Headlines have turned on data centers. But opposing all data center projects isn’t the solution. New thinking points to benefits of data centers in rural areas – they have the potential to significantly improve healthcare facilities and their communities both financially and operationally.

Rural areas are increasingly becoming fertile ground for these facilities that power AI and cloud computing. While the majority of the country’s existing data centers are located in urban areas, an estimated two-thirds of more than 1,500 planned data centers are slated for rural areas, according to a Pew Research Center analysis.

Data center developments are shifting toward rural areas because they offer more space and more affordable land than urban markets. These facilities are also attracted by economic incentives from state and local rural governments that value these projects.

How Data Centers Benefit Rural Healthcare

Property tax revenues generated by data centers can throw a much-needed lifeline to ailing rural hospitals funded by local taxing districts.

Data center-generated tax revenue can also enable financially sound rural hospitals to further upgrade their operations, provide additional services, and compete more effectively with larger metropolitan hospitals.

One striking example is Microsoft Corp.’s contributions to the tax base in Cheyenne and Laramie County, Wyo., where the technology giant operates data centers. In 2025, Microsoft was ranked as the top taxpayer in Cheyenne and the second-highest taxpayer in Laramie County. The company notes this revenue helps support local hospitals, schools, parks, and libraries. Interest is spreading to smaller Wyoming communities as well: in June 2026, Uinta County approved a data center east of Evanston, home to Evanston Regional Hospital, which became a Critical Access Hospital in 2025.

Nationally, data centers have contributed an estimated $204 billion in federal, state, and local taxes according to the Data Center Coalition. 

Those local tax dollars matter. About one-third of the nation’s roughly 1,800 rural hospitals are owned by state or local governments, according to KFF. Meanwhile, more than 40 percent of rural hospitals lose money delivering patient services, and many stay open only because they receive local tax revenues or government grants, according to the Center for Healthcare Quality and Payment Reform. Property tax revenues flowing from data centers to local tax coffers could help turn a rural hospital’s balance sheet from red to black.

Another benefit is an economic ripple effect on a data center’s host community. While data centers don’t require high staffing levels because they are mostly automated, some have agreed to prioritize local vendors, such as building contractors, material suppliers, and service providers, during construction and maintenance.

Rural communities may also benefit from data centers that provide high-capacity fiber-optic connectivity to towns lacking high-speed Internet, phone, and TV services. It is incumbent upon the local government to ensure providing improved internet access for other community businesses and area residents is included in the contract with the data center developer. 

With higher-bandwidth fiber-optic technology, rural hospitals and clinics could be better equipped to deliver a wide range of telehealth services with faster speeds and greater stability. Telemedicine is transforming rural healthcare by connecting local clinical staff with remote specialists, reducing long driving distances for patients seeking care, and keeping healthcare revenue within the community.

From an IT perspective, a nearby data center can give rural hospitals more options for cloud services, off-site data backup, and disaster recovery, with the speed and reliability that clinical systems demand.

Successfully Negotiating Data Center Developments

There has been a great deal of misinformation about data centers’ impact on public utilities and the environment. Unfortunately, fears about data center development have led an increasing number of municipalities to ban them or impose moratoriums. To avoid being embroiled in controversial data center build-outs, hospital leadership should refrain from independently supporting local data center construction. Instead, CEOs should lead proactive, early-stage conversations with local government and economic development officials to align the hospital’s long-term capital and operational needs with the project developer’s goals, so that eventual agreements deliver long-term community value. These conversations may address: 

• Grid Reciprocity: Ensure power grid upgrades and stability for the hospital alongside the data center.
• Closed-Loop Mitigation: Advocate for air-cooling or closed-loop greywater recycling to address water concerns.
• Broadband Expansion: Mandate “last-mile” fiber expansion to enhance community telehealth capabilities.
• USAC/RHC Integration: Align fiber routing with Healthcare Connect Fund bidding to maximize subsidies.
• Inventory Resilience: Establish continuity agreements to guard against regional tech supply shortages.
• Staffing Protection: Fund IT upskilling and retention grants to maintain vital clinical support.

Business and civic organizations should be included in these talks to help foster partnerships similar to those utilized by large manufacturing facilities.

Government and economic development officials should initiate and lead discussions, as they possess the expertise needed to negotiate the best arrangements on planned large-scale infrastructure projects.

Data Center Investments Pay Off for Rural Communities

Data center projects offer a distinct opportunity to bolster rural healthcare sustainability through enhanced tax bases and strategic infrastructure investments. To capture this value, CEOs must prioritize collaboration with government and economic development officials, and developers when negotiating with data-center owners and developers, ensuring these projects directly support local healthcare services expansion and stability.