The Rural Hospital Sustainability and Innovation Grant Program Act helps preserve essential rural hospital services by providing targeted financial assistance and modernization support. The legislation stabilizes hospitals at risk of closure while enabling transitions to new care models that reflect changing community needs. By pairing short-term relief with long-term innovation, the Act aims to maintain local access to care and strengthen rural health systems.

Key Provisions

• Rural Hospital Bridge Grant Program: Offers emergency funding to stabilize hospitals at risk of closure or service reductions.

  Hospital Transformation and Innovation Fund: Supports capital upgrades, service line redesigns, and transitions to new care models such as Rural Emergency Hospitals (REHs).

  Community Health Needs Alignment Requirement: Requires hospitals receiving funding to demonstrate alignment with local health needs assessments and community engagement.

  System Integration Incentive Grants: Provides financial incentives for rural hospitals to voluntarily affiliate or coordinate with larger health systems while preserving local access.

  Monitoring and Accountability Measures: Mandates outcome tracking, financial reporting, and program evaluation to ensure transparency and effectiveness.

Model Language

Section 1. Short Title. This Act shall be known and may be cited as the "Rural Hospital Sustainability and Innovation Grant Program Act."

Section 2. Purpose. The purpose of this Act is to preserve essential hospital services in rural communities through targeted financial support, infrastructure modernization, and care model adaptation.

Section 3. Definitions.
(a) "Eligible hospital" means a critical access hospital, rural acute care hospital, or other facility designated as rural by the state health department.
(b) "Department" means the state agency responsible for health care financing or public health.
(c) "Transformation project" means a capital or operational initiative that improves sustainability, care quality, or access.

Section 4. Rural Hospital Bridge Grant Program.
(a) The Department shall administer a grant program to provide immediate financial relief to eligible hospitals facing: (1) Imminent closure; (2) Loss of essential services; or (3) Operational insolvency.
(b) Applicants must submit financial data and a stabilization plan.
(c) Grant awards shall be time-limited and contingent on compliance with recovery milestones.

Section 5. Hospital Transformation and Innovation Fund.
(a) The Department shall establish a competitive fund to support rural hospital transformation projects.
(b) Eligible uses include: (1) Conversion to Rural Emergency Hospital designation; (2) Infrastructure upgrades or right-sizing of services; (3) Expansion of telehealth and outpatient care models.
(c) Preference shall be given to projects demonstrating financial viability and local health impact.

Section 6. Community Health Needs Alignment Requirement.
(a) All grant applicants must demonstrate how their project aligns with: (1) A current community health needs assessment; (2) Input from local stakeholders including patients, providers, and public officials.
(b) The Department may require letters of community support or public input documentation.

Section 7. System Integration Incentive Grants.
(a) The Department shall offer grants to hospitals that: (1) Enter into collaborative agreements with regional health systems; (2) Establish shared services or staffing models; (3) Maintain local service availability while improving financial sustainability.
(b) Partnerships must retain meaningful local governance.

Section 8. Monitoring and Accountability.
(a) All grant recipients must submit annual reports on: (1) Use of funds; (2) Service levels and quality indicators; (3) Financial performance.
(b) The Department shall publish an annual program impact report to the Legislature.

Section 9. Severability. If any provision of this Act is held invalid, the remainder shall remain in full force and effect.

Section 10. Effective Date. This Act shall take effect on January 1 of the year following its enactment.

Download Model Language