Kootenai Health, North Idaho’s largest healthcare system and employer, confirmed Monday that it’s eliminating 80 positions.

This is roughly 2% of its workforce.

Kootenai Health Chief Executive Officer Jamie Smith said these changes help position the health system to meet future demand while remaining financially responsible and operationally effective. 

“They were not made lightly,” he said in a prepared statement to the Coeur d’Alene press on Monday. “They follow extensive evaluation of our operations and thoughtful discussions with leaders across the organization.”

Smith added that Kootenai Health recognizes that the changes are difficult and deeply personal for those affected. Notifications for the eliminated positions, which Kootenai Health did not specify but said “are in areas where we need to improve efficiency,” are either underway or will be made later this week.

“Throughout this process, we have remained committed to treating every caregiver with compassion, respect and transparency,” he said.  

According to Kootenai Health, a private 501(c)(3) nonprofit that currently employs more than 4,500 staff members, the “targeted workforce changes” come as it faces mounting cost increases. 

Annual drug expenses alone for the healthcare system, whose main hospital has 397 beds, have increased by more than $60 million over the past two years. This is due to the loss of 340B Disproportionate Share Hospital status, which offers steep federal discounts through the Health Resources and Services Administration.

Smith said recent federal and state legislation has also affected Kootenai Health layoffs. 

“Medicare reimbursement rates are increasing far below inflation. At the state level, Medicaid coverage and reimbursement in Idaho have been reduced,” he said. “Reimbursement pressures continue as commercial payers deny or delay payments, and medical supply costs are increasing by double digits. Kootenai Health needs to responsibly respond to these trends.”

While subsidies decrease, Kootenai County's population continues to grow. Between 2015 and 2025, its population grew by 28.3%, making it one of the fastest-growing counties in the U.S.

Smith said as the community grows, Kootenai Health must proactively invest in expanded hospital space to “provide access to specialty care that our patients deserve.”

Kootenai Health is currently working on the new Prairie Medical Campus at Highway 41 and Prairie Avenue in Post Falls, which includes a 25,000-square-foot Micro Hospital and 72,000-square-foot Medical Office Building.

“There are times when we see volume at or near our capacity limits. To address this, we have developed a master facility plan for the main campus in Coeur d’Alene,” Smith said. “The first phase of this plan will begin in late 2027. Finally, we are continuing to invest in state-of-the-art technology such as surgical robotics, imaging equipment and other technology to deliver world-class care right here in Kootenai County.”  

Kootenai Health’s restructuring comes as healthcare systems across Idaho also face financial challenges related to federal subsidies, according to the Idaho Hospital Association, which represents community hospitals and health care systems across the state. For example, in 2025, the state implemented a 4% across-the-board cut to Medicaid reimbursement rates. 

Luke Mayville, executive director of Reclaim Idaho, the organization that spearheaded Idaho’s Medicaid expansion ballot initiative in 2018, opposes this cut.

“With so much strain on hospital budgets, now is the worst time for elected officials to be slashing Medicaid and letting tax premiums expire,” he told the Coeur d’Alene Press on Monday. “We need elected officials to protect our healthcare, not take it away.”

Among the 22 hospitals that reported their finances in a recent survey, about half of them are operating at a negative margin. Of the 18 hospitals that also reported to this survey, four had less than 30 days of cash on hand.

The standard for U.S. hospitals is to have at least 150-200 days of cash on hand, with a minimum acceptable level around 90 days.

Idaho Hospital Association Chief Advocacy Officer Toni Lawson said growing pharmaceutical, labor and health insurance costs are all affecting operations.

“It’s kind of a perfect storm for some,” she told the Coeur d’Alene Press on Monday.

That storm has already affected other regional healthcare systems. 

Heritage Health, which provides medical, dental and behavioral health care services to nearly 26,000 patients across North Idaho, laid off 40 employees in February 2025 due to forecasted funding cuts. Though these positions were mainly administrative, Lawson said the most vulnerable positions commonly affected by layoffs in Idaho’s predominantly rural healthcare system are labor and delivery and behavioral health services.

“We’ve been warning about this,” Lawson said.

While Kootenai Health eliminates positions in certain areas, it still currently has 139 open positions.

According to Kootenai Health, it must act responsibly to “preserve our mission" amid high cost and reimbursement challenges as well as the need for major investments in facilities and programs.

“These are difficult decisions that affect valued caregivers, and we are committed to treating every individual impacted with dignity, compassion, and respect,” Kootenai Health said in a prepared statement. “Whenever possible, we will work to identify opportunities elsewhere within our organization and provide support resources to those transitioning out of Kootenai Health. Our commitment to our patients, our community, and the future of healthcare in North Idaho remains unchanged.” 

    Smith