Alabama Governor Kay Ivey announced Wednesday that the state has submitted its plan for the federal Rural Health Transformation Program.
The plan submitted to the Centers for Medicare and Medicaid Services, CMS, details how Alabama will utilize funding provided by the Rural Health Transformation Program, established this year by the One Big Beautiful Bill Act.
“As someone from Wilcox County, making meaningful improvements in how we deliver health care in rural Alabama is critically important to me. Thanks to President Trump’s One Big Beautiful Bill, states have an opportunity to make transformational change that will benefit citizens and communities for generations,” Ivey said. “Making America Healthy Again begins in rural America, and I look forward to the state and federal governments working together to improve health care across the state.”
The OBBBA created a $50 billion multi-year investment program for healthcare systems in rural communities across the U.S.
Ivey’s office wrote that the Alabama Rural Health Transformation Program was developed in collaboration between the governor’s office, the Alabama Department of Economic and Community Affairs, the Alabama Department of Finance, the Alabama Medicaid Agency, the Alabama State Health Planning and Development Agency and a 20-person group of Alabama healthcare officials and lawmakers.
Initiatives established by the program will focus on improving healthcare access, implementing technological innovations, such as telehealth services and fostering financial resilience among the state’s rural healthcare systems.
ARHTP will include 11 state-wide initiatives: the Collaborative Electronic Health Record, IT and Cybersecurity Initiative, the Rural Health Initiative, the Maternal and Fetal Health Initiative, the Simulation Training Initiative, the Statewide EMS Trauma and Stroke Initiative, the EMS Treat-In-Place Initiative, the Community Medicine Initiative and the Rural Health Practice Initiative.
“My team left no stone unturned as it gathered information to submit our plan,” said Ivey.
“It is a thoughtful, strategic plan that must be coupled with state policy changes to maximize effectiveness,” the governor added. “Once implemented, the initiatives and policy changes will make meaningful improvements to healthcare in rural Alabama. They will help fulfill President Trump’s goal to Make America Healthy Again, and I have no doubt they will help Alabamians become healthier.”
The project narrative for ARHTP, released by ADECA, emphasizes the need for rural healthcare investments in Alabama in order to combat the “deteriorating healthcare system” in Alabama’s 58 rural counties, which are home to 1.6 million citizens, or 32 percent of the state’s population.
The document highlights the “persistent disparities” faced by rural communities in income, health outcomes and healthcare access when compared with rural municipalities, as well as higher rates of chronic disease and uninsured or underinsured residents.
According to ADECA, as of August, 60 percent of Alabama’s rural hospitals were at risk of closing, with 48 percent at “immediate risk.” In 2024, 65 percent of rural hospitals in the state had negative financial margins on patient services. The state provides more than $650 million in uncompensated care annually.
The ARHTP plan cites that four rural hospitals in Alabama have closed since 2019, three have closed their labor and delivery units since late 2023 and three have reduced inpatient services to become Medicare Rural Emergency Hospitals in recent years.
The document states that ARHTP will “target and prioritize all hospitals and persons” within Alabama’s rural counties, where health disparities, provider shortages and economic hardship are the most pronounced.
“When rural hospitals close or scale back services, residents lose access to emergency care, obstetrics, and other critical health services, leading to worse health outcomes and higher mortality rates,” the document states. “The closures also devastate local economies, as hospitals are often the largest employers and economic anchors in their communities. Alabama’s rural healthcare safety net is, therefore, in jeopardy—not only threatening public health but also undermining rural economic vitality.”
Although the OBBBA established the $50 billion fund for state rural health grants, from which ARHTP will draw its funding, the act also slashed federal Medicaid spending over the next ten years by $911 billion. The Congressional Budget Office also estimates that the act will lead to 10 million more people becoming uninsured nationwide by 2034.
According to a report from healthcare nonprofit, the Kaiser Family Foundation, the total rural health fund amounts to 37 percent of the estimated loss of federal Medicaid funding in rural areas over the next 10 years.
Funds from the RHTP will be awarded by CMS and administered in Alabama by ADECA. CMS will distribute $25 million of RHTP funds “equally among states with an approved application,” and will determine how to allocate the remaining half on a discretionary basis.
According to Ivey’s office, funding awards are expected to be announced by the end of the year.
