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Recently, a few of the State Office of Rural Health (SORH) directors got together to discuss the most pressing health needs in their communities. In their quest for solutions, the conversation swirled around a central question: How can we get more financial capital into rural areas? They concurred that more capital resources were urgently needed to retain healthcare services and expand the development of health-promoting infrastructure.
For readers who are not familiar with SORH, they exist in every U.S. state. Some are located within universities, some within state government, and a few operate independently as nonprofit entities. With funding from the Federal Office of Rural Health Policy, they respond to state rural health needs through partnership building and technical assistance activities aimed at improving healthcare access and quality for the nearly 61 million people who live in rural America.
We return to the SORH directors’ central question: How can we get more financial capital into rural areas? First, we must consider who is best positioned to help. If you guessed Community Development Financial Institutions, you are correct! Also, known as CDFIs, these entities play the role of “financial first responders” in communities that lack access to mainstream capital. By providing low-cost loans, they serve to meet critical housing, small business, and infrastructure development needs for many under-resourced communities, including those in rural and frontier areas.
To assist SORH directors in answering their question, we set out to clarify needs and barriers related to capital resources for healthcare and social determinants of health in rural areas. We spoke with 11 SORH and 10 CDFI and community development intermediary organizations that serve communities in the West, Midwest, Deep South, Mississippi Delta, Appalachia, and Northern New England.
More pre-development support is needed
One common theme that emerged is the need for more pre-development support. Often, “access to capital” roadblocks cannot be resolved by new funding or financing, alone. Rather, the problem boils down to readiness. Communities need help with prioritizing development needs and goals, finding suitable partners, and developing robust business plans in order to produce investible projects.
The New Market Tax Credit Program offers one example of where the issue of readiness is key. This federal program aims to attract private capital in low-income communities by permitting investors to make an equity investment and receive a tax credit against federal income-tax owed. The program has been used to successfully finance a range of projects that target community health improvements— from hospitals to early learning centers, grocery stores, distribution centers, and permanent supportive housing. However, if a project is not already in the pipeline and ready to be financed, a community is unlikely to be able to access this financial resource, which has a narrow window for application and approval.
Other major barriers to investments in rural health included low population, lack of capacity, limited collateral, and the absence of Medicaid expansion in some states. Those we spoke with also pointed to federal program requirements that can be especially difficult for low-population, lower-income communities to meet, such as the cost-sharing requirement for the USDA Rural Development Community Facilities Loan and Grant Program, which requires a minimum match of 25 percent.
Building trust and multisector partnerships are key
Our conversations undergirded a key theme that was featured in the recent Build Healthy Places Network publication, A Playbook for New Rural Healthcare Partnership Models of Investment: The need to build trust and multisector partnerships.
We concluded that one of the best opportunities for SORH to get more financial capital into rural areas is to join forces with the CDFIs and community development intermediaries that operate in their respective states. Crafted, neatly, as the “ABCs” for expanding access to rural health capital resources, below are five ways that SORH can serve as valuable community development partners:
BHPN will be hosting a Network Commons on Tuesday, September 13, 2022 that explores case studies and core strategies from the rural playbook used by healthcare entities in rural areas leveraging multisector partnerships for health and well-being as examples for others to follow.
Advocate for needed policies and programs. More allies for rural housing and facilities are needed, especially when federal and state budgets are being decided. SORH can share stories of community impact.
Become partners in deploying financing. With knowledge of community priorities and state health dollars, SORH can work in tandem with CDFIs to target resources efficiently.
Consult during the predevelopment phase. SORH can serve as “navigators” for rural health infrastructure needs. This includes projects where expert knowledge of healthcare billing operations and local broadband regulations is needed.
Develop a CD finance tool kit for rural communities. Community leaders want to connect with CDFIs, CDCs, CDEs, federal agencies, and developers who can help to meet their capital resource needs. SORH can help to develop and market a roadmap.
Elevate and share existing resources. Healthcare and community development finance professionals who work in rural communities could benefit from sustained opportunities for knowledge-sharing. SORH can help to design joint events, trainings, and research initiatives.
A great way for interested parties to seed relationships with State Offices of Rural Health is to support and promote National Rural Health Day on Thursday, November 17th. The National Organization of State Rural Health Offices (NOSORH) will be broadcasting a series of webinars on opportunities to partner and celebrate the work of rural health. We hope to see you there!
Project Consultant
National Organization of State Offices of Rural Health
