| |  | | | | |  | By Megan R. Wilson | Did someone forward this newsletter to you? Sign up here to get it in your inbox. In today’s issue: - States are optimistic about federal rural health funds, but skeptical about the reach
- More details on the projected health funding shortfalls, and how it could impact hospitals
- Why a Dem senator is investigating the private equity industry’s role in for-profit day cares
Good afternoon, and welcome to Health Brief. Do you have any health policy tips or industry intel for me? Reach out. I’m at megan.wilson@washpost.com. If you prefer to message me securely, I’m also on Signal at megan.434. This newsletter is published by WP Intelligence, The Washington Post’s subscription service for professionals that provides business, policy and thought leaders with actionable insights. WP Intelligence operates independently from The Washington Post newsroom. Learn more about WP Intelligence. |  | | The Trump administration hopes that AI could help save rural hospitals, but experts warn it isn't that simple. (Arin Yoon/Reuters) | | | |  | The Lead Brief | Some states and rural health providers are excited by the promise of using artificial intelligence to improve and extend care to distant communities — while also being skeptical of the Trump administration’s promises of how far-reaching the benefits could be. My WaPo colleague Lauren Weber takes a deep dive into the realities behind the use of technology to expand health services in rural areas amid massive cuts in federal funding. While states are planning how to use the $50 billion from the Rural Health Transformation Program funding that’s intended to improve care, they’re also grappling with the idea that it may not be enough to cover losses that could be almost triple that amount. Here’s a sampling of Lauren’s reporting on how states want to use the money on technology: - North Dakota hopes to tap federal funds to use drones for “rapid delivery of supplies and laboratory samples.”
- Massachusetts expects to deploy “AI support systems to bring care directly to rural residents in geographically isolated communities.”
- Texas officials say they hope to speed up fax processing by increasing AI-based automation.
- Alaska hopes to see drones delivering critical medical supplies, lab tests or medication, which could be a game changer in a state where the vast majority of its communities aren’t connected by roads, according to state Health Commissioner Heidi Hedberg.
“AI is not the panacea — it is not going to solve everything,” Hedberg told Lauren. → It comes as the Trump administration is pushing the increased use of AI to help transform rural health. Health Secretary Robert F. Kennedy Jr. and his team have suggested that AI nurses could save dying rural hospitals, as more than 200 have shuttered or dramatically cut services over the last two decades. (Those AI nurses don’t exist.) Meanwhile, Centers for Medicare and Medicaid Services Administrator Mehmet Oz drew criticism when he optimistically said that robots could give ultrasounds to pregnant women in rural areas with no OB-GYNs. (Critics argued that it minimizes provider shortages and questioned the technology’s ability to handle more complex cases.) In a statement, CMS vowed that the Rural Health Transformation fund would close such access gaps. “The goal is not fewer services, rather more sustainable rural health care,” the agency told Lauren. Read the full story: “RFK Jr. and Dr. Oz have a plan to save rural health care. Here’s the catch.” | | | |  | State scan | In addition to federal cuts to Medicaid, enacted in the same GOP-pioneered law that created the Rural Health Transformation Program, there are other funding shifts set to hit states’ balance sheets, creating ripple effects for hospitals and other providers. A new report from the Robert Wood Johnson Foundation explores just how much of a shortfall states and health systems could face amid the increase in the number of uninsured Americans, federal funding reductions and restrictions on how rural health program funding can be used. → The number of people without health insurance is expected to increase following the changes to Medicaid in Republicans’ signature domestic policy law. Millions more are expected to drop coverage after Congress failed to revive the boosted tax credits that helped people afford plans on the Obamacare marketplace. When providers offer care to people who can’t pay for it, that’s known as uncompensated care. Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, found that Rural Health Transformation funds will cover less than 10 percent of the estimated increase in uncompensated care in most states. The Rural Health Transformation Program caps how much money can be paid to providers directly. GOP policymakers and the Trump administration have designed it to fund investments in rural care. However, Hempstead notes that the program “represents the only new source of federal funding for states to potentially offset the health care spending reductions” that will stem from Republicans’ One Big Beautiful Bill and expiration of the enhanced Affordable Care Act premium tax credits. - In Texas, the increased demand for uncompensated care could reach more than $30 billion over the next five years. Even if the state spends the maximum allowed (15 percent) of its rural health allotment on paying providers, that’s still $210 million, or less than 1 percent of how much Texas is projected to need to offset charity care alone.
- Similarly, California is expected to experience a $32 billion increase in demand for care from people who aren’t able to pay. But the state can only use a maximum of $175 million of its five-year allocation of Rural Health Transformation funds to compensate providers.
- Overall, hospitals located in rural areas across the country are expected to see a $23 billion increase in uncompensated care, in addition to an $87 billion drop in revenue over the next 10 years, as a result of federal changes, according to an Urban Institute analysis from last year.
→ ICYMI: I wrote about the distribution of the initial round of Rural Health Transformation funds — and how the money is being split among states following the CMS announcements in January. The highs and lows: - In its first year, Texas received the single largest amount from the fund — more than $281 million — but the amount it received per rural resident was the lowest of any state: a measly $59.
- Rhode Island, the nation’s smallest state, received the most money per rural resident: nearly $1,600. While census figures tabulate the state’s rural population — fewer than 100,000 people, or 8.9 percent of its total population — state officials told regulators that the figures are actually around 18 percent.
| | | | | | Under the Radar | Sen. Jeff Merkley (D-Oregon) is probing private equity’s role in child care centers, sending letters to KinderCare Learning Companies and Learning Care Group, Riley Beggin reports from The Post’s newsroom. Merkley, the leading Democrat on the Senate Budget Committee, is asking the companies questions about their ownership structure, in addition to cost and pricing trends, among other topics. → Private equity firms have invested in many of the top child care companies. Day care costs in 30 states and Washington, D.C., are higher than the tuition and fees at public universities in those states and D.C., according to early-childhood education advocacy group Zero to Three. Merkley raised concerns that the child care providers funded by private equity have an incentive to maximize profits by paying workers less, raising tuition and investing in higher-income and high-population centers, according to the letters reviewed by The Post. “We’ve all seen the reports of private equity’s often negative influence in other sectors, such as hospitals, nursing homes, and single-family homes. I hope to better understand if that trend is continuing in the child care sector,” Merkley told Riley in a statement. → Both companies told Riley that they take high-quality child care seriously. Proponents of private equity involvement in child care argue that the federal programs meant to bolster child care are inadequate and underfunded. Private equity firms have more resources to help companies operate amid other rising costs. Read the full story: “Private equity role in soaring child care prices under investigation.” | | | | | | | | | | | | |
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