Little Colorado Medical Center has formally moved to terminate its contract with Blue Cross Blue Shield after more than a year of stalled negotiations, escalating a dispute that could affect roughly 3,000 patients in the region. This move will officially take effect July 1.
Hospital CEO Travis Udall stated that on March 26, the hospital sent a notice of termination to the insurer via both email and certified mail. As of publication, Udall said the hospital has not received a response.
The notice marks a significant development in an ongoing reimbursement dispute that Udall has said places mounting financial pressure on the rural hospital. Speaking previously at the Good Morning Winslow monthly networking breakfast, Udall said Blue Cross Blue Shield reimburses Little Colorado Medical Center at approximately 9 to 15 cents on the dollar, a rate he said has not increased since 2013. Negotiations between the hospital and insurer have been ongoing for more than a year and a half.
Udall has said the reimbursement gap comes as inflation, staffing costs and supply expenses continue to rise, further straining hospital operations. He noted that even Medicaid reimbursement, which averages about 26 cents on the dollar, still falls short of the actual cost of care. At the same time, traditional grant funding sources that rural hospitals have relied on are diminishing, leaving fewer avenues to offset losses.
Approximately 3,000 patients who receive care at Little Colorado Medical Center currently rely on Blue Cross Blue Shield coverage. Udall said the termination notice introduces uncertainty for those patients, though in some cases insurers have historically returned to negotiations or adjusted reimbursement rates after contracts are ended. He emphasized, however, that there is no guarantee that will occur in this situation.
“This isn’t unique to Winslow,” Udall said, pointing to similar reimbursement disputes involving hospitals across Arizona, including in Phoenix, Wickenburg, Prescott and Bisbee. He described the issue as part of a broader challenge facing rural and regional hospitals statewide.
The contract dispute comes amid broader changes to the region’s healthcare landscape. North Country HealthCare, previously one of the other major healthcare providers in the area, recently filed for bankruptcy. Under an agreement finalized in the wake of that filing, El Rio Health has taken the area’s clinics and began operations April 1 under the name Elk Ridge Community Health. The transition places additional attention on the stability of local healthcare access as providers and insurers navigate ongoing financial pressures.
With the termination notice now delivered and no response yet from the insurer, the situation remains unresolved, leaving patients, providers and hospital leadership awaiting the next step in negotiations.
