Rural Health News is a weekly segment of Rural Health Today, a podcast by Hillsdale Hospital.
On December 29, 2025, the Centers for Medicare and Medicaid announced how the Rural Health Transformation Program funding will be distributed to the states. This program was created to support rural hospitals in the H.R. 1 legislation that exorbitantly cuts funding from the national rural health infrastructure. While we are grateful for the federal government’s recognition of the need for rural health funding, we were disappointed by the minimal financial contribution to this program, as well as how the funding would be dispersed.
The new rules imposed by H.R.1 will result in a $6 billion loss for Michigan hospitals over the next 10 years. With many hospitals already experiencing devastating losses from rising subsidies, cost of labor and visa increases, our state should expect to see many hospital and clinic doors closing as these cuts take effect, leaving those communities without the critical and preventative care they need.
When the opportunity arose for hospital leaders to submit their recommendations for funding to the state, I was honored to lead the task force organized by the Michigan Health and Hospital Association. I met with many other rural health CEOs and industry experts and we shared our pain points and what would be required to keep the doors open for each of our institutions. Ultimately, we formed five recommendations and passed them on to the state for review.
Several weeks later, we heard that Michigan had submitted its application for the Rural Health Transformation Program funding without addressing our recommendations or including a single one of them in the application. I read through the application when it was published online for the public to review. While some solid needs were represented, such as new technology and workforce wellness, the application lacked concrete strategies and clear support for rural hospitals themselves. Following the proposed direction of the funding, it goes to the state first for forming an administrative office to distribute the funds, then to many non-rural “partners” in care to form opportunities rural hospitals can then apply for if they’re eligible.
When the $6 billion loss hits, it’s not going to hit the state and non-rural partners. It’s going to hit our hospitals’ bottom lines. It’s going to carve out the reimbursement Michigan healthcare providers need to deliver services and support rural communities.
In response to the state’s application, CMS awarded $173 million, far short of the $250 million Michigan applied for. The state of Michigan, which has some of the largest rural health needs, is receiving the eighth lowest amount of funding in the country. In light of this, let’s consider a few facts.
- Michigan has the fourth most residents who live in a rural county with either a complete or partial primary care workforce shortage.
- We are sixth in the country for residents living in a rural county with a full or partial mental health workforce shortage.
- 40% of rural counties in our state don’t have a practicing OB-GYN.
If I were to speak on behalf of rural healthcare providers across the state of Michigan, this is what I would say: Our mission is to bring health services to families and individuals at their most vulnerable moments. Rural communities are the heart of our nation and sustaining them requires adequate access to healthcare. There are so many barriers unique to rural communities that make it difficult to thrive: food insecurity, lack of transportation, economic decline, isolation, poor literacy, the list goes on. But at nearly every point of that list, I can still truthfully claim that having a hospital makes a positive difference. We prop up our local food pantries and fuel the local economy. We listen to each patient and provide the mental health support so many need. We guide them through the healthcare system and personalize their care because that’s what it means to be a rural hospital.
When decisions are made at the state and federal level, real communities are impacted down the road. I fear that we are about to see a domino effect of lost resources and closing hospitals as H.R.1 takes effect and Michigan doesn’t have the funding it needs to support rural health. Before it’s too late, we have to rewrite this story. CMS needs to adjust this funding allotment to better prioritize Michigan’s needs. If we don’t take care of our rural hospitals today, they won’t exist tomorrow. So, let’s go back to step one and figure out what our state really needs so we can leverage every available dollar to support rural health. Our communities are counting on it.
— Jeremiah J. Hodshire, President & CEO of Hillsdale Hospital
Rural Health Today is a production of Hillsdale Hospital in Hillsdale, Michigan and a member of the Health Podcast Network. Our host is JJ Hodshire, our producer is Kyrsten Newlon, and our audio engineer is Kenji Ulmer. Special thanks to our special guests for sharing their expertise on the show, and also to the Hillsdale Hospital marketing team. If you want to submit a question for us to answer on the podcast or learn more about Rural Health Today, visit ruralhealthtoday.com.
