Rural Health Care

Sustainability Plans

A primary goal of the Rural Health Care Pilot Program is to fund networks that demonstrate that they will be successful and sustainable in the long-term. To ensure the long-term success of Pilot projects and to prevent wasteful allocation of limited universal service funds, the Federal Communications Commission requires that each Pilot project file a sustainability plan with USAC.

See the FCC's Rural Health Care (RHC) Pilot Program 2007 Selection Order, WC Docket No. 02-60, FCC 07-198, 22 FCC Rcd 20360, Paragraph 54.

USAC's Two-Tier Review Approach

Request For Proposals
Projects submit a draft sustainability plan with the submission of the FCC Form 465. The draft sustainability plan should begin to answer the questions outlined in the FCC's FAQ 24 based on the information available to the Project prior to initiating the competitive bidding process.
Request for Funding
Projects submit a final sustainability plan with the submission of the FCC Form 466-A. The final sustainability plan should completely address all questions outlined in FAQ 24. Projects should update their sustainability plans each time they file a new request for funding.*

* Exception: If a project submits a Request for Funding for a Network Design Study, a detailed sustainability plan is not required. A detailed sustainability plan need only be submitted when the Request for Funding is for network construction or funding for telecommunications or broadband services.

The 2007 Selection Order also directs projects to submit a copy of their sustainability plan with every Quarterly Report filing, which should be updated to reflect the current status of the project each quarter. See 2007 Selection Order, paragraph 126.

Sustainability Requirements

The following is a breakdown of the areas of sustainability outlined in FAQ 24; however, each plan is still reviewed on a case-by-case basis per FAQ 24. USAC recommends that Pilot projects address each area of sustainability separately to expedite review.

Minimum 15% Funding Match

FAQ 24 states that projects should "discuss status of obtaining minimum 15 percent match for the project. If such project funding is dependent on appropriations or other special conditions, such conditions should be discussed."

USAC recommends that projects receiving appropriations or grant funding include a description of any special conditions and general information regarding those conditions. Secondary sources of funding, if already identified, should be included.

Project Sustainability Period

FAQ 24 states that projects should "indicate the sustainability period and how it compares to the initial investment. Although a sustainability period of 10 years is generally appropriate, the period of sustainability should be commensurate with the investments made with Pilot Program funds."

USAC recommends that, at a minimum, each project should project a 10 year sustainability period. For projects entering into long-term leases, IRUs, or capital build projects, the sustainability period should match the life of the investment. For example, if purchasing a 20 year IRU, the sustainability period should be a minimum of 20 years. A budget should be included, showing income and expenses for the project at the aggregate level.

Principal Factors

FAQ 24 states that projects should "discuss each of the principal factors that were considered by the participant to demonstrate sustainability. These factors should be discussed in narrative, and (if appropriate) shown in proposed budgets."

USAC recommends that projects include all factors that show that the Pilot project will be sustainable for the entire sustainability period. Any factor that will have a monetary impact on the Pilot project should be reflected in the project's budget.

Terms of Membership in the Network

FAQ 24 states:

"Describe generally any agreements made (or to be entered into) by network members (e.g., participation agreements, memoranda of understanding, usage agreements, or other documents)."

"Describe financial and/or time commitments made by proposed members of the network."

"If the project includes excess bandwidth for growth of the network, describe how such excess bandwidth will be financed."

"If the network will include eligible health care providers and other network members, describe how fees for joining and using the network will be assessed."

Excess Capacity

FAQ 24 states "if the project includes excess capacity to be used for any purpose other than the dedicated health care network, explain the funding for such excess capacity.

In doing so:

Indicate how users of such excess capacity are paying their fair share; and describe generally agreements made between the health care network portion of the project and the excess capacity portion of the project (e.g., cost allocation, sharing agreements, maintenance and access, ownership)."

USAC recommends that projects considering procurement of excess capacity discuss their plans with their coach as soon as possible, for guidance on appropriately incorporating such costs in procurement and sustainability plan documents.

Ownership Structure

FAQ 24 states that a project should "explain who will own each material element of the network, and arrangements made to ensure continued use of such elements by the network members for the duration of the sustainability period."

USAC recommends that projects respond with a narrative description responsive to this area of sustainability. For example, "Each health care provider will own the end user equipment" or "the (Name) Network will own all network elements, including all fiber constructed and equipment purchased with universal service funds."

Sources of Future Support

FAQ 24 states in part: "If sustainability is dependent on…

  • fees to be paid by eligible health care providers – then, describe generally the health care providers' commitments and ability to pay such fees;
  • fees to be paid by other network members – then, describe generally the likelihood of demand to use the network by such entities;
  • revenues from excess capacity – then, describe generally the likelihood of demand for such excess capacity."
  • USAC recommends that each project address, in narrative form, its source(s) of future support using the above as a guideline. For projects that have multiple sources of funding, address each source of funding and the likelihood of receiving that funding.

Management of the Network

FAQ 24 states that projects should "describe the management structure for the network for the duration of the sustainability period, and how management costs will be funded."

USAC recommends that projects provide a narrative description of how the network will be managed, including all administrative aspects of the network including but not limited to invoicing, contractual matters, and network operations. Any factor that will have a monetary impact on the Pilot Project should be reflected in the project's budget, to include how management's costs will be funded.