In July of 2025, Public Law 119-21, commonly known as the One Big Beautiful Bill, was enacted. Among other provisions, the Bill included the Rural Health Transformation (RHT) Program, which allows the Centers for Medicare & Medicaid Services (CMS) to award designated healthcare funding to all 50 states.
The RHT program includes $50 billion in federal grants and aims to improve healthcare access, quality, and outcomes in rural communities.
For health system leaders thinking these funds could be used for the back office, including financial, workforce, and operational applications, you would be correct! The RHT Program does indeed provide a rare funding opportunity to strengthen and enhance various software and security elements that support rural healthcare facilities.
In this post, we’ll take a closer look at the specifics of the program, identify easy opportunities that healthcare organizations can prioritize as part of it, and discuss what some states are already doing with the program’s funding.
First up, the basics.
How Does the Rural Health Transformation Program Work?
It’s simple. The money is distributed over the course of the next five years, from fiscal year 2026 through fiscal year 2030, with $10 billion available each year. Half of the annual total is split equally among the states. CMS allocates the other half using a formula based on factors like rural population, the number of rural health facilities, and each state’s policy commitments and proposed initiatives.
CMS approved awards for all 50 states in December 2025, and states now control how funds are distributed within their borders for fiscal year 2026. Providers access the money through their state’s process, whether that’s a direct grant application or an intermediary, like a hospital system or association.
Each year, states must build their spending plans around a defined set of approved uses of funds, and they must direct funding toward at least three of them. The approved uses include areas like prevention and chronic disease management, workforce recruitment and retention, cybersecurity, and technology adoption in rural hospitals.
Making the Best Use of RHT Funding
Well into year one of the five-year program, a lot of the early attention has focused on clinical priorities, like telehealth expansion, chronic disease management, and behavioral health access. Those are important investments, but they aren’t the only ones.
If you look closely at the spending plans, you’ll quickly see that many of them read like an ERP project charter.
That’s because the RHT program covers technical assistance, software, and hardware for IT advances that improve efficiency and strengthen cybersecurity. It also funds training and adoption support for technology-enabled solutions in rural hospitals, including AI.
Aging financial systems, manual supply chain processes, and workforce management tools that can’t handle modern scheduling are efficiency problems and thus can qualify as a targeted area to improve via the RHT’s federal funding.
If you lead finance, IT, or supply chain at a health system with rural facilities, a few project types map cleanly to the available dollars:
System consolidation after affiliation: Bringing a newly affiliated rural hospital onto your existing ERP platform fits squarely within the shared operations and technology language. Think expansion and consolidation work on the existing system, followed by process optimization once the facility is live. This is a defensible back-office use of RHT dollars because the efficiency gain is measurable and the partnership requirement is built into every state plan.
Workforce management modernization: It’s well documented that the healthcare industry is experiencing labor shortages and rural facilities are a part of that story. These systems lose staff to burnout and scheduling chaos. Fortunately, RHT’s workforce goals give cover to invest in scheduling, time & attendance, and labor analytics tools that make rural sites easier places to work.
Cybersecurity hardening: Rural hospitals are frequent ransomware targets, and cybersecurity capability development appears by name in the approved uses. Moving off unsupported legacy systems is often the single biggest security upgrade available. That’s because many cloud systems, like Infor CloudSuite, shift infrastructure security, patching, and updates to the vendor. Beyond the responsibility falling on the host, these systems also include frequent automatic updates that roll out with minimal disruption.
AP & financial process automation: Another area rural facilities should turn their attention to is accounts payables (AP). Healthcare AP is a very complex space, so implementing a purpose-built solution to relieve staff of having to chase down paper invoices is a good investment. Plus, automation here is low-lift, high-return, and doesn’t require a full platform migration.
One note on guardrails. The funding comes with spending caps: no more than 10% of a state’s award can go to administrative costs, capital expenditures and infrastructure are capped at 20%, and replacing existing certified EHR systems is capped at just 5%. Funds also can’t cover new construction, replace existing federal funding, or plug operating deficits. Read those limits closely and something interesting stands out.
The clinical system everyone assumes will absorb the technology budget has a hard ceiling, while back-office systems carry no equivalent cap—meaning the caps favor the exact projects listed above.
