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\n\t\tCan\u2019t see the audio player? Visit kffhealthnews.org<\/a> to listen.\t<\/p>\n When Josh Fleig, Louisiana\u2019s chief innovation officer, learned his state had set aside $20 million a year, for five years, to invest in startup rural health companies, his reaction was not surprising: \u201cWow!\u201d<\/p>\n In rural America, where people are often reported to be sicker with poor access to healthcare, the cash influx is a relief. In the economic development space where Fleig operates, it\u2019s an opportunity.<\/p>\n \u201cLook, that\u2019s a lot of money for what we do,\u201d said Fleig, whose state-funded economic development office invests in corporate launches, ranging from software startups to shipbuilders.<\/p>\n Josh Fleig, chief innovation officer for the Louisiana Economic Development agency, says he\u2019s excited to help fund startup technology companies that could improve the health of rural residents in the state. (Margot McNeely\/Louisiana Innovation)<\/p>\n Louisiana and a handful of other states set aside money from their share of the $50 billion federal Rural Health Transformation Program to quickly invest in new technologies, mirroring private industry moves. Lawmakers added the rural health program to offset more than $900 billion in reduced Medicaid spending expected over 10 years from Republicans\u2019 sweeping 2025 tax and spending law.<\/p>\n But rather than filling the budget hole, the rural program\u2019s assignment is to find new approaches for revitalizing rural communities where doctors are in short supply and hospitals have been downsizing and closing for decades. The federal government doled out the first-year rural health program awards to states this year, with pots ranging from $147 million in New Jersey to $281 million in Texas<\/a>.<\/p>\n Modernizing technology infrastructure is a key pillar of the federal rural health program, and the catalyst money epitomizes the administration\u2019s strategy to move fast and experiment with untested technology \u2014 much like the \u201cmove fast and break things\u201d mantra during the heyday of Silicon Valley.<\/p>\n Instead of breaking things, though, the goal is to \u201cmove fast, fast-fail, innovate quickly, and move to sustainability,\u201d said Aaron Bujnowski, a managing director with the healthcare industry group at the consultancy Alvarez & Marsal. \u201cThis is a transformation that is still meant to serve the people.\u201d<\/p>\n Rigorous Rules and Tight Deadlines<\/strong><\/p>\n Beyond Louisiana, Timothy Foster, a spokesperson for the Centers for Medicare & Medicaid Services, confirmed that Delaware, Georgia, Massachusetts, Nebraska, South Carolina, Virginia, and West Virginia are also creating rural health tech catalyst funds.<\/p>\n Every year, states must compete for rural funding in the five-year federal program. Federal regulators will take money away from states that do not meet the goals promised in their applications, including whether they designated money to companies for tech innovations.<\/p>\n CMS, which is overseeing the program, released a seven-step guidance document<\/a> for states to follow when creating the tech catalyst operations. No more than 10% of each state\u2019s award can be spent on a rural tech catalyst fund.<\/p>\n States\u2019 initial annual progress reports for the rural fund were due at the end of August. CMS has declined to publicly post those reports; it plans to publish an annual report on state progress. States must show that first-year funds will be obligated \u2014 but not necessarily spent \u2014 by Oct. 30, according to the CMS guidance document.<\/p>\n Daniel X. O\u2019Neil, a technology consultant who advocates for open data and open government, created a state tracker<\/a> and parsed the original state applications to find dozens that mention catalyst awards and technology funds.<\/p>\n O\u2019Neil said he is \u201clooking forward to the clawbacks and the craziness of October because, you know, that\u2019s serious stuff.\u201d<\/p>\n For the rural health catalyst funds, CMS requires states to submit the list of finalists \u201cat least 15 business days\u201d before announcing winners, along with \u201csufficient information\u201d for the agency to \u201cassess each proposed project,\u201d according to the guidance document.<\/p>\n The document outlines intellectual property and federal rights but does not provide guidance or standards for patient rights or protections. CMS spokesperson Foster stated in an email that the technology investments must comply with federal \u201cprivacy, security, interoperability, and patient safety\u201d requirements.<\/p>\n Protecting Patients<\/strong><\/p>\n Maya Sandalow, director of the health program at the Bipartisan Policy Center and one of the leading analysts watching the rural fund, said the catalyst funds are \u201cpublic dollars\u201d and has called for more transparency in the overall rural health program. The center is a nonprofit think tank in Washington, D.C.<\/p>\n Accurate and timely reporting must be done to ensure \u201cthe necessary guardrails are in place\u201d to protect patients, she said, adding that the innovation needs to be \u201ctested in a way that\u2019s safe for the patients that they are going to be used on.