The Rural Health Transformation Program’s (RHTP’s) $50 billion injection is “a significant step forward” for the rural health safety net but likely comes too late to reverse years of deterioration that have left hundreds of hospitals in jeopardy.
That’s according to the latest annual report from Chartis on the current state of rural health. This time around, the healthcare advisory services firm warned that 41.2% of all rural hospitals are operating in the red, and 417 are “vulnerable to closure” based on a model Chartis developed that incorporates factors like net patient revenue changes and consecutive years of operating losses.
Those numbers are a slight improvement over last year’s report, which flagged 46% of rural hospitals operating at a loss and 432 vulnerable facilities.
Still, Chartis said the gains aren’t uniform. Operating improvements are “largely due to stronger financial performance of rural hospitals in expansion states,” where 34.9% are in the red and the median operating margin is 2.9% (up from last year’s respective 43% and 1.5%). In the country’s 10 non-expansion states, 52.2% are operating in the red, and the median operating margin is -0.7% (versus the 53% and -1.1% of last year).
As for those at risk of closure, the largest threat faces rural residents in Texas (50 at-risk rural hospitals), Kansas (44), Tennessee (27), Georgia (25) and Mississippi (24). Year to year, Chartis highlighted jumps in the percentage of vulnerable rural hospitals in Tennessee (44% in 2025 to 61% in 2026) and South Dakota (28% to 42%).
Since 2010, Chartis found there have been 206 rural hospitals that have either closed or have converted to models that exclude inpatient care, such as by adopting a Rural Emergency Hospital designation.
Besides outright closures, Chartis warned of the care deserts some states and rural communities face for specific services.
Chemotherapy, for instance, was ended at 448 rural hospitals between 2014 and 2024, and 10 states had more than 40% of their rural hospitals stop offering the service. Obstetrics has also been a sore spot, with 331 rural hospitals ending services between 2011 and 2024, headlined by 71% of rural obstetrics units closing in Florida.
RHTP ‘likely to treat symptoms but not deliver a cure’
Rural hospitals’ path forward is a perilous one with reduced reimbursement and payer mix disruption on the horizon, Chartis wrote. On the former, annual policy-driven cuts will cost rural hospitals nearly $690 million this year alone while impending Medicaid reductions from the One Big Beautiful Bill Act (H.R. 1) will hit rural hospitals for nearly $140 billion over multiple years.
A bright spot for rural care is the five-year, $50 billion RHTP that was included in last summer’s spending bill. States spent the back half of 2025 filing applications spelling out their plans for the money and, in late December, the Centers for Medicare & Medicaid Services (CMS) shared its decisions on how much money each would be receiving in fiscal year 2026.
The year’s awards range from $281 million (for Texas) to $147 million (for New Jersey)—though Chartis tempered expectations on how much of that funding will reach hospitals’ most pressing operating needs.
“Although initial public talking points surrounding the RHT program suggested the fund would offer direct relief to rural hospitals, the final text of H.R. 1 included a broad list of eligible entities,” the firm wrote. “It also defined a broad list of allowable uses for the allocated funds. While these allocated funds may seem significant, provider payments cannot exceed 15% in a given budget year per [the CMS]. States also cannot spend more than 20% on capital expenditures and infrastructure.”
Chartis noted that the RHTP’s allocations aren’t neatly aligned with the vulnerability of each state’s rural hospital safety net or the size of its rural population. An analysis of the 47 state applications that were made available to the public conducted by the firm “revealed inspirational and aspirational initiatives” that should bring benefits as well as “provisions that may undermine the RHT program’s overall effectiveness and increase safety net instability.”
Among the positives, states frequently outlined plans to boost interoperability in rural settings and modernize IT platforms, efforts many rural hospitals are forced to postpone due to limited cash on hand, Chartis wrote. Every reviewed application outlined some kind of telehealth initiative to improve care coordination, extend limited workforces and improve access, per the report.
Sixty percent of the applications included efforts to either create or expand collaborative rural hospital networks. Many states plans to address Make American Healthy Again priorities of behavioral health (cited in 54% of applications) and chronic disease (60%), “offered a compelling mix of foundational and innovative approaches to changing behaviors” including clinical, community or technology-led programs.
Chartis’ apprehension largely centered on eight RHTP applications that outlined plans to reform Certificate of Need laws, which require organizations to convince regulators of substantial unmet demand for care before opening new hospitals. The reform plans cite reduced competition and barriers to access expansion, which the firm worried could lead to specialized providers pulling much-needed high-margin outpatient service volumes away from rural hospitals.
“At the median, outpatient services generate 85% of revenue for Critical Access Hospitals and 77% for rural and community hospitals,” Chartis wrote. “Greater competition for these services will likely siphon vital revenue streams from rural hospitals, further jeopardizing their financial viability.”
While the states’ proposals are broadly “innovative” and should “positively impact healthcare in rural communities,” Chartis said the program and its money likely won’t be enough to reverse rural hospitals’ current or future financial realities.
“The Medicaid cuts that take effect in 2027 will intensify efforts to stabilize the financial viability of rural hospitals. Rural hospitals need to plan for those cuts while using RHT funding at the state level to deliver the maximum benefit from those programs and initiatives to the communities they serve,” the report concludes.