Rural providers run on fragmented, legacy systems that raise costs and drain staff time. Most lack the capital and IT leadership to modernize, leaving them with a patchwork of tools that add burden without improving care. The RHT Fund should catalyze a full Gen AI-enabled transformation—  replacing outdated systems with interoperable platforms built for rural workflows and embedding AI tools that automate administrative and clinical tasks. Done right, this shift would allow technology to support clinicians rather than hinder them, making rural care delivery more efficient and sustainable.

States can accelerate this shift by creating Rural Health AI Implementation Centers that provide “fractional CTO” support—strategic guidance, technology partner vetting and selection, hands-on implementation support, and multi-year roadmaps to ensure sustainability. Direct funding should also expand broadband, accelerate migration to cloud-based EHRs, and bring providers into compliance with common data and interoperability standards to avoid further fragmentation. Finally, states should fund the development of regional technology platforms—shared EHR, billing, and telehealth systems used across multiple rural providers—through joint procurement, IT staffing, and collective maintenance contracts to allow smaller hospitals to pool resources and access enterprise-grade tools at sustainable cost. With these steps, technology becomes an asset rather than a liability, making rural care more efficient, sustainable, and resilient.

2. Right-Sizing Facilities & Service Models Through Digital Tools

Rural infrastructure is often oversized, expensive to maintain, and misaligned with actual demand. Low occupancy rates leave hospitals carrying high fixed costs, while communities still struggle to access the right mix of services. The RHT Fund should be deployed to realign rural infrastructure with community needs—replacing underutilized assets with flexible, technology-enabled lower-cost models that preserve access without locking providers into unsustainable overhead.

To achieve this, states should begin with capacity importation—replacing underused specialty units with rotating or mobile specialty teams that serve multiple hospitals on a scheduled basis. This model has proven effective in rural specialties, where pooling scarce specialists lowers fixed staffing costs while maintaining timely access to care. States should also pursue localized service redesign by repurposing unused inpatient space into urgent care suites, telehealth hubs, or outpatient centers, with funding to adapt facilities and redeploy staff. At the same time, states should deploy modular and mobile clinics to extend reach into underserved communities at lower overhead. Finally, states should reduce duplication and right-size capacity by building hub-and-spoke networks, where anchor hospitals concentrate advanced care and smaller clinics deliver routine services, lowering fixed costs and directing resources toward the services rural communities need most.

3. Creating a Digitally Empowered Workforce

Rural communities face persistent workforce shortages—fewer clinicians, higher turnover, and limited access to specialty expertise. These gaps make it difficult to sustain services and adopt new care models. The RHT Fund should be deployed to expand the reach and capabilities of the rural workforce—not just by adding headcount, but by enabling clinicians to practice at the top of their license and embedding technology into everyday care delivery. 

To make this shift, states should expand scope-of-practice laws, allowing nurse practitioners and physician assistants to manage more cases with specialist oversight and telehealth consultation. These changes must be paired with reimbursement parity and liability protections to ensure providers feel empowered to take on expanded roles. States should also invest in digital workforce upskilling by launching training programs that integrate AI decision support, AR/VR simulation, and telepreceptorships into clinician education, with rural rotations and continuing-education credits tied to participation to drive adoption at scale. To strengthen the pipeline of rural providers, states should create fast-track credentialing pathways that bring new clinicians into rural practice more quickly and open advancement opportunities for existing staff, including streamlined background checks, licensing reciprocity across state lines, and bridging programs that move LPNs and medical assistants into higher-skilled roles. Finally, technology-enabled care delivery must become the standard in rural models—expanding telehealth, virtual coordination, and remote monitoring to extend provider reach, integrate specialty expertise, and ensure timely care close to home. To succeed, these tools must be paired with workflow redesign and technical assistance, so that they reduce burden rather than create it. The result is a digital-first care model that lowers per-patient costs, improves provider efficiency, and makes rural practice more sustainable.

