The Northern Arizona Healthcare (NAH) Board of Directors and Executive Team met recently and affirmed northern Arizona needs a new hospital to adequately care for the region’s growing health care needs. The Board also determined that, at this time, we cannot announce a site for a new hospital and we cannot announce a timeline due to impactful external barriers we must acknowledge.
In the coming years, hospital systems across the United States will face numerous financial challenges that make it imprudent to commit to a large new investment at this time.
There are and have been general challenges and pressures in recent years from declining reimbursement rates from insurers, both public and private. However, one particularly impactful new factor is the Medicaid cuts that were passed in 2025, according to which NAH is projected to lose $50 million annually in reimbursement for caring for our community. Those cuts are scheduled to take effect in 2027 and compound over the following years, ultimately amounting to hundreds of millions of dollars.
These reductions to what insurance companies and governments pay NAH for the care we provide are happening even as the cost to provide that care rises. The cost of care continues to grow annually due to increased prices of supplies, medical equipment, and pharmaceuticals, combined with wage and benefits increases. As the cost to staff and equip our hospitals and clinics rises, we are and will continue to be reimbursed less over time for the care we provide.
Those current and forthcoming financial considerations must be weighed simultaneously against the known and well-understood community need for more adult inpatient beds, space for modern medical technology, increased emergency department capacity, and design to efficiently accommodate all support services required to provide safe, high quality, patient-centered care.
The responsible step the NAH Board and leadership have jointly decided to take is to continue to assess the overall impact of these and other proposed financial changes before committing to a path forward. Our 2030 Strategic Plan identified both Growing Our Reach (including the construction of a modern regional referral facility), which is focused on meeting community need and providing access to health care services, and Achieving Financial and Organizational Stability as two of NAH’s four strategic imperatives. The Board and leadership are continuing to assess how to balance those priorities to ensure we can keep our promise to provide care for the entire region before, during, and after the construction and opening of a new facility.
In light of the timeline uncertainties, and their lack of suitability for a future hospital, the Board did make the decision to stop due diligence with the three potential hospital location sites that NAH does not currently own. Because NAH remains bound by non-disclosure agreements, no one from NAH is permitted to disclose the location of those three sites or the identities of the owners.
Board members and NAH leadership will continue to discuss how to meet the current and growing regional health care needs amid capacity limitations of our current facilities during Board meetings throughout 2026 and beyond. At such time that a substantive decision is made, NAH will share that information.