Kootenai Health Cuts 80 Positions Amid Drug Costs
North Idaho's largest healthcare system is eliminating about 2% of its workforce as drug expenses and reimbursement pressures mount.
Updated on Nov. 10, 2026 in Healthcare
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Kootenai Health, North Idaho's largest healthcare system and employer, is eliminating 80 positions, roughly 2% of its more than 4,500 staff. Notifications for the cuts are either underway or will be made later this week.
Why it matters
The system cites rising drug costs after losing 340B Disproportionate Share Hospital status, along with Medicare reimbursement rates rising far below inflation. For Idaho, the cuts arrive alongside a 4% across-the-board Medicaid reimbursement reduction implemented in 2025.
Kootenai Health's annual drug expenses have risen by more than $60 million over the past two years, against a backdrop where about half of 22 surveyed Idaho hospitals run at a negative margin. The system currently has 139 open positions even as it eliminates 80, and the source does not explain how those openings relate to the cuts.
The players
Kootenai Health
A private 501(c)(3) nonprofit that operates North Idaho's largest healthcare system and employs more than 4,500 staff members.
Heritage Health
A regional healthcare provider that laid off 40 employees in February 2025 after forecasting funding cuts.
The details
Kootenai Health is a private 501(c)(3) nonprofit. The system lost 340B Disproportionate Share Hospital status, which it links to higher drug costs. Heritage Health, another regional provider, laid off 40 employees in February 2025 over forecasted funding cuts.
Timeline
February 2025: Heritage Health lays off 40 employees over forecasted funding cuts.
2025: Idaho implements a 4% across-the-board Medicaid reimbursement cut.
This week: Layoff notifications at Kootenai Health are underway or will be completed.
Late 2027: First phase of the main Coeur d'Alene campus master facility plan begins.
Market Landscape
Idaho's 2025 4% Medicaid reimbursement cut is compounding pressure on hospital margins, and roughly half of 22 surveyed Idaho hospitals already operate at a negative margin. Kootenai Health's layoffs fit that pattern of providers adjusting staffing to absorb reimbursement shortfalls.
Residents who rely on Kootenai Health may see changes in staffing levels across North Idaho's largest healthcare system. Patients on Medicaid could feel the effects of reimbursement pressure as providers adjust to the 4% state rate cut.
The takeaway
Hospital layoffs in North Idaho reflect a squeeze from both rising drug costs and reimbursement rates that have not kept pace with inflation. Watching how Kootenai Health's staffing and services evolve will show whether these pressures ease or deepen.
Further reading
For more on the financial pressures facing providers, see Healthcare coverage.
Source note: This article includes information reported by Coeur d'Alene Press.
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