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"For people living in rural communities rural hospitals are a lifeline, and yet today 20 million Americans in our rural communities do not have adequate access to quality health care," Vice President Al Gore said. "That is why we are taking this important step to help assure that rural hospitals can meet the health care needs of working families."

The Rural Hospital Flexibility Program is a 5-year $125 million program administered by HHS' Health Resources and Services Administration's Office of Rural Health Policy. This nationwide program allows the creation of a new category of rural hospitals called "critical access hospitals," or CAHs. States will use the HRSA grant funds to develop a rural health plan, help communities decide which hospitals should convert to CAHs and promote the development of rural health networks that include enhanced delivery of emergency medical services.

"These grants will help rescue financially at-risk rural hospitals and make sure they continue to provide much needed care," said HHS Secretary Donna E. Shalala. "We're giving states the resources and flexibility to develop their own unique plans for revitalizing small rural hospitals and building the strong networks needed to give rural residents access to comprehensive, quality health care."

In 1997, more than 54 million Americans lived in rural areas, making up 20 percent of the U.S. population. Of those, more than 20 million have inadequate access to health care.

The critical access hospital is a new designation that entitles a rural public or non-profit hospital to receive cost-based reimbursement for their Medicare patients. For a hospital to qualify as a CAH, it must operate a limited number of inpatient beds, keep patients a maximum of four days, provide 24-hour emergency medical services and be designated by the state.

HRSA's grants to the states will help rural communities determine how local care should be delivered, what resources are needed, and what problems and barriers must be overcome to achieve better health care for all rural residents. This program is designed to bring together key local organizations that provide or support health care service delivery, including hospitals, clinics, community health agencies, local public health agencies, emergency medical service providers, social service agencies, local government, and business and consumer groups.

"What's unique about this new program is that it gives rural communities a chance to save their local hospitals, and helps develop a broader range of essential health care services to their residents through the community networks," said HRSA Administrator Claude Earl Fox, M.D., M.P.H.

In April 1999, HRSA provided up to $200,000 to each of 48 states to jump start the program. Rhode Island and New Jersey did not receive funds because they do not have any counties in non-metropolitan areas. With today's award, HRSA made available up to $600,000 to each state that applied for the funding. Five states--Connecticut, Delaware, Pennsylvania, Utah and Oregon--chose not to apply for the additional funding but remain eligible in subsequent years. Five HRSA-funded rural health research centers and the Rural Policy Research Institute have developed a consortium to provide technical assistance to states, develop a management information system and evaluate program implementation. A technical assistance center will also be established to help grantees improve their skills and expertise.

The new program is modeled after two successful demonstration projects conducted in the early 1990s: the Montana Medical Assistance Facility program and the Essential Access Critical Hospitals/Rural Primary Care Hospital program in New York, West Virginia, North Carolina, Kansas, South Dakota, Colorado, and California.

HRSA is the lead U.S. Department of Health and Human Services agency responsible for improving access to health care for all Americans. Through a range of programs that bring health care to rural and isolated areas, HRSA improves access to primary care and preventive services in rural areas, where health care providers are in short supply.

The list of grantees and awards follows:

Rural Hospital Flexibility Program
Fiscal Year 1999 Grant Awards

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