Rural hospitals lacking the scale to participate in value-based care have felt pressure to close, downsize, or merge. Clinically Integrated Networks may present an option for achieving sustainability while maintaining independence – if market conditions are right.
The sustainability crisis facing rural hospitals is not new, and it shows no signs of abating. Since 2010, 152 rural hospitals have closed or converted to non-inpatient care facilities. Many others are limping along, with 44% of rural hospitals operating on negative margins. That’s a grim sign for the future because the biggest risk factors for hospital closure are negative operating and total margins combined with low days cash on hand.
In this environment, Clinically Integrated Networks have emerged as a compelling model, especially in states with higher numbers of independent hospitals. By banding together, these independents can achieve the scale necessary to negotiate with payers, invest in shared infrastructure, and participate in value-based care — without being absorbed into larger health systems.
CINs now span from Ohio to Montana to Texas, with reported operational savings of 10% to 30% and a membership base that continues to grow. For independent rural hospitals in the right markets, CINs may represent a genuine breakthrough.
Why CINs Work: Solving the Scale Problem
The causes of rural hospital financial distress are multiple and interconnected – but much of the problem comes down to scale. Though most Medicare payments remain effectively volume-based, the trend is clearly toward paying for value rather than volume (MACRA, value-based purchasing, accountable care organizations, etc.). Small rural hospitals have struggled to meet even the basic requirements, lacking the patient populations to generate meaningful quality data and falling short of the covered lives thresholds for value-based contracts.
Simultaneously, insurance market consolidation has reduced independent hospitals' negotiating leverage with commercial payers. Independent facilities are simply too small to negotiate favorable rates on their own.
This creates a downward cycle. Without negotiating leverage, rural hospitals can't secure better payment rates. Without better payment, they can't invest in the IT systems needed to track and measure value-based care performance. And without those systems, they can't participate in the value-based contracts that might improve their payment. For years, struggling rural hospitals felt they faced a stark choice: sell to a larger system, downsize, or close.
CINs are designed to address both sides of the rural hospital revenue equation. On the commercial side, CINs aggregate multiple facilities to secure better reimbursement rates and more favorable contract terms. Beyond headline rates, CINs also can negotiate preferred rates for ancillary services like laboratory and imaging, establish direct channels to payer representatives for faster resolution of payment disputes, and ensure consistent application of contract terms across all network participants.
Equally important, CINs are designed to solve the covered lives problem that has locked individual rural hospitals out of value-based care. Most federal alternative payment models require minimum patient populations – 5,000 attributed beneficiaries to participate in the Medicare Shared Savings Program, for example. Individual rural hospitals rarely reach these thresholds alone, but by pooling their patient populations through a CIN, hospitals can access these programs across Medicare, Medicaid, and commercial plans.
Finally, CINs may generate financial benefits through economies of scale for purchasing and operations, including pooled investment in IT infrastructure and data analytics platforms that individual hospitals cannot afford. CINs also reduce administrative burden by handling contract negotiations centrally rather than requiring each hospital to manage multiple payer relationships independently.
The TORCH CIN: An Early Rural Model
The theoretical advantages are compelling, but the model is still nascent, and practical experience is limited. The biggest exception is Texas, with the largest rural population of any state – and, notably, a market where nearly 40% of hospitals remain independent of larger systems.
The first major rural CIN was launched by the Texas Organization of Rural & Community Hospitals (TORCH) in January 2021. With just nine members at launch, TORCH has grown to 43 hospitals – 32 of which are Critical Access Hospitals – and roughly 100 affiliated clinics. Geographically, member hospitals sprawl nearly 800 miles from the Panhandle to the border region. These facilities serve almost 800,000 rural Texans, with over 90,000 covered lives now participating in value-based arrangements spanning Medicare, Medicaid, and commercial payers.
That kind of critical mass gives member hospitals much more leverage when negotiating with payers – a key advantage of the CIN model. In March 2026, Ascendient spoke with Paul Aslin, TORCH’s Executive Director, to better understand the CIN model in action.
Organization and Structure
The TORCH CIN operates as a member-owned LLC, with a Board of Managers and two key committees: one overseeing payer contracts and incentive distribution, the other monitoring quality performance and sharing best practices. Member hospitals elect leadership from their own CEOs, maintaining direct control over network strategy and operations.
