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SHIP Program Description
The Small Hospital Improvement Program (SHIP) Grant is an annual grant program that provides funding to small rural hospitals to help them support specified activities. The Patient Protection and Affordable Care Act, signed by President Obama on March 23, 2010, included new language for the SHIP grant. Specifically, the purposes for which funds can be used was amended to include activites related to:

  • Prospective payment systems (PPS);
  • Value-based purchasing programs (VBP);
  • Accountable care organizations (ACO); and
  • The National pilot program on payment bundling (Payment Bundling).

Grantees are encouraged to focus their SHIP funding on the principles that underlie these concepts. The following bullets provide background information on these concepts to provide you with a broader context. Below are some examples of activities that SHIP funding could be used for under the new statutory language:

  • PPS: Funds may continue to be used to offset costs related to the implementation of prospective payment systems (PPS). Grantees could use funds to support activities such as updating chargemasters or providing training in billing and coding. For more examples of how a hospital could spend funding under this category, click here.
  • VBP: One of the key challenges facing small rural hospitals in the area of VBP is improving data collection activities in order to facilitate reporting to Hospital Compare. Grantees could use funds to help them report data to Hospital Compare. For more examples of how a hospital could spend funding under this category, click here.
  • ACOs: The ACO concept is heavily focused on improving quality outcomes. Consequently, grantees could use funds to support activities that support quality improvement such as reduction of medical errors as well as education and training in data collection and reporting and benchmarking. For more examples of how a hospital could spend funding under this category, click here.
  • Bundled Payments: One of the concepts behind bundled payment is building accountability across the continuum of care. Under this authorized funding use, hospitals could use SHIP funding to improve care transitions between ambulatory and acute, acute to upstream acute, and acute to step-down facility. SHIP funding could also be used for training, clinical care transition protocol development, or data collection that documents these processes. For more examples of how a hospital could spend funding under this category, click here.

These changes apply to grants made on or after January 1, 2012. Consequently, hospital applications for 2013 grants must comply with the amended provisions of the law (Section 1820(g)3 of the Social Security Act).

SHIP Hospital Eligibility
Hospitals apply to the Oklahoma Office of Rural Health (OORH) to receive a SHIP grant, and the OORH applies to the Office of Rural Health Policy on behalf of all of the state's eligible hospitals. To be eligible for a SHIP grant, a hospital must meet the following criteria:
  • Have 49 available beds or less, as reported on line 12 of the hospital’s most recently filed Medicare Cost Report;
  • Be located outside a Metropolitan Statistical Area (MSA) or located in a rural census tract of a MSA as determined under the Goldsmith Modification or the Rural Urban Commuting Areas; and
  • Be a non-federal, short-term, general acute care facility.

Applications and Progress Reports
Participating hospitals are required to submit an annual application and progress report to receive SHIP grant funding. In 2012, 59 Oklahoma hospitals qualified to receive $7,503.80 per hospital in SHIP grant funding. For a map of participating hospitals, click here (opens in new window).


For further information regarding this grant, please contact:

Corie Kaiser