In December 2025, the Centers for Medicare & Medicaid Services (CMS) announced a massive new investment in rural healthcare through the Rural Health Transformation program (RHT).
Authorized by the One Big Beautiful Bill Act, the RHT program aims to improve “healthcare access, quality, and outcomes by transforming the healthcare delivery ecosystem,” according to CMS, which outlines five strategic goals:
- Make rural America healthy again
- Sustainable access
- Workforce development
- Innovative care
- Tech innovation
How would RHT achieve those goals? Through a $50 billion investment in states that agree to direct their eligible appropriations toward aligned providers and programs.
Between 2026 and 2030, the RHT program makes available $10 billion per year, with 50% distributed equally between all participating states, and the other 50% allocated by CMS according to specific demographic and structural factors in each state. For instance, states with higher rural populations or a greater reliance on rural health facilities—like Iowa, Kansas, or West Virginia—would be allocated more funding than more urban states, like New York or Rhode Island.
First-year funding has already been delivered to all 50 states, ranging roughly from $147 million to $281 million per state.
But what does this investment mean for providers—especially those serving rural populations? Let’s take a look.
New funding opportunities—if you can prove your impact
For most providers, the main point of interest in the federal RHT program is the funding it aims to deliver. But to get a piece of the $50 billion pie, providers will need to coordinate with their state rather than directly petitioning the federal government. And they’ll need to prove their ability to support the administration’s healthcare goals.
Unlike federal programs that pay hospitals or clinics directly, the RHT program is state-administered. States applying for funding are required to identify three or more applicable use cases from CMS’s list of 10 approved uses. Providers seeking a share of that funding should demonstrate how their usage would align with those approved cases and further the five strategic goals outlined by CMS.
Some of these approved uses include:
- Promoting evidence-based medicine to improve prevention and chronic disease management
- Encouraging the use of consumer-facing, technology driven solutions for chronic disease management
- Providing training and technical support for technological solutions in rural care settings
- Identifying gaps in care related to preventive, ambulatory, acute inpatient care, and outpatient service lines
- Recruiting and retaining clinical labor in rural areas with a minimum commitment of five years
Providers should expect states to increase reporting requirements, performance benchmarks, and ROI measurement—and those that fail to deliver may see funding adjustments or even claw backs of issued funds.
Pressure to make sustainability-oriented strategic decisions
The RHT program is more than a rescue plan for rural healthcare; it’s an effort to redesign rural care delivery by incentivizing systemic improvements to access, preventive medicine, and efficiency-oriented technology.
Put bluntly, this funding isn’t “extra cash.” To stay within the bounds of the program, providers will have to make some tough strategic decisions about how they spend their RHT dollars:
Preserve or regionalize local services?
Organizations serving rural communities may find that some services operated locally in those communities are actually more sustainable when centralized at the regional level. A 2022 systemic review found that regionalization can improve resource allocation, cost efficiency, and mortality rates.
In practice, this could mean keeping emergency care, imaging, and primary care local, while pulling specialty services—like labor and delivery, trauma care, oncology, and complex surgeries—into larger, regional facilities. For some organizations, a shift toward regionalization might require partnering with larger systems.
However, regionalizing services can create a sense of those services being lost or diminished at the local level (even if doing so actually improves access within affected areas), potentially leading to community pushbacks.
In these cases, providers should be careful to clearly communicate the rationale and impact of regionalization decisions to current patients and the broader communities that they serve—in addition to the state agencies from which RHT funding is being appropriated.
Invest in inpatient or outpatient capacity?
With aging infrastructure, limited resources, and fewer staffing options, many rural providers operate under significant inpatient utilization pressure.
While modernizing inpatient facilities is a valid use of RHT funding, it may not ultimately be optimal: fluctuations in inpatient utilization mean dollars directed to these facilities might not produce the desired return on investment or improve patient outcomes as effectively as those spent on outpatient and preventive care.
Patient utilization data can help providers identify points of consistent underuse within specific facilities or service lines, highlighting opportunities to convert beds or divert staff to improve rehabilitation or behavioral health capacity, for example.
Shifting resources toward outpatient clinics, telehealth, home care, or remote monitoring allows rural providers to better align with broader industry trends—but it also requires a different approach to staffing, referral, and reimbursement strategies.
Whether providers choose to invest in inpatient or outpatient capacity, they should drive—and continuously re-evaluate—their decision-making with high-quality data.
Build permanent workforce pipelines or double-down on locums?
Locum tenens staffing is a cornerstone of rural healthcare strategy (and increasingly central to providers regardless of region). Providers receiving RHT funding could leverage it to reduce their reliance on costly locum tenens coverage, but first, it’s important to know whether potential short-term savings equate to long-term gains.
Locums staffing offers short-term flexibility and long-term reductions in clinician burnout at the cost of premium labor rates. In rural regions where capacity is highly seasonal (think heavily agricultural areas or small college towns where populations drastically decrease during certain times of year), the cost of contract labor is likely worth the flexibility of being able to downsize in the offseason.
But in rural areas where populations remain fairly static year-round, investments in permanent workforce pipelines can create stability, resiliency, and cost-savings. These might include:
- Residency, fellowship, and rural rotation partnerships
- Clinical trials and research programs at local institutions
- Retention bonuses, housing support, and student loan incentives
Stay independent or partner with larger systems?
If larger competitors are better positioned to achieve the administration’s goals, smaller rural providers may need to choose between independence or access to RHT funds that could benefit their patient base.
This doesn’t necessarily mean preparing for imminent acquisition; many independent rural providers could demonstrate greater strategic impact toward RHT initiatives through joint referral programs, shared staffing agreements, or partial integration with larger health systems.
Partnering with larger systems can provide access to capital and negotiating power at the cost of local autonomy. Again, the right data can help providers objectively analyze the pros and cons of their options and make sound partnership decisions.
Demonstrate value and make confident decisions with real-world data
The federal government isn’t in the business of handing out free money, and recipient state governments want to partner with providers that can demonstrate their RHT dollars are making the biggest impact.
Derived from real-world claims, reference, and affiliations data, insights into patients and providers can help rural healthcare organizations:
- Model service line demand
- Identify underserved populations
- Measure staffing shortages
- Track referral patterns
- Quantify social determinants of health
- And more.
Want a first-hand look at how Definitive Healthcare’s data and analytics can help you identify areas where investment offers the greatest value? Sign up for a demo today.
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