A common question regarding CINs is whether member hospitals rise and fall together financially. At TORCH, contract terms are negotiated collectively, but most incentive payments are earned based on individual hospital performance. A smaller number of shared savings arrangements are tied to group results. This design is significant: hospitals benefit from collective bargaining power without being penalized for a neighbor's underperformance.
TORCH funds its ongoing operations by retaining approximately 20% of the incentive payments paid out to member hospitals, with 80% flowing directly to hospitals. Annual membership dues are set at just $100 per hospital, a deliberate choice by TORCH’s CEO to ensure cost is never a barrier to joining. This model means TORCH’s financial sustainability grows with membership and with quality performance, directly aligning the network’s incentives with those of its members.
TORCH’s formation was enabled by initial seed funding from UnitedHealthcare, which approached TORCH to improve rural hospital engagement. UnitedHealthcare was transparent about its dual objectives: building goodwill with rural providers while increasing market share in rural areas. This upfront capital allowed TORCH to develop CIN infrastructure without requiring resource-constrained rural hospitals to fund startup costs themselves. The willingness of a major payer to invest in rural network development was unusual for 2021 and helped position TORCH as an early adopter of this model.
Services and Support
The TORCH CIN manages all payer relationships and contract negotiations, giving small hospitals collective bargaining power they could not achieve alone. Its Clinical Quality Committee monitors performance across all contracted payers and shares best practices, while also providing access to actionable data from multiple payer partners, though not yet in a fully integrated platform.
Beyond these basics, the TORCH CIN connects participants with embedded resources. Through its partnership with Main Street Health, a value-based care company that manages Medicare Advantage contracts, participating clinics receive health navigators who assist with comprehensive care assessments and care gap identification. CVS Accountable Care provides education and data infrastructure for original Medicare participation. These management partnerships reduce the technical and operational burden on small hospitals.
Early Outcomes
A 2024 independent evaluation conducted by NORC at the University of Chicago and Texas A&M provides insight into the network's early implementation and results.
The TORCH CIN negotiated contracts with upside-only incentives and no downside financial risk, a critical design choice for resource-constrained rural hospitals learning value-based care. In 2023, TORCH CIN participants exceeded their chronic care management targets in the Medicare ACO but lagged in annual wellness visits, highlighting both the promise and the learning curve.
Participating hospitals experienced several early wins. Financial incentives from Main Street Health for completed comprehensive care assessments provided immediate value. The TORCH CIN successfully negotiated with UnitedHealthcare to bring all participants in-network for laboratory services, a concrete example of collective bargaining power. Hospitals gained direct payer contacts for faster issue resolution, and the CIN reduced administrative burden by handling contract negotiations centrally.
Underpinning these results is what Aslin describes as a “better together” stance: when payers have attempted to offer arrangements to only a subset of members rather than the full network, TORCH has held firm on the all-or-none position.
Consistent clinical improvements have been harder to document as the CIN continues to build an integrated data analytics platform that can measure quality across payer types. For instance, Texas Medicaid has an incentive program offering an estimated $150,000 in annual payments to hospitals that hit quality measures – but the required data platform is prohibitively expensive for smaller facilities. In 2024, TORCH partnered with a nonprofit health information exchange to help members access the data platform at no cost. Even so, Aslin acknowledges that the raw data is not always helpful in responding to quality gaps. Robust analytical capabilities are among the CIN’s biggest unmet needs, he says.
Despite the inevitable growing pains, it is worth noting that the TORCH CIN has succeeded in bringing a measure of stability since its launch in 2021. While the Sheps Center counts 26 rural hospital closures since that time, hospitals participating in the Texas network have experienced no closures and no affiliations – a clear win for rural communities in the Lone Star State.
Cibolo: A Private Company Scales the CIN Model
Cibolo Health operates statewide clinically integrated networks in regions of the country where independent hospitals are relatively numerous. Networks are structured as nonprofits owned by member hospitals, while Cibolo provides management services through annual fee-for-service contracts.
Cibolo’s CIN model is young but fast-growing: North Dakota's $3.5 million investment in 2023 helped launch the Rough Rider Network, which Cibolo then used as a proof of concept for expansion to other states. The company projects that in 2026, the combined networks will represent more than 120 hospitals with service areas covering approximately 4.7 million people. Current numbers (March 2026) are shown in the chart below.
