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DHS outlines plan to stabilize rural hospitals, says $10 million could federalize to $37.7 million
Summary
Secretary Arkoosh told appropriators an existing $10 million state allocation for rural hospital stabilization could be used to draw down federal funds and become $37.7 million; the administration also proposed a $20 million flexible patient‑safety fund for acute, place‑based hospital needs.
At the Appropriations Committee hearing, DHS Secretary Dr. Valerie Arkoosh described two separate budget items aimed at maintaining hospital capacity across Pennsylvania: a $10 million rural-hospital stabilization appropriation that can be federalized and a proposed $20 million “patient safety and services” contingency fund.
Why it matters: Rural hospitals face thin margins and staffing and access pressures. Arkoosh said the $10 million the General Assembly previously appropriated for the current fiscal year was structured so the Commonwealth could draw federal matching dollars; if the state again appropriates $10 million, DHS would likely execute a similar plan that would increase the funding available to hospitals. “That 10,000,000 is going to become $37,700,000 that will be distributed to these hospitals,” Arkoosh told the committee.
DHS said it has a distribution plan developed with the Hospital and Health System Association of Pennsylvania. The current approach applies to hospitals in county classes 4 through 8 that provide obstetrics and treat Medicaid fee‑for‑service patients. DHS noted 60 hospitals met the criteria in the current allocation set and said allocation factors included obstetric services, measures of financial stability, Medicare/Medicaid share, participation in Pennsylvania Rural Health programs, social‑vulnerability indices and geographic isolation for critical‑access hospitals.
Arkoosh also described a proposed $20 million patient safety account intended to provide flexible, rapid response funding for acute local crises affecting patient access and safety. She said that account would be used case by case and that some of its uses could not be federalized depending on circumstances.
Committee members asked how those funds would reach counties lacking obstetric services; Arkoosh said the allocation formula is not final and the administration is open to adjustment. Lawmakers also pressed DHS on accountability; Arkoosh said funds would not be targeted to the benefit of private‑equity owners and described state-directed payments as a tool to leverage federal matching funds.
Ending: DHS said it will seek CMS approval where needed to federalize state-directed payments, share the distribution methodology with appropriators and continue to refine allocation criteria to prioritize access and stability, particularly in rural counties.
