CEO says KRMC is facing $150 million in Medicare reimbursement cuts

Brian Turney, chief executive officer of KRMC, outlines the hospital’s plans to purchase city-owned land around Interstate 40 and build the Kingman Crossing interchange at Wednesday’s Mohave Republican Forum.

Photo by Hubble Ray Smith.

Brian Turney, chief executive officer of KRMC, outlines the hospital’s plans to purchase city-owned land around Interstate 40 and build the Kingman Crossing interchange at Wednesday’s Mohave Republican Forum.

KINGMAN – With 80 percent of its customers on some form of government health care, Kingman Regional Medical Center is surviving on thin margins and facing cuts of almost $150 million in Medicare reimbursement, Brian Turney said Wednesday at the Mohave Republican Forum.

“Our balance sheet is pretty good,” KRMC’s chief executive officer told a packed room of about 50 people. “Our income statement is not so good.”

Still, the hospital has made a play to purchase city-owned land south of Interstate 40 and build an interchange estimated to cost $20 million to $22 million in order to spur economic development.

Turney first floated the idea in May when he met with city staff and council members, including Mayor Monica Gates and Councilman Travis Lingenfelter, and made a formal presentation Sept. 5.

The economy of Kingman is closely tied to KRMC, he said. The hospital bought land near its Hualapai Mountain Campus last year because “it was obvious nothing was going to happen,” Turney said.

KRMC only needs about 20 to 25 acres, in addition to the current 20 acres, for adequate expansion.

“Regarding Kingman Crossing, it’s going to have to make economic sense to the community and make economic sense to us and make economic sense to the developer,” Turney said. “Otherwise, nothing’s going to happen. The environment and the city has to be right for that to happen.”

The advantage for the city is it would reduce risk and reduce the need for increased taxes, there would be no upfront cost, and the developer would have to deal with only one entity.

The risk for KRMC is the national economy could turn sour, Kingman’s growth rate could be slower than expected, estimates from Applied Economics on the tax revenue could be wrong, or the developer might not be the right fit.

Gates said City Council needs to honor the will of the people who voted overwhelmingly in November to sell the Kingman Crossing property.

“They didn’t say build an interchange. They didn’t say develop the property,” she said. “All seven council members said our No. 1 priortity is to move forward with Kingman Crossing. We put $1.2 million in the budget for design work.”

The city still has to conduct its due diligence on the property, which includes a fair market value appraisal, and to gauge the interest of other buyers who may be out there, the mayor said.

KRMC is a major stakeholder in the community, and is willing to take the risk of funding the interchange away from citizens, she noted.

“Worst-case scenario, you get an interchange out of this. We really have the best opportunity we’ve ever had moving this project forward,” Gates said.

The council has discussed building both the Kingman Crossing and Rancho Santa Fe Parkway (or Rattlesnake Wash) interchanges simultaneously, funded partly by a 1 percent sales tax increase.

Rancho Santa Fe has “great merit” and always has, Gates said. But after meeting with the Arizona Department of Transportation on what it’s going to take to get the interchange on ADOT’s five-year plan, it was clear that there’s nothing in the budget for $20 million, she said.

Mohave County Supervisor Jean Bishop, attending the forum, asked if there’s been any discussion about a paved road from Kingman Crossing, should it be approved, to Rattlesnake Wash and Kingman Airport.

Gates responded that the road came up at the state transportation board meeting, and it was a suggested recommendation. Also, a Las Vegas investor who owns a significant amount of land around Rattlesnake Wash has also expressed a willingness to pay his fair share.