Rural Health Transformation Program: State Strategies for Lasting Impact

Kody H. Kinsley
Former Secretary of Health and Human Services, North Carolina 
Senior Policy Advisor, Johns Hopkins University

Vibrant main streets and vast natural beauty set the backdrop to what defines rural America: people who are strong and self-reliant, who face challenges with pragmatism, and who come together as a community to help one another. Yet today, with aging hospital infrastructure, consolidation and acquisition of providers, rising medical costs, and higher rates of chronic disease, rural Americans face persistent challenges in building healthy communities.

This is not a new issue for state health leaders—it was a top priority for me during my time as Secretary of Health & Human Services in North Carolina. And recent congressional action cutting Medicaid coverage and increasing individuals’ insurance premiums on healthcare.gov will have an outsized impact on rural America. However, H.R.1 includes $50 billion for a Rural Health Transformation Program (RHTP), which offers an opportunity for state health leaders to double down on efforts to improve access and transform systems of care for rural communities—but doing so will require both vision and innovation.

The Centers for Medicare & Medicaid Services (CMS) is expected to release the application in September, with state plans due by early November. While we await further guidance, state policymakers should begin building their plans now, using the allowable uses in the statute as initial guardrails. 

This expert perspective details key considerations for states as they design their transformation plans to apply for the fund. These include: the importance of engaging stakeholders; strengthening your current rural healthcare footprint while thinking innovatively about ways to promote health; focusing on uninsured individuals and controlling costs; investing in state capacity; tying funding to service delivery and outcomes; and planning for sustainability. 

Engage Rural Stakeholders Around Shared Principles

Start with deliberate, inclusive engagement. In rural communities, trust is built through local networks—schools, churches, chambers of commerce, volunteer emergency medical services (EMS) and fire departments, food pantries, and other civic organizations. Their voices—especially those with first-hand experience navigating rural health systems—are essential. State leaders must also use this as an opportunity to partner with legislators, local elected officials, hospitals, primary care providers, and behavioral health providers to work together toward a common goal.

Some states have already begun: for example, Alaska issued a request for information, while Pennsylvania opened a public comment process. And given persistent broadband limitations, in-person town halls and roundtables—hosted in partnership with trusted community groups—will be critical. State Health and Value Strategies is tracking state actions to prepare to apply for the RHTP, including to engage the public, here.

To focus decision-making when demand exceeds resources, leaders should articulate a set of guiding principles. These go beyond statutory requirements to define a shared vision. Three principles I’d offer:

• People First – Prioritize resident health, especially focused on disease prevalence and those who are uninsured.
• Transformative – Invest in models and new efforts that fundamentally improve how care is delivered.
• Sustainable – Build solutions that demonstrate effectiveness and last beyond the fund’s five-year horizon.

Transforming Rural Healthcare Delivery

The name of the fund says it all—transformation. We have to resist the impulse to simply shore up what we have and instead consider how we work toward creating what we need.

That may mean outfitting a local church basement as a fresh food pantry to help manage diabetes. Or reaching kids in school with comprehensive behavioral and physical healthcare via telehealth. Communities can use funds to train EMS providers to help to manage chronic conditions and support addiction recovery. States could support partnering with pharmacies to expand preventive care or basic disease screenings. These models aren’t theoretical—they’re working in many pockets of the country today. 

Rural communities thrive on trust, so investing in a trusted workforce is key. Community health workers, nurse practitioners, and EMS teams are essential to rural health’s future. Partnering with federally qualified health centers (FQHCs), tribal health centers, and faith-based organizations can dramatically expand care without pouring money into new construction.

And yes—rural hospitals matter. Often the largest employer in a region, they are vital for both community health and local economies. But keeping them open must mean bolstering their partnerships and reimagining them as key parts of broader networks of hubs and spokes: telehealth critical care management, coordinated transfers, rotational specialty clinics, workforce training centers, or emergency hospital conversions. Hospitals should be supported to serve today’s needs while adapting to the future that is already here. 

Tie Funding to Service and Outcomes

If we want transformation, we need accountability. States should require that funds go toward the delivery of care—especially preventive and whole-person care—and include clear outcome metrics. This includes increases in well-child visits, diabetes management, vaccination coverage, maternal health supports, and reduced emergency room use for avoidable conditions. Tying program participation to adoption of policies that improve access and control costs can help build synergies across the system and consistency for consumers, such as setting standards around charity care and financial assistance.

Flexible payment models—such as value-based arrangements or hybrid global budgets for rural providers—can create incentives for outcomes. Programs that integrate health and social supports, such as transportation, housing, or food access, have proven both cost-effective and impactful. North Carolina built networks to deliver social care for some of the sickest individuals in the most rural parts of the state, and improved health and saved money in just two years. 

Transparency and regular reporting on progress are essential to sustaining trust with the community and with federal partners. Clear communication about milestones, challenges, and outcomes ensures accountability. Some states, such as Oregon and Utah, have already established dedicated webpages for the Rural Health Transformation Program and indicated plans to provide regular updates, offering a model for others to follow. 

Building Toward the Future

With the program sunsetting in five years, states must prioritize efforts that can become self-sustaining—either by reaching scale or through alignment with innovative payment models. One-time investments that build lasting capacity help: initiatives like rural workforce pipelines linking high schools to community colleges, modern data systems that connect student health with educational outcomes, and broadband infrastructure to expand telehealth access. 

Even with the scarcity of flexible funding elsewhere, this is still a moment to consider braiding resources and aligning related initiatives. States should partner with CMS and payers to create new reimbursement structures, and CMS should fast track approval of models that support this effort. States should use the trust and partnership built through this effort to garner legislative support for sustainable funding streams and new state policies that support rural health. 

Building on existing efforts, states should enhance their abilities to support rural health by improving the data tools and staff capacity of their organizations. Tools and teams that help track: rural health delivery systems’ fiscal viability; rural residents’ travel time to care for acute and ambulatory services; rural provider recruitment; and other key access indicators can give states the edge to intervene at the less costly moments.

This is a challenging time for state health leaders and their teams—major changes, workforce shortages, and shrinking budgets are driving tough choices. But the Rural Health Transformation Program offers a rare spark: a chance to energize agency staff, build community trust, and foster bipartisan partnerships around a unifying goal. Getting this right can lay the groundwork for long-term rural health transformation. State leaders have an opportunity to lead the way by prioritizing this effort and empowering their best teams to move it forward.