The Sustainability Requirement is the ERP Story
Here’s what makes the RHT program so interesting. One of its five strategic goals is sustainable access: helping rural providers become long-term access points for care by improving efficiency and sustainability, which CMS describes as rural facilities working together, or with high-quality regional systems, to share or coordinate operations, technology, and care.
And every state’s transformation plan is required by statute to strengthen local and regional partnerships between rural hospitals and other providers.
When you think about what those two things mean in practice, it becomes clear. Shared operations run on shared systems. There’s no version of regional coordination where every facility keeps its own general ledger and its own item master and things somehow work out. The program doesn’t say ERP anywhere in its language, but the sustainability goal depends on it.
A Word About the Smallest Facilities
The RHT program is aimed at small rural hospital systems. But how small is small? It’s a fair question as most of this money is aimed at 25-bed critical access hospitals and rural clinics that likely don’t have the need for an ERP or other systems of this scale.
But two things remain true. The first is that many rural hospitals belong to or are affiliated with larger regional systems, and a small facility may be the named beneficiary while the shared platform work happens at the system level.
Consider how that plays out. An independent 30-bed rural hospital is losing money and losing staff, the exact profile this program exists to save. Through a state-funded initiative, it formalizes an affiliation with a regional health system.
The affiliation is the transformation the state pays for. But making that partnership real involves deep systems work—the rural facility moves onto the regional system’s financials, purchasing, and scheduling platforms so shared operations actually operate. The grant may have named the small hospital, but the implementation work, and the relationship, happen at the enterprise level.
The second is that right-sized technology exists for standalone facilities. Under the program’s approved uses, a critical access hospital that can’t justify a platform migration can still fund AP automation, workforce scheduling, or a cybersecurity upgrade.
Simply put, the funding fits more organizational sizes than the headlines suggest and if you’re considering system enhancements, it’s worth reading into your state’s plans. Speaking of which…
How States Are Using RHT Funds
Below are examples of three states already putting RHT funding to work to support their hospitals’ back-office infrastructure.
Washington: The state’s RHT project narrative proposes $32 to 42 million per year for investments in AI, cybersecurity, revenue cycle management, and governance to improve hospital efficiency and capacity. The same plan funds a rural health network to offer shared services to member hospitals and names reduced administrative burden as a fix for the root causes of financial instability in rural healthcare.
Texas: The Lone Star state has its sights set on building shared infrastructure. The Rural Texas Strong plan includes a cybersecurity initiative creating a shared platform for hospitals, clinics, behavioral health providers, and rural veteran nursing homes. The state frames the investment in operational terms: protecting revenue streams and keeping billing and operations running through an attack.
New Mexico: New Mexico is using RHT funds to hire a contractor whose whole job is helping rural hospitals fix their operations and finances. That includes helping struggling facilities affiliate with larger systems and share services. The state will judge the work on two numbers: operating margins and workforce retention.
Getting Access to RHT Funding
Healthcare systems don’t apply directly to CMS. States receive the awards and distribute funds in their own way. Some states run direct grant applications for eligible providers. Others use an aggregator model, routing money through hospital associations or rural health networks that select subrecipients.
That means your first call is to your state’s program office or hospital association, and your second call is to whoever helps you scope the project you’d propose. Proposals with defined outcomes, realistic timelines, and measurable gains will beat vague modernization asks every time.
And that’s where an implementation partner who has done this work at rural and regional health systems can play a critical role. While not a grants administrator, a partner like RPI can help you define the project, the outcomes, and the budget that goes into your application. Eligibility rules and application requirements vary by state, so confirm those details with your state’s RHT program office before scoping anything.
The Time to Act is Now
States are moving through their first year of distribution, and year 1 dollars are largely committed in many states, which makes now the moment to position for budget period 2. There’s no single application window. Each state runs its own process on its own timeline, so the next opportunity in your state may already be taking shape.
The deadlines are tighter than a five-year program sounds though. Under CMS rules, first-year funds must be obligated by October 30, 2026, and spent by September 30, 2027. States are pushing procurements out quickly to hit those marks, and the next round of funding arrives on the same compressed clock.
Health systems that identify their back-office use case now will spend RHT dollars on transformation. The ones that wait will spend the next five years reading about it.
So, ready to put RHT dollars to work? RPI helps rural and regional health systems modernize workforce management, automate AP, and consolidate back-office systems, with the healthcare references to prove it.
Contact us below to get started on scoping a project that fits your state’s funding priorities.
