Governor Katie Hobbs Submits State Application for Federal Rural Health Transformation Program Grant

Phoenix, AZ - Today, Governor Katie Hobbs announced that Arizona has submitted the state's application for the federal government's Rural Health Transformation Program alongside a bipartisan letter of support for the Governor's plan. The program was designed to support health care access in rural communities through investments in health care workforce and technology.

"Arizonans are struggling with health care that is unaffordable and inaccessible," said Governor Katie Hobbs. "And rural Arizonans face challenges like potential service reductions and hospital closures, a lack of health care professionals, long wait times, insufficient access to specialty care, and outdated technology that is holding our communities back. As health care in rural Arizona continues to be under threat, I'm going to fight to deliver this critical funding for our state and protect Arizonans at risk of losing accessible and affordable health care."

The Governor's plan, which was developed in consultation with rural Arizona nurses, doctors, hospitals, health care plans, and community leaders, focuses on the following key initiatives:

• Rural Health Care Workforce - $57 million/year for five years
  • Investments will increase residencies, and will subsidize health education for future clinicians and allied health professionals who commit to working in rural Arizona, including at universities, colleges, career and technical education schools, and high schools. Will also include retention, relocation, and commuting incentives for existing health professionals who work in rural Arizona, upskilling and training grants to improve our existing rural workforce, and the creation of the Arizona Healthcare Workforce Project at the Arizona Office of Economic Opportunity to lead healthcare workforce strategy and to create statewide training networks to supercharge our existing workforce.
• Rural Health Care Access - $45 million/year for five years
  • Investments will focus on improving access to healthcare in rural communities, including via telehealth, co-location of services, mobile clinics, and improved care coordination and health transportation.
• Key Health Initiatives - $27 million/year for five years
  • $10 million for behavioral health and substance use disorder, to include access to naloxone, tele-behavioral health services, and crisis services for rural Arizonans;
  • $5 million for maternal-fetal health initiatives to improve obstetrician care and access to maternal mental health resources for rural Arizonans; and
  • $12 million for chronic illness prevention and treatment, including increases to screenings and public health resources; and
• Rural Health Care Resiliency - $51 million/year for five years
  • Investments to focus on subsidizing rural providers' fixed costs, including for electronic health records, healthcare technology and equipment, scaling back-office resources, and reducing administrative burdens faced by rural providers, including related to credentialing, licensing, and interoperability challenges.

"With significant input from rural health care clinics, hospitals, clinicians, Medicaid health plans, Tribal partners, universities, and elected officials from across the political spectrum, I'm confident that this plan will be able to deliver truly lasting change for rural Arizona communities and protect Arizonans from threats to their health care," continued Governor Katie Hobbs.

Arizona expects to receive an announcement regarding its funding award before December 31, 2025, and will begin awarding contracts and subgrants, and distributing funds to rural Arizona in early 2026.

In a letter supporting the submission, bipartisan members of Arizona's congressional delegation highlighted rural Arizona's geographic diversity and the unique challenges faced when delivering health care to communities. Read the full letter here.

In another letter submitted with the application, 17 Arizona associations and organizations praised Arizona's efforts to engage with the health care community to submit an application that will meet Arizona's needs. Signers include health associations representing Arizona's hospitals, community health centers, behavioral health providers, nursing homes, doctors, nurses, ambulances, fire chiefs, fire districts, and Medicaid health plans. The letter is also supported by members of the business community, including the Arizona Chamber of Commerce. Read the full letter here.

Read Governor Hobbs' submitted plan here.