Pennsylvania’s Opportunity to Transform Rural Health

September 11, 2025

Pennsylvania is developing its application to participate in a new federal fund created to stabilize access to care in rural areas as hospitals and communities brace for sweeping Medicaid cuts.

The Rural Health Transformation Program (RHTP) provides $50 billion in funding nationally over five years. States must apply this year to participate. Half of the funding will be distributed evenly among participating states and the remaining half will be awarded based on CMS’ discretion.

HAP is advocating with both state and federal leaders to ensure that Pennsylvania’s plan helps stabilize rural hospitals so they can continue to provide comprehensive care in their communities.

Here are five things to know:

Intent of the Program:  In a letter this week to CMS Administrator Mehmet Oz, U.S. Senator David McCormick (R-PA) and U.S. Representative John Joyce (R-PA-13) emphasized that Congress’s intent is for the program to provide “direct support to rural hospitals so they may remain sustainable.”

“By focusing resources on hospitals, Congress is intending to address the risk of closures and ensure that rural Americans continue to have a reliable, local point of entry to the health care system,” the lawmakers wrote. “The fund must make investments that help rural hospitals serve their communities when funding ends, not create new initiatives that cannot be sustained without additional support.”

Care at Risk:  Pennsylvania’s rural hospitals and the services they provide communities are already at-risk, with fewer than half are operating with margins necessary for long-term stability and about 40 percent have faced multi-year losses, HAP noted in an August letter to Department of Human Services (DHS) Secretary Valerie Arkoosh. This will worsen as they absorb an estimated $1 billion in direct Medicaid cuts over the next decade plus a sharp rise in uncompensated care as Pennsylvanians lose health coverage.

Opportunity for Pennsylvania:  The RHTP won’t offset Medicaid cuts, but it can provide an upfront infusion of resources that help rural hospitals make the necessary investments to better weather the losses and promote future stability. “Pennsylvania has an opportunity through the RHTP to help protect the stability of rural hospitals so they can continue to serve their communities,” HAP President and CEO Nicole Stallings wrote in a recent column for RealClear Pennsylvania. “But only if we focus on the right investments.”

Ways to Sustain Care:  In a letter to Arkoosh last week, HAP laid out detailed strategies for how the commonwealth can make lasting investments to stabilize access to hospital care now that will not require continued funding when the RHTP ends. Those include:

• Investments to supercharge initiatives to develop, attract, and keep providers in our rural communities.
• Infrastructure improvements to modernize facilities and implement technology that supports innovations like telehealth and virtual nursing.
• Regulatory flexibility and updates that empower rural hospitals to innovate.

In their letter to Oz, Joyce and McCormick also emphasized opportunities to support hospital investments in workforce, infrastructure, and technology.

Quotable:  “Beyond health care, rural hospitals are often the top job creators and economic anchors in their communities,” Stallings wrote. “They enable vibrant communities where people want to live and where businesses can grow. With so much at stake for our rural communities, policymakers must prioritize investments through the RHTP that keep rural hospitals intact and protect the vital role they play.”

See HAP’s detailed recommendations for how the RHTP can support rural health care access online.