Cibolo offers comprehensive services: value-based contract negotiation, network development and governance, population health platforms, care management, and shared services from billing to recruitment. The company employs dedicated payer contracting staff with experience negotiating value-based arrangements across commercial, Managed Medicaid, and Medicare Advantage payers, as well as managing participation in CMS programs. The company's executive team includes former health plan executives with experience in Medicare Advantage expansion into rural markets.
This turnkey approach reduces startup barriers but creates ongoing dependencies. While Cibolo does not publish its fees (and did not respond to an inquiry from Ascendient), some sources have reported initial membership fees of $25,000–$50,000 per hospital, used in part to fund upfront infrastructure including an analytics platform. This cost difference reflects a real trade-off: Cibolo’s higher fees provide more robust data infrastructure from the start, while TORCH’s low-cost model prioritizes broad access over infrastructure.
Whether the model delivers on its clinical and financial promise is difficult to access, but media reports are encouraging. Cibolo COO Brittany Sachdeva recently told Modern Healthcare that hospitals in North Dakota’s Rough Rider High-Value Network have seen sharp increases in some preventive care services, including 120% for pediatric checkups, 32% for breast cancer screening, and 17% for colorectal screening. Member hospitals have experienced a combined $418,000 per year in savings and revenue improvements per 1,000 patients, she said.
More growth may be on the way. Cibolo’s CEO reports that leaders from 10 additional states are exploring it, and new federal funding through the $50 billion Rural Health Transformation Program (RHTP) may accelerate that expansion further.
State-Led Alternatives: Different Definitions of "CIN"
Most existing CINs like TORCH and Cibolo are legal structures specifically designed for collective payer negotiations. Their core function is joint contracting with commercial insurers, ACO formation, and value-based payment arrangements, all while maintaining clinical integration standards that satisfy FTC antitrust requirements.
Two states, Vermont and Arkansas, are experimenting with a more limited CIN model, using funds from the Rural Health Transformation Program. These models stress investment in operational infrastructure and care coordination CINs without the payer negotiation component. This is a meaningful distinction. For TORCH CIN members, payer contracting is typically the primary reason rural hospitals join. CINs that provide only operational shared services may struggle to attract and retain members that need relief on the revenue side.
The two states also operate in very different contexts, which matters for interpreting their design choices.
Vermont allocated $100-200 million over five years for shared operational infrastructure for the state’s independent rural hospitals: a shared EMR platform building on the state's existing Health Information Exchange; a shared HRIS system for HR functions; a statewide e-Consult platform; a closed-loop referral system; a centralized interfacility transfer tool; and technology grants for remote patient monitoring. Vermont's plan explicitly emphasizes “maintaining hospital independence and competition.” But Vermont's decision to omit payer negotiation from its CIN design likely reflects the state's existing all-payer model, which already provides a different payment framework than most states. What works in Vermont's regulatory environment may not translate to states where hospitals face standard commercial payer dynamics.
Arkansas allocated $110 million to develop what it calls "locally-driven CINs" focused on improving efficiency, data sharing, and regional collaboration among rural providers. Like Vermont, there is no mention of collective payer negotiations, joint contracting, or ACO formation. But unlike Vermont, Arkansas does not have an all-payer model or any alternative payment structure that might compensate for the absence of collective payer negotiation. Arkansas operates in a conventional fee-for-service and commercial payer environment, making it a particularly important test case: if operational-only CINs can generate sufficient member value to sustain participation without the revenue-side component, Arkansas is where we'll see that proof. If they can't, it will reinforce the argument that payer negotiation capability is not optional but foundational to CIN sustainability.
Matching the Model to the Market
The emergence of multiple CIN approaches – member-owned cooperatives, privately managed networks, state-funded operational models – is a healthy sign that the market is experimenting. For rural hospitals evaluating their options, the relevant questions are:
1) Do we have sufficient scale? The minimum population needed depends on a particular CIN's goals.
- For collective payer negotiations, a larger patient base increases negotiating leverage with commercial insurers. When a CIN represents a significant portion of an insurer's local network, it gains stronger bargaining power for contract rates and terms.
