LINTON — Indiana is expected to receive around $1 billion over the next five years earmarked to do one thing: improve health in rural communities.
The influx of funding comes from the federal Rural Health Transformation Program that Congress approved last year as part of the One Big Beautiful Bill to help adjust for losses in Medicaid funding. It allocates in total $50 billion to all 50 states. Indiana will receive nearly $207 million this year for its first allocation.
The money marks one of the largest investments into the state’s rural healthcare services in years, according to Cris Henderson, a research associate for Prevention Insights at Indiana University’s School of Public Health.
“I think it is fair to say that we … are excited about what is possible over the next five years,” she said.
But Brenda Reetz, CEO of Greene County General Hospital, isn’t so thrilled.
Last year, the critical-care facility in rural southern Indiana operated at a loss of $1.75 million. The hospital in January only had enough cash on hand to stay operational for 10 days.
None of this new funding will help the facility stabilize its finances, Reetz said.
In Indiana, hospitals are expected to lose $12.7 billion over the next 10 years due to the Medicaid spending cuts created by the One Big Beautiful Bill, according to the Indiana Hospital Association. The anticipated $1 billion provided by the federal health program hardly makes up for that loss.
“That’s what keeps me awake at night,” she said. “This program can be transformational, but are we even stable enough to do it?”
What’s in the program?
State agencies spent months last year working with healthcare organizations from across rural Indiana to develop a plan on how to spend the money.
The plan, approved in December by the Centers for Medicare & Medicaid Services (CMS), focuses on 11 strategic initiatives. Those include bolstering telehealth services, providing transportation to providers, technology upgrades and increasing the rural healthcare workforce.
The plan also created eight regions in the state that could apply for grant funding to carry out specific projects and strategies to meet the needs of residents. Grant applications were due July 1.
In the south-central region made up of eight counties, nearly 30 agencies are collaborating to focus on mental health, infant and maternal health and access to care, explained Henderson, whose IU program is one of the collaborators.
Daviess Community Hospital, located in the small southern city of Washington, has applied for program funding to support maternal health, prevent infant mortality and upgrade its medical records technology, CEO Justin Harris said.
The funding will bolster services that are lacking in many rural parts of the state, he said, and praised state leaders for developing a comprehensive plan to improve residents’ health.
‘This is our money’
Even so, Harris called the program a “Band-Aid.”
His hospital for years has operated with million-dollar deficits due in part to underpayments from both Medicaid and commercial insurance companies. The facility broke even for the first time in April, Harris said.
The rural-health dollars are a short-term investment, he said, not a long-term solution.
“It’s a five-year program — which is fantastic — but then what happens after five years?” Harris said.
The original intention of the program was to create funding explicitly to help prop up rural hospitals following the rollout of the One Big Beautiful Bill, according to Dan Hardesty, senior director of government affairs at the Indiana Rural Health Association.
But when CMS later announced the details of the program, the scope of the funding shifted from only hospitals to general initiatives to improve rural health, Hardesty explained.
Reetz with Greene County General Hospital said that change has created “heartburn” for facilities that are already losing money due to Medicaid underpayments and struggling to stay open. Since 2015, nine Indiana hospitals have closed or shuttered their in-patient services due to financial losses. Most of those were in rural communities.
“Rural hospitals really do feel like this is our money to help us out and stabilize us, but that’s not the way the rules were written,” she said.
Harris said even though the funding won’t directly help the bottom line at the Daviess County hospital, he’ll gladly spend the money to bolster the programs he can.
In the meantime, the hospital will continue to push for policy changes to achieve long-term financial stability.
“I’m going to take it for what it is, and I’m going to be positive about that,” Harris said. “There’s a lot of opportunity out there.”
Editor’s note: This story was updated on July 16 to say all Indiana hospitals are expected to lose a collective $12.7 billion over the next 10 years — not just rural hospitals. And that nine hospitals have closed since 2015 — not 10 since 2020.
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FPI News reporter Carson Gerber covers pressing issues throughout the state and how local communities are tackling those challenges. Reach him at 756-204-4250 or carson.gerber@fpinews.org.
