A history and explanation of Kremmling Memorial Hospital District tax revenues
Cole White, Chief Financial Officer, KMHD
Kremmling Memorial Hospital District (KMHD) has been operating at its current location at 214 South Fourth Street for more than 60 years. During that time, KMHD has seen major changes in both its physical structure and in the scope of services provided at the hospital.
Major additions to the hospital and clinic were made in the past 50 years, the last of which occurred in 1974. Early changes to KMHD were financed in part through Hill-Burton funds, which were appropriated for hospital reconstruction after World War II, and in part through generous community donations.
To assist the hospital in financing the 1974 expansion, a mill levy was introduced in the early 1970s and a taxing district was formed. These funds have helped the hospital pay for the addition, which was completed in 1974, and day-to-day operations, equipment purchases, physician recruitment and countless other organizational improvements.
Throughout the last 45 years, costs associated with providing health care have grown at double-digit inflation levels, while reimbursement from federal and state programs, commercial insurance companies and private payers have grown at a much slower pace.
For many small hospitals this has spelled demise. Hundreds of rural hospitals failed during the 1980s and 1990s as a result of these changes. Most of the rural hospitals that were able to survive did so with both the support of the state and federal government and the unwavering support and patronage of their community. One such survivor is KMHD.
Kremmling Memorial Hospital District qualified as a “Critical Access Hospital” in 2003. This means that because of the hospital’s remote location and the need for 24/7 emergency care, the federal government provides cost-based reimbursement through Medicare. This reimbursement is intended to improve financial performance and thereby reduce hospital closures.
Among many requirements, the hospital must be 15 miles from another hospital in mountainous terrain. Critical access hospitals must maintain a maximum of 25 acute care in-patient beds. They must also provide 24-hour emergency services, with medical staff on-site or on-call and available in 30 minutes or less.
Throughout the years, Kremmling and Grand County have seen numerous changes. Many traditional industries have come and gone, family ranches have all but disappeared and much of what supports the area is now heavily reliant on tourism and the service industry. What hasn’t changed is the community’s continued commitment to KMHD and the support of high quality, affordable health care for the people of our region.
A major change that occurred at the state level that directly impacted health care in our region was the passing of the Tax Payers Bill of Rights (TABOR) in 1992. To comply with TABOR, KMHD had to lower its approved mill levy over the years. As a result, the taxing district supplied the hospital with $928,021 in 1991 and $852,180 in 2010.
Throughout the years, tax revenues have contributed a smaller and smaller portion of the resources necessary to support operations. In 1991, tax revenue accounted for approximately 65 percent of the revenue necessary to keep the hospital operating. By 2009, the district supplied KMHD with less than 10 percent of the hospital’s total budget.
Simple ZIP code analysis of patient origin shows that the majority of hospital revenue is generated from services utilized by people from east Grand County; this includes Timberline Family Practice patient patrons. (Timberline Family Practice located in Granby was purchased by KMHD in 2006).
Nearly 60 percent of the hospital’s revenue is derived from the utilization of services from people originating outside of the tax district, (east of Kremmling). Simply put, if you subtract the revenue attained from taxes and the patient base from East Grand, the hospital would not survive on the business from the population within its district alone.
A recently completed market study indicates that the proposed Middle Park Medical Center in Granby would be self-sustaining and would contribute to the overall bottom line of KMHD.
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