by Liz Carey, The Daily Yonder
August 3, 2026
For eight states, about 10% of their allotment from the Rural Health Transformation Fund will go not to rural hospitals, but to tech companies seeking innovative solutions to challenges rural healthcare providers face.
The Rural Tech Catalyst Fund takes a tenth of the states’ allocation from the Rural Health Transformation Fund and diverts it to technology companies. Proponents say the fund will provide innovations that will address challenges that are unique to rural hospitals. So far, eight states have been approved for the RTCF program: Alaska, Alabama, South Carolina, Louisiana, Georgia, Nebraska, Tennessee and Connecticut. And states are using the funds in ways that best suit the needs of their rural communities. For instance, in Alaska, the money will be used to pilot technologies that are well-suited for remote, roadless settings, including unmanned drones, remote pharmacy dispensing units and portable diagnostic tools.
In Louisiana, those funds are $20 million, and officials are still determining what that money will be spent on. A collaboration between Louisiana Economic Development and the Louisiana Department of Health, the plan connects healthcare technology entrepreneurs with rural healthcare providers to determine what those solutions will be before awarding any of the grant money.
“That money is meant to invest into early-stage technology companies that can help solve rural health challenges in Louisiana,” Josh Fleig, head of Louisiana Innovate, said in an interview with the Daily Yonder. “Broadly speaking, these challenges could be access challenges, chronic disease challenges. It can be about improving operations for rural health providers, it can be hardware or software, it can be any of the above, but it’s very much about creating solutions through technology startup companies that can solve our rural health challenges.”
Fleig said recipients of the money will face rigorous and continuing scrutiny. First, Louisiana Innovation will assess the company to see if it’s a viable business. From there, the solutions the companies propose will be considered by those in the Louisiana Department of Health.
Julie Foster Hagan, the executive director for the Office of Rural Health Transformation and Sustainability within the Louisiana Department of Health, said those guardrails put the emphasis on providing solutions rural hospitals actually need and use.
“We will set the stage for all of the clinical activities that we want to make sure are in line with other activities either within our department and within the Department of Rural Health Transformation,” Hagan said in an interview with the Daily Yonder. “Part of what we envision is that these folks, they’re startup companies; they have novel ideas. But the only way those novel ideas are going to work is if they actually have partnerships in rural communities that are willing to use the technology that they’re presenting.”
And the companies’ activities and solutions must also pass requirements set out by the U.S. Department of Health and Human Services. Hagan said her department had not yet awarded any money, as they were still waiting for guidance from the Center for Medicare and Medicaid Services on how the money can be spent.
As they wait for that guidance, the LDH is bringing stakeholders together with tech companies to align those ideas with rural healthcare challenges. This month, the department held a rural health summit that allowed rural healthcare providers to talk with tech companies that have applied for the RTCF money. The summit allowed the providers to hear about the proposed technologies and begin to think about whether they might help them.
Dozens of companies are proposing a vast array of ideas.
“We had 165 applications, and some of those fall into the category of accessing existing care in the clinics, but many are patient-centric,” Eli Brodsky, deputy director for the Office of Rural Health Transformation and Sustainability, said in an interview with the Daily Yonder. “We have companies that are looking at devices that can detect something earlier and make sure the patient can easily navigate care because of those indicators, and we even had companies that proposed nutrition-based education, and things that don’t necessarily fall within the healthcare service space.”
Even after the money is initially awarded, the companies will have to meet benchmarks to ensure they are doing what they said they were going to do, as well as ensuring that their solution is actually being used. If rural providers don’t find the solution helpful, Fleig said, future RTCF funding for the company would be pulled.
But some wonder if it’s money well-spent. Alan Morgan, CEO of the National Rural Health Association, said the fund holds promise, but will require careful observation.
“Like most of the rural health transformation program funding, the rural tech catalyst fund certainly holds both great promise and great risk for the program,” Morgan wrote in an email to the Daily Yonder. “Innovative technology such as AI and telehealth certainly has the potential to address workforce shortages and access to care concerns. However, since this funding is not expected to go toward rural providers themselves, nor the rural communities they serve, it most certainly will garner a lot of attention. The funding recipients will absolutely need to show positive impact for rural health.”
Morgan said the focus of the Rural Transformation Funding should be on providing healthcare in rural communities.
“NRHA believes that a priority focus should be placed on rural hospitals and clinics,” he explained. “For funding that is not targeted towards these rural safety net providers, there will obviously be a lot of scrutiny on outcomes of these projects.”
Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, said the RTCF has its benefits, but many of the needs of rural communities lie in having physical access to care.
“The number, size, health challenges, and resources in rural communities vary dramatically across states, so the best results from the Rural Health Transformation Program will be achieved if each state has the flexibility to allocate the funds in a way that best addresses the specific needs of rural communities in that state,” Miller said in an email interview with the Daily Yonder. “While there are many ways in which technology can improve access to healthcare for rural residents, a phone app can’t deliver a baby, draw blood, or stitch a wound. Those are the services rural residents need if they are pregnant, diabetic, or injured, and they will lose access to those services if more is not done to prevent closures of rural healthcare services and providers.”
The flaw in the system, he said, is not that money is available for technological tools that may help, but that the money won’t help if there’s no hospital that benefits from the technology.
“Unfortunately, CMS (Center for Medicare and Medicaid Services) is implementing the RHTP in a way that makes it very difficult for states to prevent losses of existing services,” Miller wrote “One of the main goals Congress stated for creating the RHTP was to try to prevent the loss of rural health care services. The primary reason that rural hospitals and clinics are eliminating services and closing altogether is because of inadequate payments for services from insurance plans, but the CMS rules for the RHTP severely limit states’ ability to address that problem. CMS provided states with the flexibility to give up to $20 million per year to startup companies to test unproven technologies, but it did not give a state the flexibility to spend all of the money preserving and strengthening essential healthcare services even if that is what is really needed by the rural communities in the state.”
But Louisiana’s Governor Jeff Landry argues the RTCF will help usher in the future of rural healthcare.
“Louisiana’s rural communities deserve access to high-quality, affordable and sustainable health care solutions close to home,” Landry said in a statement. “The Rural Tech Catalyst Fund will help drive innovative care models, strengthen health care access in underserved areas, and improve outcomes for patients and families across rural Louisiana.”
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