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Rural challenges may dampen digital healthcare's potential
The $50B Rural Health Transformation Program has states investing in digital healthcare, but key challenges may limit its long-term transformative potential.
The Rural Health Transformation Program, or RHTP, aims to support rural healthcare by providing states with $50 billion over five years to improve healthcare access, quality and delivery in underserved areas. All 50 states threw their proverbial hats into the ring for the funding; each secured a slice of the $10 billion available for 2026.
States must invest the money in approved use cases, including promoting measurable interventions to improve chronic disease management and prevention and implementing technology-driven solutions for chronic disease management. Recent analyses from Chartis and the Bipartisan Policy Center show that digital health technology is a key focus in state applications for the funds.
"At a high level, we found that every single state is investing in digital health in some capacity, and that they're really using Rural Health Transformation funds to both modernize their core health IT infrastructure and expand virtual care options," Maya Sandalow, associate director of health policy at the Bipartisan Policy Center (BPC), said in an interview with Virtual Healthcare.
However, ongoing rural health challenges could hinder states' plans to enhance digital health access.
States eye telehealth, RPM for RHTP investment
The RHTP is launching at a critical juncture in rural healthcare. According to Chartis data, 40% of all rural hospitals operate in the red, and more than 400 hospitals are currently at risk of closure. The recent Medicaid cuts will likely worsen their financial situation, as Medicaid reimbursements account for nearly 10% of a typical rural hospital's net revenue.
The focus on digital health technology in states' RHTP applications could be an attempt to mitigate rural hospitals' dire financial straits.
Sandalow pointed out that even though rural communities could benefit significantly from digital health programs, including telehealth and remote patient monitoring (RPM), rural hospitals are often unable to adopt them due to the high upfront costs. The RHTP funding can provide a critical financial pathway to integrating digital healthcare.
"States are using these funds to kind of close the digital infrastructure gaps that have limited rural technology adoption for years," she said.
Michael Topchik, partner and leader of the Chartis Center for Rural Health, echoed Sandalow, adding that rural health CEOs are eager to upgrade their IT offerings.
"There are a lot of have-to-haves and many nice-to-haves," he said. "Their larger, more urban counterparts are making staggering investments, which is potentially going to put rural hospitals further behind."
The RHTP will inject between $147 million and $281 million into each state in 2026, the recent BPC report shows. States' applications for the funding include various proposals for telehealth and RPM programs. For example, Arizona, Arkansas and Maine aim to create telehealth hubs to act as additional community-based access points, while Florida and Utah plan to invest in telehealth-based access to specialty care, such as behavioral health and obstetrics.
Other states, including Kansas and South Carolina, proposed using some of the RHTP funding to increase the use of RPM and patient-facing technologies, such as digital health apps, wearables and AI tools, in rural areas.
According to Topchik, rural health workforce challenges are significant drivers of states' proposed investments in virtual care models. Not only are rural physicians and nurses leaving their jobs because of stress and burnout, but this workforce is also aging alongside their patients.
"The biggest challenge is, of course, workforce, workforce, workforce," he said. "When I talk to CEOs around the country, they tell me their No. 1 challenge that keeps them up at night is workforce."
But integrating telehealth into healthcare delivery in rural areas could alleviate this burden. It would allow providers to support care beyond their geographic location, bolstering services, including specialty and emergency care, in rural areas.
"[Telehealth] really potentially could be a huge relief valve for the crisis we have in rural America, which is a shortage of workforce," he continued.
In particular, telehealth could have a significantly positive impact on rural access to behavioral healthcare. Telehealth can be used to bring behavioral healthcare to the millions of Americans living in mental health professional shortage areas in a timely and convenient way, Topchik added.
Maternal healthcare is another key focus of states' virtual care proposals in their applications. In 2022, a little over half of rural hospitals (52.4%) lacked obstetrics services. Topchik noted that the applications included several proposals to expand obstetrics care through various mechanisms, including prenatal care via telehealth.
Interstate licensure compacts are also receiving a boost via the RHTP. These compacts authorize clinicians to practice virtually in participating states. The BPC report noted that states can earn extra points, which could result in more RHTP funding, by committing to specific policy actions, including joining these compacts.
"We saw a lot of states committing to [participation in compacts], which will often require collaboration with the legislature, which ultimately needs to approve it," Sandalow said.
For instance, Alaska committed to joining the Psychology Interjurisdictional Compact (PSYPACT), and New Mexico passed legislation in February to join several interstate licensure compacts.
RHTP offers a new hope for rural digital healthcare
Though digital healthcare in rural areas is poised to receive a significant boost from the RHTP, the gains may not be enough to overcome some of the longstanding challenges facing rural healthcare facilities. Access to stable Internet connectivity is one such challenge.
According to former Federal Communications Commission (FCC) Commissioner Anna M. Gomez, 24 million Americans lacked access to fixed broadband connectivity in 2024. That year, the FCC's Affordable Connectivity Program, which offered monthly discounts on broadband services, also ended, leaving rural communities without a "lifeline" to connectivity, Gomez noted in the 2024 statement.
Without access to reliable broadband, rural health providers' plans to invest in digital healthcare services could stall, as broadband is critical for remote care tools, Topchik said.
Further, Sandalow noted that the sustainability of these digital health plans is unclear, as the RHTP offers "time-limited funds." The impact of the funds on digital health programs in rural facilities will depend on how states plan to integrate these technologies.
"States' plans really vary in both the level of specificity and the types of ways that they're planning on investing in technology," she said. "Some states are looking to really integrate it throughout all of their initiatives, and for some states, it's kind of more of a one-off."
States will also have to figure out a way to sustain digital healthcare in the long term, beyond the five-year timeline of the RHTP, she added.
Still, there is reason to be optimistic. According to Topchick, the RHTP is effectively setting up 50 different experiments to enhance digital healthcare in rural areas. Each state is attempting to address rural health facilities' digital challenges in different ways, which will yield insights into what works and what doesn't.
"And CMS is very, very interested in studying those and identifying best practices so that those can be leveraged and shared more broadly," he said. "Just because someone tries something and it doesn't work out as well, that doesn't mean that they can't benefit from somebody else who does do something better. So, I expect it will have a tremendous impact."
Anuja Vaidya has covered the healthcare industry since 2012. She currently covers the virtual healthcare landscape, including telehealth, remote patient monitoring and digital therapeutics.
