The institutions behind Distributed Healthcare, and where each one already exists
The first post described what Distributed Healthcare covers and how it pays. This one answers a harder question. Who builds it, under what legal authority, and how long does that take.
The honest starting point is that clinical capacity is the easier half. A neonatal intensive care unit is a design, a contractor, equipment on a purchase order, and staff recruited against a posted salary. Expensive and slow, but a known problem with known solutions.
The following cannot be purchased that way:
A salary schedule with legal authority behind it. A hiring process that moves faster than competitive civil service. Credentialing a clinician can carry between facilities. Procurement standing at national scale. Payment rails that pay a rural ambulance service monthly and a surgeon per procedure. The authority to stop paying someone. A governing body with standing to remove a board.
Each of these took the Veterans Health Administration decades. That is the real lesson of the VHA, and it is an institutional lesson rather than a clinical one.
Federal charter
Regional Health Authorities are federally chartered corporations, created by a single act of Congress.
This matters most where catchments cross state lines, which they routinely do. A county in northern New Hampshire refers into Vermont and Maine. A county in western Wyoming refers into Idaho. Under a state charter, an authority serving that catchment would incorporate in each state, answer to several attorneys general, and operate under several bodies of nonprofit law.
The federal alternative already exists and has for ninety years. The Tennessee Valley Authority operates across parts of seven states on one federal charter and registers as a foreign corporation in none of them. Amtrak operates in forty-six states the same way. Both are federal instrumentalities rather than state corporations.
State oversight of a multi-state health system is not a hypothetical weakness. In New Hampshire, North Country Healthcare operates three hospitals in the state's northernmost counties. When community complaints accumulated about board governance, primary care availability, contracting, layoffs, and executive compensation, the reviewing body was the Charitable Trusts Unit of the state Department of Justice. It opened a review, took months, found a breach of fiduciary duty, and issued recommendations. That is the strongest instrument a state charter provides, and it arrives after the damage and stops at the state line.
Aggregation, not creation
The authorities are not built from nothing. They are chartered from institutions that already run at the required scale.
Public hospital districts in Texas, Washington, and California already have boards, taxing authority, hospitals, and multi-site management. Large safety-net systems — Denver Health, Parkland, Cook County, Grady, Harborview — already carry a catchment obligation and full institutional capacity. The largest federally qualified health center networks run dozens of sites under community-majority boards with audited finances. Existing rural affiliations have already consolidated finance, purchasing, human resources, and contracting across multiple hospitals.
That pool is somewhere between two and four hundred entities nationally. It is also the reason the number of authorities should be an output of the chartering process rather than a figure chosen in advance.
One correction to an earlier draft of this work: it proposed chartering the community health center pool generally. That was too easy. An organization running eight clinics has the right governance model and nothing like the management capacity to run a trauma system, an ambulance network, and a global budget. Governance model and institutional capacity are separate things, and only the larger networks have both.
Every county assigned
Every county in the United States is assigned to exactly one authority. There is no unassigned territory.
That single rule does several jobs at once.
It ends deserts by definition. A desert is a county no system wants, and under universal assignment there is no unwanted county, only a county whose assignment carries a capacity payment. The economics that make rural counties unattractive are created by paying per unit delivered; funding the assignment reverses them.
It prevents patient dumping. An authority with a standing catchment obligation cannot improve its position by moving someone out.
It makes the receiving obligation enforceable. Each rural catchment names its designated receiving center, and that center's budget is conditioned on accepting transfers.
And it crosses state lines without machinery, because the charter is federal.
Assignment is made county by county on observed referral flow, drive time to the nearest capable receiving center, existing institutional relationships, and authority scale. Referral flow is answerable from claims data and should govern, rather than political boundaries. Where flow genuinely splits, a county may be assigned to one authority for emergency and obstetric care and another for oncology.
Regionalized assignment is established practice. Trauma systems already designate regions with named receiving centers. Medicare's hospital referral regions partition the country. England's integrated care boards cover all territory with no gaps.
The personnel chassis
Authorities operate under personnel authority derived from Title 38, the statute Congress built in stages over four decades because the VA could not recruit clinicians under ordinary civil service rules.
That authority supplies immediately what would otherwise take a generation: clinician pay bands adjustable by locality, direct-hire authority, recruitment and retention incentives, education debt reduction as a recruiting instrument, and a national credentialing system already operating at scale.
This is the correct use of the VHA, and it is narrower than earlier versions of this program proposed. The authorities inherit the plumbing, not the clinical mission. They do not become veterans' facilities. Veteran priority and veteran governance remain intact. The VHA continues as an independent veteran-priority system, restoring the direct capacity that community purchasing has eroded, and may share facilities, training programs, laboratories, and transport with the authorities where doing so improves care.
