Rural hospital leaders say a federal promise to modernize rural care is arriving as their budgets fray, with Medicaid funding reductions adding pressure on hospitals already worried about survival.
For the Saint Johns in Creighton, Nebraska, the local critical access hospital has been a lifeline. Rick and Jane Saint John said they moved to Creighton because the town’s hospital supports their child, who has nonverbal autism and epilepsy and can require up to three hospital visits a week. Jane Saint John said doctors saved her life when she contracted bacterial pneumonia, and she said that had she waited another day for care, her organs would have begun to shut down. Rick Saint John said driving an hour to the Yankton hospital could have cost her her life.
This reliance on nearby care is what makes the news of financial peril at Avera Creighton Hospital resonate. The Associated Press reported that the couple was shocked to hear the hospital faces financial peril, and it framed the concern as part of a broader rural realization that a large rural health “fund” does not automatically translate into an immediate rescue for vulnerable hospitals.
The program at the center of that debate is the $50 billion Rural Health Transformation Program included in President Donald Trump’s tax-and-spending law last year. Republicans have billed it as a way to help rural hospitals, but critics and hospital experts say its design limits how much it can stabilize facilities under current financial strain. The AP reported that the program includes $10 billion per year allocated across all states for five years.
Last summer, Health Secretary Robert F. Kennedy Jr. touted the initiative as a rural “biggest infusion in history” and pledged it would “restore and revitalize these communities.” The AP said the concern now is that the fund is expected to be used for innovation rather than covering shortfalls. Dr. Mehmet Oz, a Centers for Medicare and Medicaid Services administrator, said in a December video that the funding “gives states the tools to design solutions that last, not Band-Aids that fail,” and the White House said the money is intended to fund “big ideas” that improve access in the long term.
Hospital finances are the immediate sticking point. The AP cited warnings that rural hospitals are not just facing aging infrastructure but also Medicaid reimbursement cuts that have long helped hospitals manage bottom lines. It said rural hospitals were hit especially hard after last summer’s Trump administration cuts to Medicaid, the government’s safety net for low-income Americans. It also reported that millions of people are expected to lose Medicaid benefits as new Medicaid work requirements go into effect in 2027—a set of changes the Trump administration has said is aimed at cracking down on fraudsters rather than cutting off eligible enrollees.
KFF estimates add to the skepticism about what the $50 billion program can accomplish. The AP said health research nonprofit KFF projects rural hospitals will expect to lose $137 billion over the next decade, and it reported that advocates see that projected loss as far larger than what the new fund can offset if it is not structured to keep hospitals operating at current capacity.
Nebraska’s proposals illustrate the program’s innovation focus, even as some lawmakers seek more direct help for facilities at risk of closure. The AP reported that Nebraska received $218 million for the rural health grants’ first installment and plans to spend about $90 million on healthier food options at schools, recruiting more health care workers, and mobile sensors to remotely monitor chronically ill patients in rural areas. The state also plans $10 million to “right size” critical access hospitals that are at risk of closing by getting rid of inpatient care where bed occupancy is typically low.
Avera Creighton Hospital CEO Theresa Guenther told the AP that her hospital is not in danger of closing, though she said Medicaid cuts will be painful and that the hospital and others will have to determine what that impact looks like. She said the hospital hopes to obtain part of the $50 billion fund to help manage patients’ chronic diseases and cover workforce costs.
Nebraska Republican state Sen. Barry DeKay said hospitals like Creighton’s remain vital despite low occupancy rates. He also said his mother received life-extending care there after a hip replacement and that he worries the Medicaid cuts could hurt rural hospitals across the state. DeKay said, “I’ll try to be working as hard as I can to get as much money to rural hospitals — whether it’s in my district or any other rural district in the state,” and he said the hospital matters beyond medical care, citing job losses if services are reduced or the hospital closes.
The AP also reported pushback from hospital groups. It said the Colorado Hospital Association sent a letter in December to state lawmakers accusing them of ignoring input from rural hospitals during the application process. In Nebraska, the Nebraska Hospital Association has criticized both the Medicaid cuts and the structure of the $50 billion fund, including statements that efforts to limit Medicaid spending send a message “that access to health care is not a priority.”
Across the country, some Republican lawmakers have explored ways to use portions of the rural health program to help struggling hospitals. Meanwhile, some states have taken separate steps to keep hospitals open. The AP said Wyoming enacted a law allowing rural hospitals to file Chapter 9 bankruptcy, and that North Dakota’s legislature passed a bill aimed at rescuing a rural hospital through a low-interest loan of up to $5 million administered via the state-owned bank.
Even with those moves, rural hospital experts warned the timeline is tight. The AP reported that Wellness Equity Alliance policy expert Ben Young said, “I am not optimistic in the short term,” because rural hospitals face immediate financial shortfalls and need operating support now.