Rural Health Transformation: What Nonprofits Need to Know
This week, we intended to write about treacherous DEI keywords to avoid in grant narratives. But we have been fielding a lot of questions about Rural Health Transformation (it came up in our last two meetings), so bear with us while we take a moment to address this hot topic. We’ll circle back to DEI in two weeks.
When the OBBBA was signed into law on July 4, 2025, most headlines focused on tax policy, entitlement reforms, and sweeping cuts to discretionary grant programs. Far less attention has been paid to one of the bill’s more consequential investments for underserved communities: the Rural Health Transformation program.
For rural health nonprofits, clinics, and hospital systems, this program represents a rare bright spot in an otherwise challenging federal funding landscape - one that is increasingly competitive, politically scrutinized, and resource-constrained.
Why Rural Health Needed a Reset
We know rural communities face persistent and compounding health challenges; we’re headquartered in central Appalachia. Hospital closures, workforce shortages, aging populations, higher rates of chronic disease, and long travel distances for care all strain already fragile systems. Over the last decade, more than 140 rural hospitals nationwide have closed or converted services, leaving entire counties without local inpatient care. Those that remain are increasingly controlled by health systems with monopoly-power in many regions.
At the same time, rural providers are often excluded - intentionally or not - from large federal innovation initiatives that assume urban density, academic medical partners, or robust administrative infrastructure. The Rural Health Transformation program is designed to counter that trend.
What Is the Rural Health Transformation Program?
Authorized and funded under OBBBA, the Rural Health Transformation program channels federal investment into structural, system-level improvements for rural healthcare delivery. Unlike traditional service grants, this initiative emphasizes transformation rather than short-term operations.
While agency-specific guidance is still rolling out, the program is expected to support:
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Integrated care models that coordinate primary care, behavioral health, and substance use treatment
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Telehealth expansion and digital infrastructure upgrades
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Rural workforce recruitment, retention, and training pipelines
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Hospital sustainability planning and service redesign
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Community-based partnerships that address social determinants of health
These grants will be made to states that apply and we anticipate that each state will have its own process and procedures for subgranting (or not) once the state awards are made.
Why This Program Matters in the OBBBA Context
OBBBA dramatically reshaped the federal grant environment. Billions of dollars in previously authorized discretionary funding were rescinded, including grants already awarded but not fully expended. Research, equity-focused, and infrastructure programs saw deep cuts, and many nonprofits are now operating in a climate of uncertainty.
Against that backdrop, Rural Health Transformation stands out for two reasons:
It prioritizes rural communities explicitly.
In a bill that reduced or eliminated many place-based and equity-driven programs, rural health received direct statutory attention - an acknowledgment that rural systems require tailored solutions.
It supports capacity, not just services.
This program recognizes that rural health challenges are not solved by one-year pilots or isolated service expansions. Instead, it is supposed to invest in governance, systems, workforce, and long-term sustainability.
For nonprofits accustomed to stitching together short-term program grants, this shift is significant.
The Timeline
Rural Health Transformation (RHT) Program webpage, housed within CMS, indicates that states will receive awards by December 31, 2026.
Who Should Be Paying Attention?
The Rural Health Transformation program is particularly relevant for:
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Rural hospitals and critical access hospitals
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Federally Qualified Health Centers (FQHCs) and rural health clinics
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Behavioral health and substance use treatment providers serving rural areas
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Public health nonprofits and rural health coalitions
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Community-based organizations partnering with healthcare providers
Once the awards are made, it will be important to keep an eye on state-level decisions and communications to know how to access funding opportunities in your state.
Strategic Implications for Nonprofits
While the opportunity is promising, competition will be intense. Nonprofits that want to be competitive should begin preparing now by:
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Documenting regional health gaps with data, not anecdotes
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Strengthening partnerships across clinical and community-based sectors
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Investing in evaluation and outcomes tracking capacity
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Aligning projects with sustainability beyond the grant period
This is not a program for “business as usual” proposals. States should be looking for evidence that applicants can fundamentally change how care is delivered in rural settings.
A Rare Opportunity - With Strings Attached
The Rural Health Transformation program does not erase the broader challenges introduced by OBBBA. Many nonprofits are still grappling with rescinded funds, delayed competitions, and shrinking discretionary pools. But for rural health organizations, this program offers a chance to move from survival mode toward long-term resilience.
The organizations that succeed will be those that treat this funding not as a lifeline - but as a catalyst for real, measurable transformation.
As guidance continues to emerge, rural health nonprofits would be wise to watch this program closely. In a constrained federal environment, opportunities like this are few - and the stakes for rural communities could not be higher.