- For value-based care participation, adequate covered lives are essential for reliable performance measurement. Smaller populations face higher risk of random variation: a few very expensive patients or temporary physician turnover can swing performance metrics and trigger financial penalties through no fault of the network. Health Affairs research shows a 10% chance of random variation in performance results for a population of 5,000 covered lives, compared to just 1% at 50,000 lives. The Pennsylvania Medical Society's economic modeling suggests 20,000 covered lives is "a good beginning," 50,000 is "likely to succeed," and 100,000 or more will be "sustainable for years to come."
- For operational models, you need enough participating facilities to achieve meaningful economies of scale.
2) Are there enough independent hospitals? Early evidence suggests that CINs are best suited to states with higher total numbers of independent hospitals. Cibolo, for instance, has taken root in Midwest and Mountain regions, where 44% of the U.S.’s independent hospitals are located.
In the South Atlantic, by contrast, 82% of hospitals already belong to a health system – perhaps making it difficult to form a sufficient network of truly independent hospitals. This doesn't mean hospitals in system-driven markets have no options. But it does mean they should be honest about whether a CIN is a realistic path or an aspirational one.
3) Do we have strategic clarity? Beyond questions of scope, does your strategic ambition focus on operational efficiencies and shared services, or on collective payer negotiation and value-based care participation? The answer shapes every subsequent decision about model selection, governance, and investment.
4) Do we have sufficient capital and financial runway? Upfront costs include IT systems, care coordination staff, data analytics platforms, and administrative infrastructure, plus ongoing expenses for clinical champions, IT expertise, and regulatory compliance support. Plan for 3-5 years before reaching positive returns, during which time the network must manage revenue shifts and downside risk. Potential funding sources include state appropriations such as RHTP awards, federal programs like CMS Advance Investment Payments, philanthropic capital, or payer seed investments.
On the payer seed investment option: TORCH’s founding experience suggests that early outreach to a payer with strategic interest in rural market expansion may be worth exploring. A group launching from scratch may also want to budget for legal fees to establish agreements and, critically, for contracting expertise. TORCH’s experience suggests having an advisor fluent in both was valuable in getting initial contracts in place.
5) What are the data integration challenges? Networks typically manage 6-8 different EHR products across member hospitals, although TORCH CIN manages 14. Success requires robust IT planning to integrate these systems and account for rural broadband limitations that can affect real-time data sharing. TORCH's experience offers one point worth noting: the member hospital running Epic appeared to outperform others on value-based care measures, which Aslin attributed in part to enterprise EMRs being more regularly updated to capture quality-relevant documentation. Whether this reflects a broader pattern is unclear, but it suggests that EMR choice may be a factor worth considering.
6) Do we have the right governance structure? What level of control and operational involvement can your organization sustain? Member-owned cooperatives like TORCH provide direct control but require active governance participation and consensus-building across members. Management service companies like Cibolo offer proven systems and professional execution but create ongoing service dependencies with undisclosed fee structures. State-led initiatives provide built-in accountability through RHTP reporting requirements but involve multi-stakeholder coordination that may limit operational flexibility.
7) Do we have operational workforce capacity? Technology and contracts alone do not produce value-based care results. Staff at member hospitals and clinics must take ownership of value-based care tasks like pulling patient data from the EMR weekly, identifying care gaps, and scheduling preventive screenings. Networks should plan through staffing and capacity support as part of their implementation planning.
One model worth considering: TORCH partnered with Texas A&M’s Rural and Community Healthcare Institute (ARCHI), which used state funding to place remote care coordinators across cohorts of member hospitals. TORCH's experience suggests this kind of externally funded capacity support improved participation among member hospitals.
The Path Forward
Rural CINs address real problems: payment structures incompatible with small scale, workforce shortages demanding collaboration, and payer consolidation requiring collective negotiating power. The early results from TORCH and the rapid expansion of the Cibolo model demonstrate that CINs can deliver meaningful value for independent rural hospitals – but only where the market conditions support them.
There is no single blueprint for rural CIN success. Health systems that jump into CIN development without honestly assessing their market structure risk investing time and capital in a model that can't deliver. The better approach is to start with market reality – including consolidation levels, strategic alignment of potential partners, payer landscape, etc. – and work backward to the partnership structure that fits.
The CIN movement represents a genuine advance for rural healthcare. Making sure it's the right advance for your hospital is the work that matters most.
