By Jeremiah Hodshire, President & CEO of Hillsdale Hospital
When the One Big Beautiful Bill Act was signed into law in July, it created the Rural Health Transformation Program, a five-year, $50 billion investment in rural healthcare. The MHA Board of Trustees took swift action empowering an MHA board-appointed task force charged with creating recommendations that the Michigan Department of Health & Human Services (MDHHS) could use when submitting the one-time application for funding.
I’ve had the pleasure of chairing the task force and working alongside my colleagues Tonya Darner, UP Health System; Karen Cheeseman, Mackinac Straits Health System; Dr. Ross Ramsey, Schuerer Health; Michael Rose, MyMichigan Health; and Peter Marinoff, Munson Healthcare. This process has been collaborative and informed by other rural hospital leaders across the state through the Rural CEO Town Hall the MHA hosted in late September. I am also deeply indebted to the MHA staff, specifically the driving force behind keeping our committee on task, Lauren LaPine-Ray, who has served as an outstanding ambassador, facilitator, researcher and connector as we navigate the federal guidelines! A few key themes emerged through this process and informed the recommendations shared with MDHHS.
When I look out across our community, I see the same faces that fill our hospital’s halls — farmers, teachers, small business owners and families who trust us to care for them when it matters most. Yet every year, it becomes harder to keep our doors open. Recruiting and retaining obstetricians, gynecologists, social workers, psychologists and primary care physicians has turned into an uphill push. Technology that could connect us to specialists hundreds of miles away remains out of reach due to inadequate broadband and out-of-date electronic medical records platforms. And the gap between what it costs to provide care and what we’re paid to deliver it keeps widening. That’s why the Centers for Medicare & Medicaid Services’ Rural Health Transformation Program matters so much right now. This new federal funding opportunity isn’t just a policy line item — it’s a lifeline. But for Michigan’s small and rural hospitals, it will only make a difference if the dollars actually reach us, the people on the ground.
Our Greatest Need: People
Every rural hospital leader will tell you the same story: we can’t hire fast enough to replace those who’ve left. Nearly 70% of Michigan hospitals report difficulty filling clinical vacancies and rural areas face the longest recruitment times in the state. Nursing wages in large systems have soared, while young physicians are drawn to urban centers where they can earn more and work less on call. Meanwhile, small hospitals like ours are paying bonuses we can’t afford just to keep labor and delivery open or to cover an emergency room shift. The costs to maintain OB/GYNs in rural areas are significant.
If the Rural Health Transformation funds are truly meant to “right-size” care delivery, they must start with stabilizing the workforce that keeps that system running. Rural hospitals should be able to use these funds for loan repayment programs, housing stipends and retention bonuses that reflect the realities of rural practice. Without people, no transformation is possible.
Technology Should Connect, not Divide
Michigan’s rural hospitals have led the way in adopting telehealth, but we are still too often left behind. Broadband is patchy and many of our systems don’t integrate with the larger hospitals where we refer patients. CMS should allow states to dedicate transformation dollars toward technology innovation — helping rural providers invest in electronic health record interoperability, remote patient monitoring and telepsychiatry tools that expand access without expanding costs. When technology works across the system, it saves time, reduces burnout and lets us keep more care local.
Payment Equity Must be Part of Transformation
Even before inflation and staffing shortages, the math didn’t add up. Rural hospitals serve older, sicker populations and depend heavily on Medicare and Medicaid. The number of births occurring in rural hospitals continues to decline, making the ability to cover costs and provide critical care even more challenging. When reimbursement rates don’t cover the cost of care, rural hospitals can’t sustain basic services like obstetrics or behavioral health. Between 2010 and 2023, 11 rural hospitals in Michigan closed or stopped providing inpatient services. Rural Transformation funds should explicitly support provider payments and shared-savings models to ensure critical healthcare access in rural areas is maintained. If rural hospitals can’t afford to pay their doctors and nurses, innovation will stall before it starts.
The Stakes for Michigan
More than 60% of Michigan’s counties are considered rural, with nearly 30 hospitals serving as the only point of care for miles. Every time one closes, an entire region loses not just its emergency room, but also its largest employer and a key part of its safety net. The Michigan Senate Fiscal Agency recently reported nearly 22% of Michigan counties are considered maternity deserts. Michigan needs true investments in rural healthcare to reverse these trends — but only if the funds flow to where they can have the greatest impact: rural hospitals themselves.
These dollars should not get lost in bureaucracy or redirected to administrative projects. They should go toward the people and places that make healthcare possible: our workforce, our technology and our providers.
If we want to build a stronger, more equitable Michigan, we must start by keeping care local, and that begins with investing in the hospitals that keep our communities alive.
The MHA recently submitted comments to the Michigan Department of Health and Human Services (MDHHS) on proposed policy 2545-BH, which sets new mental health assessment requirements for Medicaid Health Plan providers caring for Comprehensive Health Care Program enrollees.
