A map depicting the classifications of each Michigan county. Courtesy | Michigan Department of Health and Human Services
Funds for rural hospitals are headed to Metro Detroit, State Rep. Jennifer Wortz, a Republican who represents parts of Hillsdale County, told The Collegian last week.
Michigan is set to receive about $173 million from the federal government for healthcare in rural communities. Oakland and Wayne counties will be eligible to receive funds, as they are designated as “partially rural.” But Jackson and Kalamazoo counties will be ineligible, since they were labeled “metropolitan.”
“It’s completely insane,” Wortz said.
The Centers for Medicare & Medicaid Services, the federal agency administering the rural funds, did not define “rural,” said Beth Nagel, senior deputy director of Michigan Department of Health & Human Services.
“Instead, they said, ‘You know your state best.’ You tell us,” Nagel told the Michigan House Appropriations Committee Jan. 21.
Nagel said the MDHHS decided to use a classification system created by the Federal Office of Rural Health Policy. That criteria created 75 rural counties, including 17 partially rural counties.
Smaller rural hospitals will be at a disadvantage to larger hospitals when applying for grants, Wortz said.
“Large hospitals that are in larger metropolitan areas — they have grant writers,” Wortz said. “So this is probably going to be a great opportunity for them because they already have full-time grant writers. They can apply for these grants. Meanwhile, small rural hospitals, who are on a shoestring budget already, now have to fight for these funds.”
The state’s health agency will take about $19 million for bureaucratic overhead, Wortz said.
“If you took that amount alone, the $19 million, and divided it by the 73 rural hospitals in Michigan, that’s $260,000 each hospital could receive,” Wortz said. “That money is getting taken by a bureaucratic office in Lansing. And then you take the remainder of the $173 million we were awarded, and hospitals all across the state, including hospitals in Wayne and Oakland County, the highest populated counties in our state, now get access to those funds because of the way the department labeled them as semi-rural.”
Wortz also said the total number — $173 million — could have been much larger if the MDHHS hadn’t fumbled the application for federal funds.
“We’re at the bottom of the amount of funds we received,” Wortz said.
Michigan ranks 43rd out of 50 states in the amount of funding it will receive from the Rural Health Transformation Program, administered by CMS. Ohio will receive about $202 million, ranking 26th.
Kyrsten Newlon, director of communications for Hillsdale Hospital, said this could be due to the application the MDHHS sent to the federal government.
“We were very discouraged by the application that MDHHS submitted, because it didn’t address the true needs of rural hospitals in Michigan,” Newlon said. “We’re nervous that that’s happening in all of the states across the nation.”
J.J. Hodshire, president of Hillsdale Hospital, served on a Michigan Health and Hospital Association committee that provided recommendations for the state health agency’s application for federal money. But the MDHHS ignored MHA’s suggestions.
“When they submitted their application, it basically didn’t take any of our recommendations into account,” Newlon said.
She said the MHA’s recommendations aimed to fill gaps in access to healthcare created by Medicaid reforms in the One Big Beautiful Bill Act — the Rural Health Transformation Fund’s original purpose.
“The actual application that was submitted was really targeted at things like new technology, new programs. Great in theory,” Newlon said. “It’s exciting to think about where healthcare might go in the future, but we can’t go there if we can’t keep our hospitals open.”
Newlon said Hillsdale Hospital will become a microcosm for the problems facing all health centers across rural Michigan.
“We have no intention of closing our doors,” Newlon said. “We’re here for our community. We are sustainable, and we’re in a good place, but there are certain services that are more at risk than others. We will not have the opportunities that we need to grow, the opportunities that we need to expand services for more people to access this care.”
