Colorado will receive about $1 billion in federal funding to reshape rural health care over the next five years, but hospital CEOs aren’t happy with the state’s plan to spend the money. Last year’s H.R. 1 — also known as the “big beautiful bill” — allocated $50 billion for the federal Rural Health Transformation Program over five years, while cutting an estimated $137 billion in other health care spending in rural areas over a decade. The federal Centers for Medicare and Medicaid Services, which decided how much states will receive and set rules for how they can use the money, described the fund as intended to remake rural health care, not just keep existing facilities afloat. But leaders at Colorado’s rural hospitals have raised concerns that the state’s plans for transformation could actually reduce services in their communities by pushing them to centralize some types of care. And even if the state doesn’t move forward with that type of regionalization, hospitals need cash and other resources to stabilize their operations before they can focus on reinvention, rural CEOs said. States split up $25 billion from the fund evenly and submitted applications to compete for the other half. Colorado will receive about $200 million annually for five years, putting it squarely in the middle of the 50 states by award amount. Hospitals appreciate any investments in rural health care, but the amount available won’t solve all of the financial problems they face, said Kevin Stansbury, CEO of Lincoln Health in Hugo. “I think across the country, people are grateful for that,” he said of the new funding. “It’s just not enough.” Falling populations, higher poverty In general, rural areas have declining populations that are aging faster than the country as a whole and have higher rates of poverty and chronic conditions. Together, those trends make caring for rural residents more expensive than providing the same services in urban areas, and experts are skeptical that even a large one-time investment can move the rural health system out of a pattern of struggling. Colorado’s application included 10 initiatives that health care providers, nonprofits and other groups can submit proposals to fulfill. Each initiative set a broad goal, such as preventing chronic disease, modernizing emergency services or stabilizing hospitals, with a few examples of possible projects to meet that goal and an estimate of how much the state would devote to it. Jennifer Riley, CEO of Memorial Regional Health in Craig, said references in the state’s application to a regional hub-and-spoke model, where patients travel for certain services, could threaten hospitals like hers. For example, if the Colorado Department of Health Care Policy and Financing — which is managing the new federal funding — thought orthopedic surgery should be concentrated in regional hubs, patients would have to travel farther, and local hospitals would take a financial hit, she said. “Orthopedic surgery is a profitable service line, and I need some of my service lines to be profitable” to support money-losing areas such as emergency care, Riley said. The state’s focus on regional collaboration doesn’t require any hospitals to close services or take away local decision-making, department spokesman Marc Williams said. Any major changes in care delivery models would come only after consultation with a planned advisory committee and on-the-ground providers, he said. If the department has a plan to increase services — say, by ensuring at least one hospital in a region is equipped to deliver babies — that would be a different story, but the state would have to have some way of compensating hospitals taking on unprofitable services, Stansbury said. Joe Theine, CEO of Southwest Health System in Cortez, said he’s concerned about possible regionalization, and about the plan’s extension of the Colorado Hospital Transformation Program. That program requires facilities to show they’re making progress on measures of quality and was scheduled to sunset in October, after a five-year run. So far, the department hasn’t shown that the program is improving patient safety or saving money, despite the burden of tracking and reporting data, he said. “I don’t understand why we would spend more money on something we can’t prove is showing value,” he said. The state tried to incorporate as many voices as possible, which is admirable in some ways, but diluted rural hospitals’ message, Stansbury said. What hospitals need are resources and the ability to make decisions locally, within broad guidelines, he said. “It feels to me like the state is trying to say, ‘We know better,'” he said. Five general objectives for the funding The federal rules don’t allow states the degree of freedom that hospitals may have hoped for, but the department worked to include rural providers’ ideas about what the application should include, Williams said. “The federal application process was both highly competitive and significantly constrained; CMS gave states just six weeks for submission and placed clear limits on eligible uses of funding,” he said in a statement. The Centers for Medicare and Medicaid Services outlined five broad objectives for the funding: Reducing rates of chronic disease Coming up with financially sustainable models for rural health care Recruiting and retaining health workers Developing innovative payment models Using technology to improve care It also set rules that states can’t use the money to replace any existing funding, or for facility construction, research and development, purchasing telecommunications equipment or connecting households to high-speed internet. Only 15% of a state’s total funding can go to pay facilities for uncompensated care, and no more than 5% can go toward replacing existing electronic health records. Any funds will help hospitals that are struggling financially, but the 15% allowed for direct payments to cover uncompensated care, which would max out at $30 million per year, may not be enough to stabilize all of the facilities with the greatest needs, Stansbury said. The state’s plan does include some bright spots, such as opportunities for rural facilities in workforce development and expanding telehealth, said Josh Hannes, vice president of rural policy and strategy at the Colorado Hospital Association. “But that’s not what our rural hospitals are asking for,” he said. Rural hospitals’ biggest needs, generally, are cash to stabilize their operations, more staff and sometimes improvements to decades-old buildings, Hannes said. Expanding telehealth isn’t going to significantly raise hospitals’ revenues, and while funding health care workers’ continuing education is a worthwhile step, it doesn’t help rural facilities pay the wage premium they need to compete with urban ones, he said. “You can do the transformational stuff later, but we’ve got to really get solid at the basics,” Hannes said. In general, rural areas have declining populations that are older and less affluent than urban areas — trends that aren’t likely to change in the near future, said Katherine Hempstead, senior policy officer at the Robert Wood Johnson Foundation. Caring for a small population is expensive on a per-capita basis, and in some cases, it may not be safe to offer all the services a community needs, because doctors need a certain volume to keep their skills sharp, she said. Hopefully, at least a few states will come up with ideas that help rural providers a bit, and which others could copy, Hempstead said. Unlike federal funding that stabilized hospital finances during the pandemic, this round of grants is meant to address upstream problems, which won’t help keep the lights on at facilities that are struggling now, she said. “The problems that people are tackling within their applications are really tough problems,” Hempstead said. “Is anyone going to catch lightning in a bottle on this? I doubt it.” ‘Devil is always in the details’ It should become clearer how much impact the funds will have as the state releases more information about permitted uses, said Stansbury, of Lincoln Health. Ideally, each community would receive a sum of money to study the gaps in its health system and what solutions might be feasible, but that may not be an option, he said. Related Articles Judge moves to throw out DOJ subpoena for transgender patients’ records at Children’s Hospital Colorado Children’s Hospital Colorado, Denver Health pause gender-affirming care for minors again Denver health systems are adding more than $800 million in new hospital floors, clinics In a tumultuous year, US health policy has been dramatically reshaped under RFK Jr. Trump administration rolls out rural health funding, with strings attached Theine, with Southwest Health System, said the state’s plan does have promising elements, including a mention of expanding clinically integrated networks. In those, hospitals and other providers agree on a set of best practices to improve patient care, such as increasing monitoring of people with diabetes to prevent expensive complications. The group can then go to large insurers and convince them to pay incentives to keep their patients healthier — a step insurance companies wouldn’t bother taking with one facility that only sees a handful of their customers, he said. “It’s very difficult to get that payer’s attention,” he said. Riley, the hospital CEO in Craig, said proposals to bolster rural emergency medical services and increase remote patient monitoring — say, by sending people home with blood-pressure cuffs — could create opportunities for hospitals like hers. But whether the plan ends up helping in the long term will depend on whether the state comes up with a way to support its initiatives once the five years are over, she said. “The devil is always in the details of how this is going to roll out,” Riley said. 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