Allowable Investments

Small Rural Hospital Improvement Program allowable investments include activities that assist small rural hospitals with their value and quality improvement efforts and adaptation to changing payment systems through investments in hardware, software, and related training.

The Small Rural Hospital Improvement Program (SHIP) supports eligible hospitals in meeting value-based payment and care goals for their respective organizations, through purchases of hardware, software, and training. SHIP also enables small rural hospitals: to become or join accountable care organizations (ACOs); to participate in shared savings programs; and to purchase health information technology (hardware and software), equipment, and/or training to comply with quality improvement activities, such as advancing patient care information, promoting interoperability, and payment bundling.

Unallowable investments include but are not limited to, travel costs, hospital patient care services, hospital staff salaries, or general medical and office supplies. Additionally, SHIP funds may not be applied to support coronavirus-related (COVID-19) activities or be used to supplement program activities under the COVID-SHIP grant.

The allowable investments explored below outline examples and suggested topic areas for training, by category, to assist eligible SHIP hospitals in planning and selecting activities. Hospitals should contact their State Office of Rural Health with questions regarding the appropriateness or fit of a certain activity, training, or hardware/software purchase. For additional clarification, refer to the SHIP Allowable Investments Search Tool or Frequently Asked Questions (FAQs).

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Looking for Allowable Investments?

State Office of Rural Health staff and hospital staff can search online to determine whether potential activities are allowable or unallowable under the SHIP Program.

SHIP Funding Updates and Recommendations

Hospitals must first meet SHIP funding priorities before using resources to support investments in other areas. SHIP funding priority areas include:

  1. SHIP funds should be prioritized by participating Critical Access Hospitals (CAH)  in the following manner:

a) Hospitals must meet MBQIP (see and MBQIP Fundamentals Guide for State Flex Program, MBQIP Measures) participation requirements in order to improve hospital quality outcomes. Non-federal tribal hospitals may use another culturally sensitive federally managed measure of hospital quality outcomes.


b) ICD-11[1] coding readiness and/or implementation activities.

If a CAH has implemented both MBQIP and ICD-11 activities, then that hospital may select a different activity listed on the SHIP Allowable Investments contained within the hospital application. SHIP funds for non-CAHs should be prioritized in the following manner:

a. ICD-11 coding readiness and/or implementation activities

If a Prospective Payment System hospital has implemented ICD-11 activities then that hospital may select a different activity on the SHIP Allowable Investments

If a CAH or non-CAH (PPS hospital) is currently using all hardware, software, equipment, and/or trainings listed on the SHIP Allowable Investments the hospital may select an alternative hardware, software, equipment, and/or training provided:

1) the purchase will optimally affect the hospital’s ability to transform its practice and participate in a Medicare Shared Savings Program or an ACO, increase value-based purchasing objectives, aid in the adoption of ICD-11, and/or support care transitions/coordination. Hospitals are encouraged to align SHIP purchases in ways that ensure the consistent and systematic fair, just, and impartial treatment[2] of all patients by addressing Social Determinants of Health[3] (SDOH) to improve the quality of healthcare provided; and

2) The hospital receives permission from both its SORH SHIP Director if in a state and the state/territory’s SHIP Director’s FORHP Project Officer.

For more information or for additional support, please contact the SHIP Technical Assistance Team at


[3] Social determinants of health (SDOH) are the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.


In This Toolkit

Provides examples of Accountable Care Organization investment activities and resources that align with the SHIP category to support SHIP-eligible hospitals with investments in training and improvement activities.
Provides examples of Value-Based Purchasing investment activities and resources that align with the SHIP category to support SHIP-eligible hospitals with investments in training and improvement.
Provides examples of Payment Bundling/Prospective Payment System investment activities and resources that align with the SHIP category to support SHIP-eligible hospitals with investments in training and improvement activities.

This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,350,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS, or the U.S. Government.​​

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