Alabama is getting hundreds of millions of dollars from a federal rural health fund, but it is unlikely to save hospitals teetering on the brink of insolvency, according to experts.
The money comes from a $50 billion fund included in the One Big Beautiful Bill Act. When it passed over the summer, U.S. Sen. Katie Britt (R-Montgomery) noted the state’s troubled rural hospitals and called the rural health provision in a post on X a “huge victory for our state.”
But with a looming Nov. 5 deadline to apply for money under the program, experts and policymakers say hospitals that are struggling to stay in business should not count on the federal fund to save them.
“I don’t think this is going to be a means whereby we can just put different monies out so they can make payroll, meet their expenses,” said state Sen. Greg Albritton (R-Atmore). “I don’t think that’s going to be approved, and I don’t think that’s going to be a plan.”
Ryan Kelly, executive director of the Alabama Rural Health Association, agreed.
“It’s not gonna be a blank check,” he told FOX10 news. “It’s not gonna just go to the bottom line of the hospitals. Hopefully, indirectly, it will affect it. But directly, it certainly won’t just be money to be used for just anything.”
Those indirect benefits, Kelly said, could come in the form of improving health care outcomes. If federal money increases the availability of telemedicine or boosts the number of doctors and nurses, it could reduce the number of people without insurance straining emergency rooms.
The federal fund works like this: About half of the $50 billion will be divided among the states. Alabama will get $500 million over five years. The other half of the money will be distributed based on how much of a state is rural, the applications they submit and other factors.
The grants do not require matching funds, as many federal programs do. But the state must submit detailed plans for programs in specific categories. They include initiatives to promote preventative care, improve access to health care, attract and retain health care workers, reduce health care costs or improve technology.
Under federal law, emergency rooms must treat anyone who shows up, whether they can pay or not. Rural hospitals in Alabama have been hammered by uninsured patients who cannot afford to pay. Kelly, whose organization has been consulted by the governor’s office, said he expects such “uncompensated care” to continue rising. But he added that better technology has the potential to improve billing at rural hospitals.
“There’s a variety of payment mechanisms that could make improvements to the hospital system,” he said. “So that’s certainly something we’re looking at. I’d like to see something like that. … There’s a lot of compliance issues that our hospitals and our clinics have to face. None of those are going to be solved with money, but the money might be able to go towards an investment that could help to improve those issues.”
Albritton, whose district largely is rural, serves on an advisory committee that the governor created to help guide the application process. He said the details are crucial. Whatever the state decides, he said, it has to be transformative and sustainable. He said the rules are more stringent than under the American Rescue Plan Act that provided billions of dollars to help state and local governments recover from the COVID-19 pandemic. Money under the rural health program is “retrievable” if the state does not follow the rules, he said.
“How are we gonna change ourselves so that we can become viable?” he said. “That’s the question. … If we can’t sustain this, the program is not going to be approved, as I read it.”
Even if the state does get a program approved, Albritton said, officials will have to find a way to keep it going without federal funds.
“Because this money, again, is temporary, just like any other federal money,” he said.
Albritton and Kelly both said part of the money likely will be spent on rural health care workforce development. Albritton said he would like to see some of the money spent on programs to attract and retain health care workers.
There already are programs designed to do that, but Albritton said they tend to recruit outsiders who stay long enough to satisfy their commitment and then leave. He said it would be better to focus on training people from rural areas who are more likely to lay down long-term roots.
Kelly said rural areas have a particularly pronounced nursing shortage.
“Many of our hospitals have bed space available right now, but we don’t have nursing staff to cover those spaces,” he said. “So it’d be great to be able to recruit, retain, to train more nurses.”
Albritton said reforms are needed that go beyond what money in this program can solve. He pointed to Medicaid rules allowing higher reimbursement rates for doctors in urban areas.
“A doctor can do a procedure in Mobile and get paid more than doing the same procedure with the same equipment on the same person by the same doctor, and get paid less in a hospital setting,” he said.
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