COEUR d’ALENE — Heritage Health will lay off 40 employees, about 10% of its workforce, as a preemptive measure ahead of possible funding cuts, according to the nonprofit.

Mike Baker, CEO of Heritage Health, confirmed the layoffs Friday and said most of the affected positions are administrative. 

Heritage Health provides medical, dental and behavioral health services to nearly 26,000 patients across North Idaho. 

“We have to protect our mission,” Baker told The Press. “It’s always devastating when you have to do something like this.” 

The health care organization is facing financial challenges “due to delayed Medicaid reimbursements, shifting federal and state funding priorities and rising costs,” according to Heritage Health. 

“While we continue to fight for the resources we’re owed, we also have a responsibility to adapt and operate more efficiently,” said a statement issued Friday by Heritage Health. “This was not a choice we made lightly and we deeply appreciate the contributions of those affected. Their work has made a lasting impact on this organization and we will do everything we can to support them through this transition.” 

The decision to lay off employees comes in the wake of a sudden and temporary freeze on federal grant funds that Baker said left Heritage Health unable to access money for several days. Federal grant funds make up about 10% of the nonprofit’s budget, Baker said, and the lack of them had an immediate effect. 

“The impact of those (federal) decisions hit us locally,” he said Friday. “We use that funding for salaries of our medical providers. It goes directly to patient care in our community. When we don’t have that, it’s very challenging to replace it.” 

Baker also pointed to efforts by Idaho lawmakers to repeal Medicaid expansion. Such a bill was introduced in January. Meanwhile, Rep. Jordan Redman, R-Coeur d’Alene, has sponsored a bill that would repeal Medicaid expansion if certain restrictions — including work requirements, a three-year lifetime limit on health benefits and an enrollment cap of 50,000 people or fewer — aren’t met. 

“That’s devastating to the entire medical system if that happens,” Baker said. “These are our friends and neighbors who use this program.” 

About 61% of Idaho voters approved Medicaid expansion in 2018. More than 90,000 Idahoans were enrolled in the expansion program in December 2024, according to the Department of Health and Welfare. 

These elements have created uncertainty about future funding for health care, Baker said, and Heritage Health is preparing for a future where the nonprofit may need to function with fewer resources. 

“We have to weather any reductions in funding that come our way,” he said. 

Baker said Heritage Health remains committed to providing care throughout North Idaho. The nonprofit is moving forward with plans to consolidate its operations into a single facility, the Center for Healthy Living, located at 3700 W. Seltice Way. 

Heritage Health will also open a new pharmacy in Rathdrum. 

“We’re investing in the right patient care metrics while doing our best to reduce costs on the administrative side,” Baker said.