The Rural Health Transformation Program (RHTP), established under the One Big Beautiful Bill Act (OBBBA), is a much-needed investment in rural health to help address the significant disparities in access and health the rural population faces. It’s also a bright spot in a challenging time for hospitals and health systems operating in rural environments with insufficient reimbursement, a growing uninsured population and inflationary pressures. More than 100 rural hospitals have closed in the last decade.1 Another 700 rural hospitals are at risk of closure, with 300 at immediate risk, according to the Center for Healthcare Quality and Payment Reform (CHQPR). Alabama, Arkansas, Louisiana, Maine, Oklahoma and Texas have larger numbers at risk, but almost all states made the list.
With RHTP awards announced at the close of 2025, hospitals and health systems operating in rural areas anticipate program funding will likely ease some challenges and help to ease the immediate risk of closure. States have proposed a range of solutions, including forming regional networks to create capacity, sharing and economizing resources; investing in technology solutions to modernize and connect health ecosystems; and engaging partners to help address the unique challenges found in rural areas. Ultimately, the goal is to improve and create sustainable healthcare for rural communities.
RHTP shifts from relief funding to performance accountability
Past programs have sought to improve rural health, but none with the same urgency, scale, and potential scrutiny as the RHTP. Operated by CMS, RHTP has a clear focus on driving results while preventing and rooting out fraud, waste, and abuse. CMS made it clear that accountability for spending will be carefully monitored by creating the RHTP as a cooperative agreement that gives the federal government a more substantive role as compared to a traditional grant program. State awardees and their sub-awardees, including rural hospitals and health systems, are expected to achieve planned results to continue to receive RHTP funds across the full five-year period.
Six steps to access RHTP funding and stay performance-compliant
What should rural providers do now to secure and sustain RHTP funding?
1. Understand your role in each state’s plan and state expectations. Many states took a collaborative approach to engaging providers in their RHTP application planning process. However, given the tight timeframe and the often-stretched resources in state departments of health, this may not be the case in every state. While many states have initiated collaborations to mobilize funded initiatives, providers should be familiar with what has been proposed in the state(s) where they operate. Some states have proposed initiatives that would help deliver funds to providers; others are likely to influence how providers operate within the state’s broader healthcare ecosystem. For multi-state health systems that include rural facilities, understanding how proposed initiatives differ across states is important for your own technology and capital planning.
In addition to understanding the proposed initiatives, providers should also understand associated compliance requirements which will vary by state. RHTP applications allowed for states to propose initiatives to be funded by sub-award or contract. Serving as a sub-awardee introduces additional federal compliance requirements, including the Single Audit Act, for those that will receive $1M or more in federal funds within their fiscal year. Compliance with these requirements should be embedded into program operations from the beginning and included within risk management programs including compliance monitoring, internal audit, and Enterprise Risk Management (ERM).
2. Establish governance to lead and manage your efforts. Providers already operate under board governance but may need to establish a more focused governance committee to oversee RHTP initiatives. This committee should coordinate with internal and external auditors as well as other relevant risk functions (e.g., information security, third party risk)) to set clear expectations for financial and operational control and put appropriate oversight in place. The committee should establish a meeting cadence that can provide oversight for compliance and reporting, as well as key connection points with other governing committees. The membership of the committee should cut across regulatory, compliance, clinical, operations and technology leaders to confirm effective compliance and implementation of state requirements from the start.
3. Define management structure and operational capabilities. While boards and board committees offer governance and oversight, management and operational responsibilities to execute RHTP initiatives are equally important. Providers should establish a management structure and operations to administer RHTP initiatives within their hospitals. A sound management structure should organize who will be involved and in charge of executing and managing RHTP initiatives. Within the organization, clear roles and responsibilities should be defined along with supporting policies and procedures for RHTP funding so that desired results are achieved and the data demonstrates results. Individuals engaged in both the management structure and operations of RHTP initiatives should be trained on compliance requirements and associated controls. Based on the number and scope of RHTP initiatives, providers should consider establishing a program management office (PMO) to support management and operational capabilities, including routine reporting, data management, and maintaining documentation. This management should be able to understand how both existing, planned and new initiatives align to RHTP funded efforts.
4. Lock in financial controls. Developing and maintaining financial controls is essential to effective management of RHTP funds. Financial control may prove more difficult for providers engaged in multiple initiatives or that operate rural facilities across multiple states. For example, multi-state providers will be required to conduct tracking by initiative and by state but will also want to track initiatives across the enterprise, particularly those that already are or will be subject to the Single Audit Act. Providers should establish financial controls starting with a clear account structure to track receipt and expenditure of funds, noting any state-specific requirements that may include approvals for certain levels of funding, demonstrated achievement of certain milestones and documentation. The necessary financial controls to adhere to state-specific requirements may differ across states, increasing financial management complexity for multi-state providers but reducing potential audit exposure downstream.
5. Leverage grants management expertise. Institutions with existing grants management infrastructure should leverage these resources to increase the likelihood of winning grants across the respective states. Pre-award offices may be able to strengthen grant applications, and government relations offices may have familiarity with state government priorities and preferences. Post-award offices can likely assist with existing compliance, financial controls and reporting, and grant administration. For those institutions without existing grants management infrastructure, an assessment can identify necessary workforce, resources, and technology required to manage incoming grants and funding. Provision of those resources may be achieved through partnership.
6. Coordinate initiatives across the enterprise. The coordination of initiatives across the enterprise is important, especially for multi-state providers. While there is some commonality in the initiatives proposed by each state, they may be funded by different mechanisms (sub-awardee vs. contract), have unique performance measures, varied reporting requirements and distinct impacts on operations within each state. Multi-state providers that have long sought consistency across the enterprise may be faced with new variations and new decisions about how or if they will seek enterprise-wide adoption of changes made within a single state.
Let us help you
RHTP implementation will likely unfold in an environment of ongoing policy change, consolidation and operational pressure. Over the program’s five-year duration, providers should actively manage risk while demonstrating measurable performance. We can help you increase RHTP funding while maintaining strong governance, risk management and regulatory compliance.
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