Why data and identity are key to leveraging federal rural healthcare funding

State healthcare leaders face an acute operational challenge serving populations in rural and frontier communities, where provider shortages, transportation gaps, disconnected records, and transient populations routinely disrupt patient care. Fragmented data systems compound these systemic hurdles, hinder care coordination and make public health resource allocation more challenging.

One promising initiative aimed at bridging these disparities is the landmark $50 billion, five-year federal “Rural Health Transformation Program.”  Enacted as part of last year’s sweeping budget bill and administered through the Centers of Medicare & Medicaid Services, the program seeks to help state health organizations make long-needed technology and workforce investments.

Ensuring the funding will make a true impact on rural communities, however, requires a focused effort to build a robust data and identity foundation that connects fragmented data silos, protects privacy, and centers care on human dignity, say health technology experts.

“This is not about propping up a system that is under a lot of pressure and is not going the right direction,” said Melissa Magstadt, Secretary of Health for the state of South Dakota, speaking in an executive panel discussion hosted by Scoop News Group and sponsored by LexisNexis Risk Solutions.  Rather, it represents a critical opportunity for states to modernize their infrastructure to manage their data better and serve the diverse needs of their constituents.

Local leaders in South Dakota have “no shortage of innovative ideas,” Magstadt said, noting that 64 out of 66 counties are rural. “But all great ideas need an influx of one-time infrastructure cash,” Magstadt explained.

Moving directly to program implementation without a strong data foundation is one of the most significant strategic risks states face, however, cautioned Deepika Hammer, Director, Market Planning, Government Healthcare Solutions at LexisNexis Risk Solutions.

“It’s important to recognize that a medical record is an important part of the story, but only a sliver. It tells us what happens when someone interacted with the healthcare system, but it might not necessarily tell that whole story around what’s preventing them, for example, from accessing care in the future,” Hammer stressed.

To address these challenges, Magstadt and Hammer suggested that state and industry leaders must center their efforts on three key pillars:

1. Understanding the whole person over the clinical record

Achieving true health transformation requires states to look beyond traditional electronic medical records to understand the social drivers of health. “Health outcomes are shaped by a variety of factors like access to transportation, provider shortages, distance to care, economic pressures, connectivity, and changing life circumstances,” Hammer said.  When these data points remain isolated across separate program databases, coordinating services and measuring outcomes becomes nearly impossible.  Agencies can serve constituents in different communities more effectively by building a unified data core and connecting these fragmented views to identify barriers and direct resources where they are most desperately needed.

2. Establishing a trusted, connected identity foundation

A primary obstacle to modernizing rural health is data fragmentation across multiple government and provider systems.  “The same individual often appears across Medicaid, public health, human services, and provider systems. So, if states can’t confidently connect those records, care coordination and measurement become much more difficult to sustain over time,” Hammer stated. This foundation must be built on five fundamentals: clearly defining the target population, establishing a trusted identity core, focusing on data quality and reachability, gaining deep visibility into the local provider landscape, and embedding rigorous data governance and privacy controls into programs from day one.

3. Overcoming information overload and tailoring outreach

Even well-funded programs fail if the eligible population cannot be reached or does not trust the source, Magstadt noted. State agencies today must compete for attention in an information-saturated society that consumes information differently. “How Melissa, in her 50s, receives information is different from how my grandmother, in her 90s, would receive information or how my granddaughter, who is 15 years old, receives information. Yet they’re all part of the population that needs to receive information,” Magstadt noted.  Public health agencies must leverage multiple communication layers and utilize the expertise of communication specialists to deliver trusted messages to distinct populations, including, in South Dakota’s case, isolated Hutterite communities and tribal nations, she stressed.

Practical application: South Dakota’s Data Atlas

To put these data fundamentals into practice, South Dakota is utilizing its rural health transformation funds to build a localized “data atlas,” according to Magstadt. This platform drives state-collected data directly down to the county level, empowering local hospitals, critical access facilities, and community organizations to make on-the-ground, data-backed decisions.

“One county can have a completely different set of outcomes than the other, Magstadt said. She cited mortality rates as an example. The median age of death for white residents is 80, compared to just 58 for Native American residents.

Outlook: Measuring success and ensuring sustainability

The program’s funding comes at a crucial time as states face an estimated $137 billion in federal Medicaid cuts to rural communities over the next decade.

Wyoming, for instance, has earmarked roughly $200 million to bolster local hospitals and EMS providers. By comparison, Maryland has awarded $80 million to 41 grantees to improve access to primary, dental, and behavioral health care. Meanwhile,

The American Hospital Association is already urging CMS to lift a 20% cap on infrastructure and capital improvement funding for years two through five of the program. 

In the meantime, state health officials need to be mindful of how the funding works, warned Magstadt. Unlike traditional five-year block grants, the federal rural health transformation funding is highly contingent on near-term accountability.

“This grant is structured with yearly demonstrations of outcomes and metrics…that determine whether the state can apply for that next set of dollars,” she explained. Furthermore, because these are “one-time dollars,” states should reject proposals that lack long-term sustainability.

Magstadt and Hammer both emphasized that the success of the program — true transformation — will ultimately be judged not by the volume of capital distributed, but by measurable improvements in the quality of individual and population outcomes.

This article and the video panel discussion were produced by Scoop News Group, for StateScoop and underwritten by LexisNexis Risk Solutions.