What Success Looks Like

By delivering these solutions, the RHT Fund can address core structural constraints and drive bold transformation—fundamentally reshaping rural healthcare. Success would mean:

• Modernized infrastructure – Rural hospitals operating on interoperable, cloud-based systems with access to shared regional platforms 
• Reduced administrative burden – Manual, duplicative processes largely replaced with automation, freeing staff time and improving financial stability
• Right-sized facilities – Fewer empty inpatient beds; more space repurposed into urgent care, telehealth hubs, or outpatient clinics aligned with community demand
• Expanded workforce capacity and specialist availability – Clinicians practicing at the top of their license, supported by AI-enabled tools and new training pathways, while rural communities gain reliable access to specialty expertise through telehealth and mobile models

Call to Action

This is a once-in-a-generation moment for rural health. The decisions made now will shape whether rural communities not only survive, but thrive for decades to come. Policymakers have the chance to leave a lasting legacy by ensuring that the Rural Health Transformation Fund is used not as a stopgap, but as a catalyst for durable change in their states.

That means convening the right voices—hospital leaders, clinicians, community representatives, and technology partners—to build proposals that are both competitive for federal funding and designed to deliver lasting improvements in access, quality, and financial stability.  

The stakes are high—the opportunity is to write a new future for rural health, one where every community has the care it deserves.

About Homeward‍

Homeward is the only AI-native healthcare platform built specifically for rural populations. We partner with rural providers and communities to deliver population-level results at scale, extending clinical capacity, reducing administrative burden, and enabling sustainable, modern care models.

Contact: 

Kristen Konstantinidis, Chief Communications Officer, kkonstantinidis@homewardhealth.com

Footnotes:

1. Health Affairs. (2019). Waste in the US Health Care System: Estimated Costs and Potential for Savings. https://doi.org/10.1377/hlthaff.2019.00838
2. Managed Healthcare Executive. (2020). Humana study shows billions wasted in U.S. healthcare. https://www.managedhealthcareexecutive.com/view/humana-study-shows-billions-wasted-us-healthcare. Office of the Assistant Secretary for Planning and Evaluation (ASPE). (2024). Rural health research report. https://aspe.hhs.gov/sites/default/files/documents/6056484066506a8d4ba3dcd8d9322490/rural-health-rr-30-Oct-24.pdfNote: Estimate derived by applying rural share of healthcare spending (~15–20%) to national waste figures ($760–935B annually).

3. National Center for Biotechnology Information (NCBI). (2017). The U.S. rural health policy and research agenda: Moving forward. Preventing Chronic Disease, 14, E97. https://pmc.ncbi.nlm.nih.gov/articles/PMC5565131
4. Chartis Center for Rural Health. (2024). Chartis Rural Health Policy Institute Report. https://email.chartis.com/hubfs/CCRH/INDEX%20Top%20100/Chartis%20Rural_2024%20Policy%20Institute_Michael%20Topchik%20FINAL_02.12.24.pdf
5. KFF. (2023). https://www.kff.org/health-costs/issue-brief/10-things-to-know-about-rural-hospitals
6. American Hospital Association (AHA). (2023). Case study: Adapting to a new workforce environment—Hannibal Regional Healthcare System outreach. https://www.aha.org/2023-11-02-case-study-adapting-new-workforce-environment-hannibal-regional-healthcare-system-outreach
7. National Rural Health Association (NRHA). (2025). Rural physician burnout and staffing shortage impact in 2025. https://www.ruralhealth.us/blogs/2025/06/rural-physician-burnout-and-staffing-shortage-impact-in-2025
8. National Rural Health Association (NRHA). (2020). Rural hospital CEO turnover. https://www.ruralhealth.us/getmedia/bc067473-7a39-42ea-80e3-a3850f920d4f/2020-NRHA-Policy-Document-Rural-Hospital-CEO-Turnover-FINAL.pdf
9. RSI. (2023). More internet exchanges necessary for rural areas, say experts. https://www.rsinc.com/more-internet-exchanges-necessary-for-rural-areas-says-the-experts.php
10. PubMed. (2023). Trends in rural health outcomes in the United States. https://pubmed.ncbi.nlm.nih.gov/37203592
11. Missouri Hospital Association (MHA). (2020). COVID-19 surge capacity planning. https://www.mhanet.com/mhaimages/COVID-19/Surge-Capacity.pdf