Brian Turney, chief executive officer of Kingman Regional Medical Center, made it clear Thursday he has no objection to the competition KRMC will face once Hualapai Mountain Medical Center opens in two years.
However, he expressed some concerns over how HMMC will conduct business as a for-profit facility. KRMC holds a designation from the Internal Revenue Service as a non-profit operation.
"Any money we make is invested back into the facility," Turney said. "In a for-profit operation, a portion of the money goes to investors and shareholders, so not all of it is invested back into the facility.
"Any for-profit company is out to make money. We have to make money to continue our mission, but not for the purpose of our existence."
In the past decade, KRMC has built and opened wellness and cancer centers, a north tower in the hospital and new imaging center - all cited by Turney as proof of how it puts revenues back into its operation for the good of the community.
HMMC will be built on 35 acres located near the Airway underpass. The Northwest Independent Physicians Association, a local group numbering more than 40 doctors, is partnering with MedCath Corp. of Charlotte, N.C. in the $68.5 million venture.
"We are not a dividend-paying company," said Ed French, president and CEO of MedCath. "No money goes to shareholders.
"It's re-invested into the community and in growth by technology. The only way shareholders make money is to buy or sell stock, which has nothing to do with our operations."
"We'll pay city property taxes in Kingman, state sales taxes in Arizona, and have access to capital to put into the hospital without the local partners having to borrow. We'll be investing nearly $70 million in non-borrowed money in Kingman, so the best indication I can give you is that we do re-invest our resources."
"We chose to sell our interest in the hospital in Tucson to Carondelet Health Services in a joint venture," French said. "We wanted to restructure to include a majority of ownership for managed care in that market.
"We had positive cash flow and good quality care. But as a minority owner, Carondelet could not include us in their plan unless they owned a majority of the equity.
"In Harlingen, we had a great relationship with Valley Medical Center, entering into a joint venture with them, and they took a debt position that was convertible to equity. Three years later, they chose to convert a year sooner because of the hospital's success, so now we have a three-way partnership with them and their doctors, plus the community."
"Valley is a not-for-profit hospital system that has each of us owning about one-third interest, and we've also put together a real estate venture with each owning one-third interest."
French went on to say that MedCath would work with the NIPA to establish a community board in Kingman. Community members will be identified to interact on hospital services, and they will be part of the planning process to ensure community needs are met.
MedCath and the NIPA will have equal representation on the hospital's board of directors. Turney also questions whether that will truly give local doctors the stronger say they want in hospital operations.
"There have been certain situations here where the board had to overrule a recommendation from the medical staff," Turney said. "It hasn't happened often, but when it does, it has been divisive, and some physicians don't feel lay people should overrule decisions of medical staff.
"That has been a sore point, and they seem to believe having more representation on the board will give them a greater voice. It has been my experience with for-profit hospitals that such is not the case."
Attempts were made Thursday to contact city, county and school officials for comment on the new hospital.
Pete Byers, District I supervisor, was out of town and could not be reached.
"We may have a need for it because of growth in the area now and additional growth in the years to come," Mohave County Sheriff Tom Sheahan said.
"KRMC over the past 26 years has provided services to our department, and our employees have always had outstanding relations with their personnel. They've also done well for me and my family."
Maurice Flores, superintendent of the Kingman Unified School District, said he supports anything that assists the community.
"A new hospital adds to the level of service and is a good thing," Flores said. "I also like the location. It separates the two by some distance and that will provide even better service to the community."
Flores was asked if he sees any problem with doctors being part owners of the hospital and having equal representation on its board of directors.
"In Las Vegas, there are partnerships in some hospitals and they seem to function well," he said. "But I don't know enough about it to make a strong comment."
Susan Chan, district administrator for the Kingman Academy of Learning, said she had not heard anything about a new hospital and that is unusual as Kingman is a small town.
Mayor Les Byram and police Chief Bob DeVries did not immediately return calls for comment.
"I have not given it much thought," Kingman Fire Chief Chuck Osterman said.
"There must be an opportunity to fill a community need or they would not have applied."