Northern Arizona Healthcare has paused its plans to build a new Flagstaff Medical Center, even though the company says it has outgrown its current facility.
NAH says declining reimbursement rates from insurance companies and Medicaid, along with increasing costs for labor, medical equipment and medications forced executives to narrow the scope of the project.
The company expects to lose $50 million a year from Medicaid cuts included in the One Big Beautiful Bill signed by President Donald Trump last year.
“Those cuts are scheduled to take effect in 2027 and compound over the following years, ultimately amounting to hundreds of millions of dollars,” reads a media release from NAH. “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.”
NAH's board has been considering building a new Flagstaff Medical Center in three undisclosed locations.
During public forums hosted at the Flagstaff Medical Center last year, NAH leaders indicated they would release information on those three potential sites in early 2026.
But those options now appear to be off the table.
“We are not moving forward with those three sites,” an NAH spokesperson told KNAU. “We are not considering any other locations at this time.”
However, NAH is still considering utilizing property it already owns near Fort Tuthill for the project, or building at the medical center’s current site on Hospital Hill.
“The board has not made a decision to renovate,” a spokesperson wrote.
NAH didn’t say when it could renew the project.
Flagstaff voters rejected a plan to construct a new hospital and what it called a Health Village near Fort Tuthill nearly three years ago. That plan had included commercial and residential development as well as medical offices alongside the new hospital facility.
But Last year, NAH CEO Dave Cheney said they had eliminated the “village concept” as part of their future plans, regardless of potential location.
Cheney also told locals that building in place remains a challenging option.
He said it would require the hospital to close and force patients across northern Arizona to travel many miles to seek care throughout the duration of the work.
“I'm not willing – unless the community tells me to – to shut this hospital down for two-and-a-half years while we knock everything down, close services,” Cheney said at a forum last summer.