\u201d<\/p>\n To apply, startups must be less than 10 years old and have raised less than $50 million in early funding. Companies that win a portion of state catalyst funds must meet predetermined milestones before being paid \u2014 and federal officials will make \u201ctargeted reviews as needed,\u201d according to the guidance document.<\/p>\n Louisiana officials announced the state\u2019s tech catalyst fund with an event in rural Natchitoches, known as the filming location of the 1989 film Steel Magnolias<\/em>. The fund quickly drew more than 200 companies competing for between $250,000 and $3 million in seed money.<\/p>\n Tiny startup Greens Health was invited to the event. The 2-year-old company analyzes Medicare claims to identify patients with chronic diseases, such as diabetes, and works with local home health nurses and senior facilities to improve care.<\/p>\n \u201cWe\u2019ve been looking for a way to launch in Louisiana,\u201d said Kehlin Swain, co-founder and chief executive of Greens Health. The company serves about 100 patients across Texas, Alabama, and Florida and hopes to get a $250,000 investment from Louisiana.<\/p>\n Louisiana\u2019s Fleig said his state is \u201cat a really interesting turning point.\u201d The state secured $208.4 million for the first year of the rural health program and quickly created its catalyst fund using the state\u2019s already established innovation department.<\/p>\n At the same time, nearly 1.1 million people live in Louisiana\u2019s rural parishes and the state ranks as the \u201cleast healthy\u201d in the nation, according to its own application. State rates of diabetes, obesity, and cardiovascular disease are among the highest in the nation.<\/p>\n Fleig believes Louisiana is an ideal place to test technology solutions. So, while Silicon Valley has \u201cnot needed much of what Louisiana has had to offer\u201d for much of its existence, it does now, he said.<\/p>\n Caret Health is one of those companies. Co-founders Riya Pulicharam, who is a physician-researcher, and Kevin Zhao, an engineer, met in Silicon Valley. Together, they created a technology platform that identifies patients who need help getting to their appointments, having scans done, or picking up prescriptions. That technology flags a human, who then contacts the patient with a call or text.<\/p>\n Zhao said Caret had successful pilots at large health systems, but those places also had other vendors and \u201cit was a pretty big uphill battle\u201d to get in and scale. Then, in 2024, the company began paying attention to rural places.<\/p>\n \u201cThere wasn\u2019t a lot of existing infrastructure. And that was really good for us because we were able to come in very quickly,\u201d Zhao said. \u201cA lot of the hospitals really needed this kind of service.\u201d<\/p>\n Fast-forward to 2026: Caret Health is about 4 years old and has contracted with about 60 hospitals in 16 states. Pulicharam and Zhao hope to win $3 million to expand into Louisiana.<\/p>\n Louisiana\u2019s Fleig said the state will take an equity stake in each company it invests in. \u201cThe dream\u201d is that selected startup companies will also help the state make money to reinvest. If some companies fail \u2014 or fail fast \u2014 that\u2019s to be expected, but the state should still make money because of \u201cthe law of averages,\u201d he said.<\/p>\n \u201cIf we are good, we\u2019ll make more money than we spent,\u201d Fleig said. \u201cEither way, it\u2019s going to go back into improving healthcare outcomes.\u201d<\/p>\n Rural Tech-Catalyst Funds: Fast-Moving, High-Pressure<\/p>\n First-year progress reports were due at the end of August. Using the annual report, federal officials will recalculate and potentially claw back money from underperforming states, according to reporting requirements<\/a> created by the Centers for Medicare & Medicaid Services, which oversees the program.<\/p>\n States will be scored on a multitude of initiatives and plans, plus whether they earmark their first-year spending by Oct. 30. Year 2 funding will be determined by the end of October.<\/p>\n<\/div>\n<\/div>\n KFF Health News<\/a> is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF\u2014an independent source of health policy research, polling, and journalism. Learn more about KFF<\/a>.<\/em><\/p>\n This article<\/a> first appeared on KFF Health News<\/a> and is republished here under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License<\/a>.<\/p>","protected":false},"excerpt":{"rendered":" Your browser does not support the audio element. Can\u2019t see the audio player? Visit kffhealthnews.org to listen. When Josh Fleig, Louisiana\u2019s chief innovation officer, learned his state had set aside $20 million a year, for five years, to invest in startup rural health companies, his reaction was not surprising: \u201cWow!\u201d In rural America, where people…<\/p>\n","protected":false},"author":0,"featured_media":15540,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-15539","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-articles"],"_links":{"self":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/15539"}],"collection":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15539"}],"version-history":[{"count":0,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/posts\/15539\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=\/wp\/v2\/media\/15540"}],"wp:attachment":[{"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/medical-article.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}