Why rural healthcare fund’s $50B focus on tech upgrades may not help vulnerable hospitals and providers

Healthcare across rural America is in crisis.

In the past two decades, close to 200 rural hospitals have closed – 44 since 2020 alone. Hundreds more have cut much-needed health services, such as maternity care and chemotherapy treatments. Nearly half are losing money on their day-to-day operations, putting them at risk of closure.

Most regions in rural America are designated as areas that lack sufficient healthcare providers.

In 2025, the federal government launched a five-year, US$50 billion program – the Rural Health Transformation Program – to help modernize rural healthcare delivery in all 50 states.

This money is certainly much needed. As a longtime rural policy advocate and researcher, I am well aware of the ongoing barriers that prevent rural hospitals and providers from delivering high-quality care.

However, I fear that the program is too focused on making expensive and unsustainable technology upgrades that will still leave rural hospitals and health providers holding the bill for basic local infrastructure they often can’t afford.
In addition, a disproportionate focus on technology runs the risk of overlooking the most basic needs of rural healthcare systems, such as ensuring that rural areas have a healthy healthcare workforce – and providers that get paid for the work they do.

Uphill battle for rural healthcare dollars

The Rural Health Transformation Program was launched as part of the tax and spending package signed into law by President Donald Trump in July 2025.

This law will hit rural hospitals hard. For one, it will cut federal spending on Medicaid by nearly $1 trillion over 10 years, according to estimates from the Congressional Budget Office. This will directly squeeze rural hospitals’ already small operating margins.

The 2025 law is also expected to increase the number of uninsured Americans by up to 10 million by 2034. That means already strained healthcare providers will have to provide more unpaid care – placing them at even greater risk of closures.

The Trump administration billed the Rural Health Transformation Program as a way to mitigate these effects – though $50 billion does not cover the financial losses that rural healthcare systems are expected to incur due to the tax and spending bill.

The program includes $25 billion to be disbursed equally among all 50 states, regardless of each state’s size or population. Another $25 billion will be awarded to states for projects relating to technology upgrades, chronic disease programs, specific state policies and boosting the rural healthcare workforce.

Many of the states’ approved applications prioritized technology, such as investments in electronic health record systems, artificial intelligence capabilities and data sharing from urban centers into rural areas.

A growing digital divide

There’s no doubt that technology has a growing role in healthcare. Since the COVID-19 pandemic, patients increasingly use telehealth to access needed care. Remote patient monitoring – using digital devices to track and report clinical data like blood pressure or glucose levels remotely – has become more widespread.

Clinics and hospitals are also increasingly adopting AI to summarize conversations between patients and providers and help with documentation, diagnosis and more.

Rural providers have long lagged behind in adopting new technology – not from a lack of interest, but from a lack of staff and resources. Electronic health records and other IT tools such as AI require expensive software and computer equipment, as well as staff trained in running these systems.

A one-time, short-term infusion of funds from the rural health program can pay for purchasing and setting up new technology tools, but it isn’t clear where the money for maintaining and upgrading them will come from when the program’s funds run out.

Who gets the money?

Many companies that provide health technology services to rural areas, such as Epic and Oracle, are based in cities. Rural healthcare providers often access these services by partnering with large, urban health centers that already have them.

Upgrading urban systems can be valuable. But many rural providers are making do with outdated computers and information systems that lack cybersecurity protections and other technological capabilities.

As Rural Health Transformation Program funds start rolling out, some health policy experts worry that most of this money will go to tech companies or urban health centers, rather than directly benefiting rural providers or being spent in partnership with them.

Without also investing in local technology infrastructure that can handle advanced electronic health records or AI systems – and workers who can maintain those systems – such centralized upgrades may fall short of transforming rural care.

Supplement, not supplant

Perhaps the biggest worry about the program’s push to expand telehealth and other technology-enhanced services in rural communities is whether it will displace existing, in-person local providers in favor of distant ones.

A mantra often repeated among rural leaders is that technology should supplement the care that healthcare practitioners in those communities already provide – not supplant it.

Big tech solutions are already having this effect, to some extent. Retail-based care through companies such as CVS and Amazon, especially delivered online, risks essentially reducing the demand for local providers. This cuts into income that these providers rely on to keep brick-and-mortar clinics running – and it also further fragments care, which hurts patients’ health.

Enabling providers in some healthcare specialties to serve rural communities remotely from nearby urban areas would benefit those rural patients. But in my view, deepening reliance on technologies such as telehealth, online retail clinics and AI-based diagnosis – without close coordination and sharing information with providers in the community – could end up fragmenting rural healthcare even further.