South Dakota has awarded $90 million in federal funding to 82 rural health projects, putting new money behind electronic health records, cybersecurity, interoperability and digital care across underserved communities.
South Dakota awarded the grants after receiving 144 applications requesting $336 million, far more than the available funding. The projects are intended to replace outdated technology, improve the exchange of health information and give rural providers stronger digital and cybersecurity infrastructure.
The awards are part of the state’s $189.48 million fiscal 2026 Rural Health Transformation allocation from the Centers for Medicare & Medicaid Services. The five-year program runs through 2030 and combines technology investment with workforce, access and care-delivery initiatives.
EHR modernization has a measurable target
South Dakota’s plan goes beyond buying new software. It sets a target for 80% of funded Tier 1 facilities to implement certified electronic health record systems by Year 3.
The initiative specifically includes rural facilities that still depend on paper records or have limited electronic systems. The state’s objective is to bring those providers into a more connected digital environment that can support information exchange and coordinated care.
The state is linking digital upgrades to patient outcomes
The technology program also carries specific clinical targets.
South Dakota expects participating facilities to achieve an 8% increase in completed preventive screenings by Year 3, including screening for colorectal cancer, breast cancer and diabetes.
Its plan also calls for a 15% reduction in hospital-acquired infections and a 10% reduction in medication errors among participating Tier 2 facilities. The targets are intended to show whether digital tools are improving care rather than simply modernizing infrastructure.
Cybersecurity is a separate focus of the investment
The new funding includes cybersecurity assessments, technical assistance and workforce training for rural and underserved healthcare organizations.
South Dakota is also establishing Regional Innovation Centers that can help smaller providers with cybersecurity, digital-care coordination, technology testing and workforce development. The approach gives rural organizations access to technical resources that may be difficult to maintain independently.
Health information exchange is central to the strategy
Interoperability is another major component of the state’s plan.
South Dakota intends to connect its modernization effort with Health Link, the state’s health information exchange, while expanding telehealth and other digital capabilities. The plan also includes a Rural Data Atlas designed to support health planning and decision-making through aggregated data.
For rural providers, the objective is to make patient information more accessible across participating organizations instead of keeping records confined to individual systems.
Grants will also support remote care and aging services
Some projects are aimed at extending care outside traditional clinical settings.
Awarded initiatives include remote patient monitoring, digital referral and care-coordination platforms, aging-in-place technologies and virtual-reality training. Other projects are designed to connect healthcare providers with aging-services organizations and improve support following hospital discharge.
These projects put the technology funding directly into care delivery, particularly for older adults and patients managing chronic conditions.
Rural access remains the underlying challenge
Technology is being deployed against persistent access barriers in South Dakota’s rural and frontier communities.
The state identifies long travel distances, transportation limitations, provider shortages, broadband limitations and gaps in behavioral and dental care among the challenges facing rural residents. Community input collected across Aberdeen, Eagle Butte, Pierre, Rapid City and Yankton also highlighted these barriers.
That makes telehealth and remote monitoring important complements to physical healthcare capacity, particularly where specialist services are not available locally.
The $90 million is only one part of the transformation
South Dakota’s broader rural-health strategy contains 10 initiatives, covering technology and data, workforce development, community health workers, maternal health, behavioral health, emergency medical services, chronic disease and Medicaid-related care transformation.
The federal Rural Health Transformation Program provides $10 billion a year nationally from 2026 through 2030, for a total of $50 billion. CMS designed the program to help states build more sustainable rural healthcare systems rather than fund isolated projects.
South Dakota began preparing for implementation earlier this year through funding rounds and project-management work. The latest awards now move the state’s technology strategy from planning into deployment.
What comes next
The next measure of success will be implementation, not the size of the award.
South Dakota now has funded projects, defined EHR adoption goals and specific clinical targets. Providers will have to deploy the systems, connect data, train staff and maintain cybersecurity while continuing to serve patients.
The state’s rural-health transformation will ultimately be judged by whether those investments improve access and coordination, reduce preventable problems and allow rural providers to sustain modern healthcare infrastructure beyond the federal funding period.
