Pennsylvania will receive $193 million from a new federal program that supports rural healthcare.

The Rural Health Transformation Fund was created in the One Big Beautiful Bill Act of July, 2025. The $50 billion fund will be dispersed over the next five years. Each year half of it ($5 billion) will be split evenly between all states, the other half will be competitively awarded.

Rural hospitals nationwide could get $137 billion less in Medicaid funds over the next 10 years because of Medicaid work requirements, according to a KFF report.

Rural health systems run on tight margins (not enough patients to cover the cost of operating a hospital)- so any change to their fiscal portfolio can spiral to crisis.

“It was created as a response to the One Big Beautiful Bill,” said Kathy Hempstead, senior policy officer for the Robert Wood Johnson Foundation. “But it doesn’t really solve for that problem.”

15% of the money states get can go directly to providers, which Hempstead says does not make up for the immediate losses rural hospitals are facing.

The Rural Health Transformation Fund goal is to discover more efficient and economic ways to delivery quality healthcare in rural communities. Most of the money can be used on social experiments and pilot programs– like creating housing stipends for medical residency students or exploring new ways to operate EMT/transportation services.

Hempstead describes the program as more “upstream” focused.

“They might make a difference. They might help, but they’re not going to help today,” Hempstead said.

Pennsylvania will distribute the money to eight regional Rural Care Collaborators, who will work with local economies and health care systems on projects. The Commonwealth has highlighted six initiatives they want to focus on:

Technology/InfrastructureWorkforceMaternal HealthBehavioral HealthAging & AccessEMT/Transportation

With federal money flowing, state lawmakers from rural areas have ideas for programs.

“Not only do we need to have access. We have to have quality health care. And that means we need doctors in rural Pennsylvania,” said Sen. Michelle Brooks, a Republican for Crawford County who chairs the Health & Human Services Committee.

Brooks has legislation that will use Rural Health Transformation Funds to attract medical students to do their residency in rural hospitals- honing in on the workforce initiative.

“Because statistics demonstrate that if you do your residency in rural Pennsylvania, oftentimes those doctors stay in rural Pennsylvania,” Brooks said.

There are 9 Pennsylvania counties with no hospital, and 18 that have just one hospital in their county boundary- according to 2024 data from the Center for Rural Pennsylvania. Primary and other sorts of professional care are also sparse in these regions.

“I think the question people can ask now is, how will this money be spent in your state?” Hempstead said, “What programs does it go to? And will the money and results be tracked?”

Hempstead says the success of the program will depend on if the federal government actually tracks the progress of pilot programs.

“The states are all taking this seriously and trying to take the funds and do the best they can with them,” Hempstead said. “But the truth is it doesn’t solve the pressing problems of rural hospitals right now- that are only going to get worse as we see a lot of people lose coverage.”