Credentialing, and the physician in Manila
A physician licensed in one state may practise at any authority facility in a designated shortage area.
That sounds like a large change and is a small one. The federal government already does exactly this. A VA physician holding a licence in any single state practises at any VA facility in any state. Federal preemption of state licensure inside federal facilities is settled law and entirely unremarkable. The extension is to a new class of federal facility, in the places where shortage has been designated.
Which brings up the harder case. Consider a physician practising in Manila with fifteen years of experience, willing to move to a shortage county in Kansas.
Under current law she cannot practise on the strength of that training. United States licensure requires completing a US residency regardless of years already worked. Her sequence is certification and examinations, then a match cycle, then three to seven years repeating training she has already completed, then a visa waiver requiring three further years in a shortage area, and only then permanent residency. Eight to thirteen years.
Under this program the sequence is different. Certification and examinations remain, and they are the real preparation, best completed before departure. After that: a provisional national credential in sixty to ninety days, valid only at authority facilities in designated shortage areas, naming a supervising physician and a facility. Twenty-four months of supervised practice with defined case review. Then conversion to an unrestricted credential on supervisor attestation and outcome review.
Six months from certification to practising under mentorship. Two years to unrestricted practice. Her family arrives at the start on a derivative employment visa rather than in year three.
This is not a general licensure shortcut. The credential is limited by facility and by geography, and a physician who leaves the shortage area before conversion must pursue conventional state licensure. It is the same bargain the Conrad 30 visa waiver already makes, applied to licensure instead of immigration: an accelerated path in exchange for service where service is needed.
Several states have begun building versions of this independently. Tennessee enacted the first provisional licensure law for internationally trained physicians in 2023, and others have followed. The federal version does in designated shortage areas what those states are doing within their borders.
Oversight by publication
Authorities report quarterly, at facility level: audited cost per service on a standardized basis, access distribution by service line, bypass rate, staffing against standard, call burden and vacancy duration, executive compensation, and agency labor as a share of unit hours.
Publication is the enforcement mechanism before any sanction is. With hundreds of authorities reporting standardized cost, an outlier is visible on a dashboard rather than requiring an investigation to find.
The contrast with current practice is instructive. At North Country Healthcare, executive compensation rose roughly 121 percent after the constituent hospitals merged, from about $2.6 million across executives in fiscal 2015 to about $5.7 million in fiscal 2024, with executive headcount rising from ten to seventeen. Establishing that required a journalist reading tax filings and comparing years. Under standardized published cost it is a line item.
The leading indicator of institutional failure is not financial. It is bypass — the share of a catchment's population driving past the local capable site. Bypass moves before the balance sheet does, and it is readable continuously from claims data. Transfer-out rate, days cash on hand, agency labor share, and gaps in the call schedule ninety and a hundred and eighty days out complete the set. Any three trending together triggers review.
When an authority fails
Roughly seven percent of authorities will be in receivership at any point in a mature system. That is not a design failure. Hospital systems fail at approximately that rate now, with no resolution mechanism at all.
The model is the Federal Deposit Insurance Corporation rather than bankruptcy court. The FDIC does not wait for a buyer. It maintains standing resolution staff, takes control, and reopens.
A standing federal resolution corps, sized for about twenty concurrent receiverships. Automatic continuation of capacity payments throughout, so that governance is replaced and service never is. A resolution reserve funded by assessment on all chartered authorities, which prices failure risk into the system rather than requiring emergency appropriation at the worst moment. A twenty-four month cap, after which the authority is rechartered with new governance or its catchment transfers to a neighbour with the assets.
Triggers include governance breach and access deterioration, not solvency alone. North Country Healthcare is not insolvent, and was found to have breached its fiduciary duties. A solvency-only trigger catches nothing there.
How the money changes hands
The payroll levy applies to every employer at the full rate from day one. It is never phased in, discounted, or introduced at a lower rate for anyone. What phases is the base it applies to.
Until an employer's cohort converts, the value of the health coverage that employer already provides is excluded from that base, capped at current-law premium levels and indexed. When the cohort converts the exclusion ends, whether or not the plan converts with it.
An employer providing generous coverage therefore pays the full rate on wages from day one, and pays nothing on the coverage value until its cohort is called. An employer providing nothing has no exclusion to claim and pays on everything immediately.
Three things follow. No employer pays twice, because the duplication is absorbed by the narrowed base rather than by appropriation. Employers currently providing nothing begin contributing at once, which is the same wedge the Accord applies to wages. And revenue ramps automatically as each cohort's excluded value enters the base, with no separate schedule to legislate and no rate to reopen.
