Arizona's rural hospitals are waiting to see how much federal funding they'll get

State officials are waiting to hear how much money Arizona will get as part of the Rural Health Transformation Program. All 50 states submitted applications for the federal money, which comes from the One Big Beautiful Bill Act.

It will allocate $50 billion nationwide over five years to help rural health care systems in areas like workforce, infrastructure and access. States expect to hear how much of that money they’ll get by the end of the year. Arizona plans to start awarding grants early in the new year.

Arizona’s application included $57 million over five years for more residency slots, subsidized health education and more workforce issues. It also asks for money to help rural providers with electronic health records, equipment and other fixed costs, among other things.

A number of health care and business groups signed on to a letter in support of the plan — that includes the Arizona Hospital and Healthcare Association, known as AzHHA.

Ann-Marie Alameddin, the group’s president and CEO, joined The Show to talk more about the application.

Amber Victoria Singer

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Full conversation

MARK BRODIE: ... What is it that you’re happy about in this application?

ANN-MARIE ALAMEDDIN: I think the governor was very intentional in listening to the voice of rural health care providers in Arizona to see what problems that they were struggling with in the health care delivery system and that her proposal really reflects solutions for those challenges.

For example, around health care workforce. Like health care workforce has been an intractable problem for rural health care providers to recruit, to retain and to keep them in their positions. And so I think think that's an important initiative here that we will hopefully have funding that will help really solve some of those problems.

BRODIE: Yeah, and the workforce piece was the biggest chunk of money that the governor had asked for. One of the other ones dealt with behavioral health, things like maternal fetal health. We've heard all about maternity deserts in rural parts of Arizona, chronic illness prevention, things like that. How significant might that be for the rural health care system?

ALAMEDDIN: I think it's very, very significant. I mean, access to behavioral health care services statewide is an issue. It's an issue in Maricopa County and Pima County, too. But it's really an acute issue in rural Arizona, just access to behavioral health professionals and access to care.

And as you indicate ... we have maternal deserts right now where there are not OB services in certain counties and communities. And so we want to make sure that those deserts do not expand as there is a constriction in health care services with the constriction of funding that is coming into the state as a result of the One Big Beautiful Bill that was passed this summer. So I think this is trying to strengthen some of our most vulnerable parts of the state.

BRODIE: So you and I have talked in the past about sort of the state of rural health care in Arizona and how at times it sort of seems like it's on the brink of it could kind of go either way. Where are we right now?

ALAMEDDIN: Well, I think as we look at ... — the One Big Beautiful Bill, it was the largest cuts to Medicaid in the history of the program. $1 trillion worth of cuts in Arizona. We a minimum of $6 billion that will not be coming into the health care system over the next six years. Very significant cuts to the health care system in Arizona.

And so I think we are at a tipping point in terms of we've got to figure out a way that we can kind of reimagine the health care delivery system in Arizona. So that hospitals and other health care providers can kind of collaborate and share services and figure out how to work together more efficient and more effectively so that the most important thing is that. So that those the access to care remains in that community.

BRODIE: So you mentioned the cuts to Medicaid that are coming. I think it's probably worthwhile talking about this application in the context of some of the other health care issues going on, including premiums for the Affordable Care Act are going way up or are way up. Subsidies that a lot of people have been using over the last few years seemingly are going away. So how do those impacts what the governor is asking for here?

ALAMEDDIN: I think we all need to care and be tracking this issue. You know, the advanced premium tax credits, a lot of people, about 145,000 Arizonans, I think, participate in the exchange. A number of those people are able to get these subsidies to help make health insurance premiums affordable. That was what was in debate during the shutdown.

There's going to be a vote, and I think it's really important for all your listeners to know that if those advance premium tax credits are not extended, I think premiums for all of us, whether or not you're on the exchange or not, are going to continue to go up. Because it's a system, it's a contained system. And when you are constricting one area, it's going to expand in the other.

... I think we have been seeing that in all of our premiums. I think we just saw a report from Mercer indicating next year's premiums for employee coverage will continue to be higher than it is today. And I think we're at a breaking point where we need to have policy solutions that really allow for access to affordable health care across this country. But I think we've been making some — policymakers have been making decisions that are going in the wrong direction.

BRODIE: So you mentioned $6 billion not coming into Arizona for health care. Let's assume for the sake of argument that the governor gets everything that she's asking for. That's obviously not $6 billion worth of funding. So how much of a dent would this rural health care money put into the system in the context of everything else going on?

ALAMEDDIN: Yeah, it's a minimum of $6 billion. That's just on the state directed payment program that is getting ratcheted down starting in 2028. We also have the unknown of how many people will fall off AHCCCS or Medicaid in Arizona by not being able to adhere to the work reporting requirements that will be required in a year.

But as you say, even just using ceiling here of $6 billion, the best case scenario for the Rural Health Transformation Program is $200 million for each of five years. So the best case scenario is $1 billion. So, I think it can strengthen and hopefully provide that transition to help recruitment for workforce and to build some resiliency and to prevent maternal deserts from getting worse.

But I think there's hope in a new body of Congress, you know, as elections occur, as the midterms happen ... OBBA (One Big Beautiful Bill) was passed. But there can be mitigation of that legislation moving forward. There can be rollback of certain provisions.

And that's certainly where like the American Hospital Association and our organization AzHHA is looking at, you know, how can we start to mitigate and peel back some of the more detrimental provisions?

BRODIE: What are you hearing from hospital officials in some of the rural parts of the state, your members who are in rural parts of the state, about sort of how they're doing and what their next several months to years look like?

ALAMEDDIN: I think they're very concerned about access to care and their communities, first and foremost. I think they're anxious to look at ways that they can work with other similarly situated hospitals in innovative ways. Like looking at, you know, supply chain or artificial intelligence strategy. How can you look at new delivery models of either telehealth or remote patient monitoring?

Like, how can they do things differently, perhaps more efficiently than they have in the past? But it's really concerning when you look at the payer mix for hospital communities. There are oftentimes more government payers, more Medicaid, more Medicare patients, and patients who are typically older and oftentimes sicker with more chronic conditions. And then it's a smaller community.

So you don't have those economies of scale that you might have in larger communities. So it's just — it's concerning. And I think, I just hope that policymakers do take another look at OBBA and ... some of the more detrimental provisions that are going to impact access to care for many patients in Arizona, but also the financial impact that I think we all are already feeling. And it's likely only going to get worse.