Small Rural Hospital Improvement Grant Program

The Small Rural Hospital Improvement Program (SHIP) is a federally funded rural health initiative administered in Texas by the Texas Department of Agriculture (TDA) through its Grants Office. The program operates under Section 1820(g)(3) of the Social Security Act and was originally authorized through the Balanced Budget Act of 1997 to assist small rural hospitals in adapting to Medicare Prospective Payment System requirements and broader health care payment reforms. For Federal Fiscal Year 2026, TDA is accepting applications from eligible rural hospitals throughout Texas for quality improvement and health system modernization activities. The program is associated with Assistance Listing Number 93.301, Small Rural Hospital Improvement Grant Program, and funding is connected to guidance issued by the Health Resources and Services Administration (HRSA). The purpose of SHIP is to assist small rural hospitals with 49 beds or fewer in improving quality of care and adapting to evolving reimbursement and operational standards within the health care industry. Eligible investments include hardware, software, training, and related activities that improve data collection and quality reporting capabilities, strengthen participation in Accountable Care Organizations or Shared Savings initiatives, and improve hospital financial processes associated with payment bundling and Prospective Payment System requirements. The program also supports health information technology investments and operational improvements tied to care coordination, coding standards, and financial sustainability. Hospitals may request support across one or more eligible activity categories as long as all expenditures align with SHIP funding priorities and federal program guidance. Eligible applicants are defined as non-federal short-term general acute care hospitals located in rural areas that maintain 49 beds or fewer according to the most recently filed Medicare Cost Report. Rural status may be established through several federal methodologies, including being outside a Metropolitan Statistical Area, being located within a rural census tract of a metropolitan area under Goldsmith Modification or Rural Urban Commuting Area standards, or qualifying under federal rural treatment provisions. The program permits participation from both for-profit and nonprofit hospitals, including faith-based institutions and tribally operated hospitals, provided all federal eligibility requirements are satisfied. Applicants must upload documentation from the hospital Medicare Cost Report confirming the hospital bed count as part of the application process. The estimated maximum award for Federal Fiscal Year 2026 is $13,528 per hospital, subject to final HRSA allocation levels. Grant funding is distributed on a reimbursement basis rather than through advance payments, meaning recipients must initially pay project costs and later submit reimbursement requests with supporting documentation. Reimbursement requests may be submitted monthly, quarterly, or at the end of the project period. The grant does not require matching funds, cost sharing, or in-kind contributions. Allowable expenditures are limited to activities associated with value-based purchasing, Accountable Care Organization or Shared Savings activities, and payment bundling or Prospective Payment System improvements. The program specifically prohibits indirect costs, entertainment expenses, alcohol, gratuities, charitable or political contributions, undocumented expenses, and purchases outside the approved project scope or grant period. Applications must be submitted electronically through the TDA-GO grant management system. Applicants are required to create or maintain an active TDA-GO account and should complete registration well in advance of the application deadline because account approval may take between 48 and 72 hours. The application includes several required sections, including applicant contact information, hospital general information, SHIP funding priorities, hospital status details, proposed activities, purchasing categories, and certifications by the authorized official. Required uploads include an Application for Texas Identification Number form, direct deposit information for ACH payments, a W-9 Federal Tax Form, and Medicare Cost Report documentation. The application system does not allow submissions after the published deadline, and mailed, emailed, faxed, or hand-delivered applications are not accepted. TDA emphasizes that applicants should submit early because technical issues at the applicant organization do not qualify for deadline extensions or appeals. Applications for the 2026 funding cycle were due by January 22, 2026 at 5:00 PM Central Time. TDA anticipates award announcements in April 2026, with projects expected to begin June 1, 2026 and conclude May 31, 2027. The program is described as a non-competitive award process, meaning all eligible and responsive applications are expected to receive funding. Grant recipients must complete a Mid-Year Report and a Project Completion Report through the TDA-GO system and maintain financial and programmatic records for at least four years following project completion. Failure to comply with reporting requirements may result in withheld reimbursements or termination of the grant agreement. TDA also reserves the right to negotiate award terms, partially fund projects, reject applications, or cancel the funding opportunity if necessary. Technical assistance and grant management support are available through the Texas Department of Agriculture and the State Office of Rural Health. The primary grant management contact is Nicole Caston, Grants Specialist, who may be reached at Grants@TexasAgriculture.gov or by phone at (512) 463-7178. Applicants may also contact the State Office of Rural Health regional coordinators through SORHTX@TexasAgriculture.gov for assistance with the application process and technical guidance. The funding opportunity is recurring and historically administered annually, indicating that future SHIP cycles are likely to continue based on federal appropriations and HRSA guidance.

Submit TDA-GO registration well before the deadline because approval may take 48 to 72 hours. Carefully verify EIN or TIN information to ensure reimbursements are deposited correctly. Upload all required documentation directly into TDA-GO because emailed or mailed supplemental files are not accepted. Ensure requested activities clearly align with SHIP allowable investment categories and reimbursement rules.