Play-or-pay employer designs are not new. Hawaii has operated one since 1974 and Massachusetts used a version before the Affordable Care Act. The difference here is that the rate never moves. Holding the rate fixed and retiring an exclusion cohort by cohort keeps the transition out of the rate-setting fight, which is where these designs usually die.
Pre-tax money stops flowing to private insurance in two stages. Coverage that duplicates the floor loses its exclusion automatically when its cohort converts, because deducting a plan that duplicates the floor means subsidizing something already provided. Supplemental coverage loses its exclusion on a single date after the final employer tranche. That second date is sharp rather than phased, because a phase-out creates arbitrage between years and between employers.
How long
The payer moves in single-digit years. The institution takes a generation. Any figure covering both is wrong.
Medicare was enacted in July 1965 and was operating in July 1966. Eleven months, achieved by paying existing providers through existing intermediaries. It built no institutions.
The Affordable Care Act was signed in March 2010, opened its exchanges in October 2013, and the site failed on launch day. Coverage took effect in January 2014. The employer mandate was delayed twice. Medicaid expansion remains incomplete sixteen years on. And the ACA built far less than this program does.
Institution building runs slower still. The Tennessee Valley Authority took roughly five years to matter and fifteen to finish. The VA's 1995 reorganization into regional service networks took about five years to show quality gains, and that was reorganizing an institution that already existed.
So: legislative gates first, and several will fail. First payer conversion in year one, covering the uninsured, the self-employed, gig workers, and the smallest employers. That is possible for the same reason Medicare was possible in eleven months: it pays existing providers through existing intermediaries. Employer tranches follow in years two and three, largest plan values first. Enrollment completes in year seven, the financing phase-in in year ten. The claims and eligibility platform runs four to six years and is the critical path for the mature system, which is exactly why the early cohorts ride existing rails instead of waiting for it. Authorities chartered from existing institutions in two to three years, reaching national coverage in twelve to twenty.
And access itself has no completion date. Travel time to definitive care is a distribution with a mean, a spread, and a tail. The program moves the distribution. It never finishes it, because greater density is always possible. What matures is the rate: the delivery transition is complete when sites opening equal sites closing.
What is precedent and what is not
Nearly all of it is precedent, and the sources are named above.
Federal chartering across state lines is TVA and Amtrak. National credentialing inside federal facilities is current VA practice. Special clinical hiring authority is Title 38. Universal territorial assignment is how trauma systems, hospital referral regions, and English integrated care boards already work. Receivership on the FDIC model is a transplant. Provisional licensure for internationally trained physicians is Tennessee in 2023 and the states that followed. Play-or-pay employer financing is Hawaii since 1974.
Two elements are closer to new. The coverage-value exclusion that retires cohort by cohort is a variation on play-or-pay rather than a new instrument, and it exists to solve a transition problem that Hawaii never had. Attaching deserts to existing authorities rather than building institutions in them is a consequence of capacity payment and universal assignment rather than a mechanism in its own right.
The contribution is the assembly.
References
Federal chartering. Tennessee Valley Authority Act of 1933, 16 U.S.C. §831. · National Railroad Passenger Corporation (Amtrak), Rail Passenger Service Act of 1970.
Personnel and credentialing. 38 U.S.C. Chapter 74, VA health care personnel authority. · 38 U.S.C. §7402(b) and VA licensure portability across facilities. · Conrad 30 waiver program, 8 U.S.C. §1184(l).
Provisional licensure for internationally trained physicians. Tennessee Public Chapter 245 (2023), first state provisional licensure pathway; subsequent enactments in additional states. Verify current count and terms before relying on the comparison.
Territorial assignment. American College of Surgeons trauma system verification and regional designation. · Dartmouth Atlas hospital referral regions. · NHS England integrated care boards, Health and Care Act 2022.
Resolution. Federal Deposit Insurance Act, receivership and resolution authority, 12 U.S.C. §1821.
Employer financing. Hawaii Prepaid Health Care Act of 1974, HRS Chapter 393. · Massachusetts Chapter 58 of the Acts of 2006.
Implementation timelines. Social Security Amendments of 1965, enacted 30 July 1965, Medicare operative 1 July 1966. · Patient Protection and Affordable Care Act, signed 23 March 2010; exchanges opened 1 October 2013; coverage effective 1 January 2014. · Veterans Health Administration reorganization into Veterans Integrated Service Networks, 1995.
North Country Healthcare. New Hampshire Bulletin and New Hampshire Public Radio reporting, 2026, on the Charitable Trusts Unit review and executive compensation across fiscal years 2015 and 2024. · New Hampshire Department of Justice, Charitable Trusts Unit, findings on fiduciary duty, June 2026.
The clinical volume, the institutional volume, and the transition dependency workbook are published together, along with the parameters most worth challenging.