Kevin DeRonde stepped into a suite of empty offices at Mahaska Health in Oskaloosa.
“This will all be gutted, and the PET CT will be housed over here,” said DeRonde, the hospital's CEO, motioning to a room filled with various cardboard boxes, storage tubs and office furniture. “Control room will be here, and then the patient intake rooms will be back behind us.”
In January, the hospital found out it will receive more than $3 million from the state’s rural health transformation program fund to buy a new PET scanner, which is typically used to check for cancer.
The new machine will replace a mobile truck that only offers scans two days a week. It is anticipated to more than double the hospital’s scans to better detect cancer in patients earlier, DeRonde said.
“We have medical oncology cancer care in-house,” he said. “And so to have an in-house PET CT, where we can scan patients five days a week is significant to reduce the diagnosis to treatment times.”
Mahaska Health is receiving some of the first funding state officials are handing out under its Rural Health Transformation program.
Congress approved a $50 billion fund to support rural health infrastructure across the country as part of the federal budget reconciliation law that passed last summer.
But the same law — also known as the One Big Beautiful Bill Act — will reduce spending for Medicaid by nearly $1 trillion over a decade, which is expected to have a big impact on rural hospitals.
Some experts and rural hospitals said the rural health transformation program funding won’t be nearly enough to offset the reductions in revenue they expect from the changes to Medicaid.
‘Most balance the two against each other’
Over the course of the next five years, Iowa hopes to receive up to $1 billion in federal funding from the Rural Health Transformation program.
Iowa officials submitted a plan to the Centers for Medicare and Medicaid Services last fall, which said they planned to use the money to make investments in rural cancer care, telehealth infrastructure and mobile care units among other things.
For the first year of the program, the federal government awarded Iowa $209 million, which amounts to about $139 per rural resident, according to health policy nonprofit KFF.
The state plans to spend the money quickly.
“Because if you don't spend the money on the projects that you tell the federal government you're going to, they're going to claw the money back,” said Larry Johnson, the Iowa Department of Health and Human Services director. “We actually are hoping we’re organized enough to get it done that we hope to take money from states that aren't able to do what we are.”
Congress added the $50 billion rural fund to the reconciliation bill last summer to address concerns about drastic Medicaid funding reductions.
But some politicians and officials say they see them as different things to approach in different ways.
“There's a distinction here. You know, our focus is about sustainability and long-term investments for rural health communities, regardless of any sort of Medicaid implications there,” said Robert Kruse, the state medical director.
But the reality is most balance the two against each other, said Timothy McBride, a health policy analyst and professor of public health at Washington University in St. Louis.
“Certainly [it’s] an unequivocally good thing for rural [health] to get this $50 billion relative to not having it, but the net effect of all this is going to be negative,” he said.
Iowa is estimated to see a $3.84 billion decrease in spending in its rural areas over a decade from Medicaid, according to KFF.
It’s really concerning for rural hospitals, said Chris Mitchell, the president of the Iowa Hospital Association.
“As soon as the rural health transformation dollars go away, then the Medicaid cuts start to come into place. And that's not a temporary proposition. That is ongoing,” he said.
Mitchell is urging Congress to send more money directly to rural hospitals.
“Just to be more effective in helping hospitals sustain their operations, to ensure that they’re able to mitigate these upcoming Medicaid cuts,” he said.
‘We know that more than half that money isn't going to hospitals’
At Cass Health in Atlantic, CEO Brett Altman said rural hospitals like his stand to see a big reduction in Medicaid funding, and whatever money they get from the state’s rural health transformation program won’t come close to making up for that.
“When you break it down to the ridiculous, we know that more than half that money isn't going to hospitals,” he said.
But Altman’s trying to get what he can. He applied for nearly $3 million dollars through the health transformation fund for a PET scanner and was surprised the grant request was denied in January.
Cass County has some of the highest rates of new cancers in the state, and no neighboring counties’ hospitals have a scanner, he said.
“I just don't know if the bureaucrats at the state capital understand the landscape of rural health care,” he said.
Since the rejection, Altman said he’s spoken to Iowa HHS and he’s optimistic the nearly $3 million proposal will be funded in the next round.
