When the Centers for Medicare and Medicaid Services (CMS) announced its award last week of $50 billion from its new Rural Health Transformation Fund (RHTF), the question for skilled nursing facilities (SNFs) was: does the program affect us?

In a new analysis by Jay Gormley, chief investment officer and COO, Advisory, Zimmet Healthcare Services Group, the answer to that question is yes, albeit in a limited way right now.

First, the basics of RHTF. The $50 billion fund covered projects in each of the 50 states. A total of 50 percent of the funding was awarded equally and the rest for project requests by each state.

Gormley said the Rural Health Transformation (RHT) Program, and the fund, are CMS’s primary policy response to mounting financial and structural stress in rural health systems. Beginning in Fiscal Year (FY) 2026, the program authorizes $50 billion over five years (roughly $10 billion) to support state-led initiatives focused on workforce development, care model redesign, behavioral health integration, EMS modernization, telehealth, and health IT infrastructure.

“Unlike traditional Medicaid rate increases, RHT funding is explicitly non-entitlement and non-rate-based; it is designed to reshape how care is delivered in rural markets rather than to permanently raise payment levels,” Gormley said.

What About SNFs?

In the analysis of the funding program, only a limited number of states explicitly reference SNFs or nursing facilities by name, “but those references are instructive,” Gormley said.

• Kansas, he said, is the clearest example, explicitly calling out the embedding of behavioral health supports in emergency departments and nursing facilities. “This framing positions SNFs not merely as downstream placement sites, but as active care delivery settings within regional behavioral health models,” Gormley said.

The implication for SNFs is twofold: first, a recognition of their role in managing behavioral health needs in rural systems; and second, heightened expectations around clinical capability, regulatory scrutiny, and acuity management, without an explicit guarantee of rate alignment or operating support.

• Idaho also explicitly includes long-term care facilities in its description of rural care modernization efforts. In Idaho’s application, investments in electronic health records, interoperability, analytics, and technology infrastructure are framed as extending across the full continuum of care, including post-acute and long-term care settings.

“For SNFs, this represents one of the clearest eligibility signals for participation in shared IT platforms and modernization funding, particularly for smaller rural facilities that lack the scale to self-fund these upgrades. At the same time, it raises baseline expectations around data sharing, interoperability, and participation in statewide health information infrastructure,” he said.

Other examples are less clear in the funding program, with states not naming SNFs directly but instead, proposing care models that are functionally inseparable from the post-acute sector.

“Iowa’s EMS Community Care Mobile initiative, for example, includes post-surgery discharge support, chronic disease management, and home-adjacent follow-up services,” Gormley said. In rural markets, these functions intersect directly with SNF transitions and post-acute stabilization.

“The practical implication is that SNFs are increasingly judged on their ability to prevent readmissions, coordinate with EMS and mobile care teams, and manage acuity in place. While this creates upside for clinically capable facilities, it also introduces volume risk for lower-acuity short stays.”

Staffing Challenges Addressed

Overall, the analysis said workforce development is the most pervasive theme across the RHT applications and has direct relevance for SNFs even where they are not named directly.

Multiple states emphasize pipelines for nursing staff, CNAs, paraprofessionals, community health workers, and allied health roles that are core to SNF operations. “These initiatives create both opportunity and risk. SNFs that can position themselves as training sites, rotation partners, or ladder employers may benefit from improved access to labor,” Gormley said. “Others may find themselves competing more intensely with hospitals, EMS agencies, and community-based providers that are also drawing from publicly subsidized workforce pipelines.”

Beyond these direct and adjacent references, the dominant system-level themes of the RHT Program collectively impact the SNF operating environment. Telehealth expansion, remote patient monitoring, mobile clinics, and EMS treat-in-place models are designed to move care out of institutional settings where possible, the analysis said.

“The cumulative effect is an attempt to compress the low-acuity post-acute funnel, with SNFs increasingly reserved for residents with higher clinical complexity. Facilities without clear clinical differentiation are more exposed to volume pressure as these models scale,” he said.

“But that’s probably a good thing, especially for SNFs in case-mix environments. It also tracks with larger demographic and demand trends, whereas the baby boomers age there is less SNF supply on a 85+ per capita basis [our most common estimate for LTC demand] than there has been historically so that by definition ‘sicker’ folks will end up in SNFs.”

Similarly, the analysis said many states explicitly frame RHT investments as preparation for value-based care models, including alignment with CMS’s AHEAD initiative. Although SNFs are rarely named in these sections, they are structurally embedded in emerging regional accountability frameworks.

“SNFs that lack data infrastructure, care management capability, or acuity transparency risk being treated as cost centers rather than strategic partners. Conversely, facilities that can demonstrate outcomes, manage transitions, and integrate into regional care models face meaningful tailwinds,” Gormley said.

Information on RHT can be found at Rural Health Transformation (RHT) Program | CMS.

Comments or questions? Email Patrick Connole at pconnole@parkplacelive.com.