California hospitals, which faced a deadline for completing billions of dollars worth of earthquake safety improvements, recently got some breathing room to do the upgrades. But three of the state’s major players — Kaiser, Sutter and Catholic Healthcare West — are pressing forward anyway.

The ongoing controversy involving the seismic retrofitting of dozens of California hospitals continues to divide the hospital industry and the California Nurses Association, whose members work in those same hospitals.

Some of the pressure was eased last fall after Gov. Arnold Schwarzenegger approved legislation waiving the retrofitting requirement. But the controversy remains, fueled by an estimated price tag of up to $110 billion — about a fifth of the state’s total infrastructure requirements, according to some estimates.

In the Sacramento region, Kaiser Permanente, Sutter Health and Catholic Healthcare West are together spending roughly $1.6 billion in construction costs for new facilities and upgrades. Projects in the pipeline will raise that figure to well over $2 billion in the next few years.

The bill signed by Schwarzenegger, SB306 by Sen. Denise Ducheny, D-San Diego, included a retrofitting waiver for “fiscally challenged” hospitals, allowing them to proceed straight to construction of brand-new hospitals. It also moved up the reconstruction deadline by 10 years, from 2030 to 2020.

“Several hospitals were saying (they) can get the financing, but nobody would finance them on a 2008-13 deadline,” Ducheny said.
The issue reflects the decades-old dilemma over earthquake safety standards. Safety is important — but you need money, too.

California’s earthquake-safety standards for hospitals has two eras, each rooted in a major earthquake. One, the Alfred E. Alquist Hospital Facilities Seismic Safety Act, dates to 1973. The other is now 14 years old.

It was 1994 when SB1953 passed in California, setting new deadlines for meeting the regulations laid out by the Alquist Act.

It’s been said that 70 percent of California’s hospitals are in need of seismic upgrades. And the process of meeting those deadlines drags on, so far producing some limited progress among hospitals and deadline extensions by the legislature, but no assistance for the rural and inner-city hospitals with the least means for meeting the deadlines.

Now there’s a brand-new technology that could reshape the landscape of seismic requirements for hospitals. But while all agree that some hospital operators will need financial help, it’s proving a long, uphill climb to agree on how to do so.

The California Nurses Association has consistently kept pressure on the industry, saying it’s unacceptable that hospitals are missing the deadlines so many years after the Alquist Act.

“What is clear is that the state of California is putting the health of the bottom line of the hospital industry above the safety of millions of California patients and families,” said spokesperson Charles Idelson.

While he faults the industry for not moving quickly enough, Idelson praises some larger operators, like Kaiser Permanente, for making progress and “providing a model for the industry.”

“They’ve had years and years and years,” Idelson said. “Rather than spend millions on parking lots and corporate bonuses, they should be (upgrading their buildings). They know what they need to do, they’re just not willing to do it. It’s not like this was sprung on them last year.”

The roots of the Alquist Act reach back to 1971, when the Sylmar earthquake struck outside Los Angeles, damaging several hospitals, two of which collapsed. One of them was brand-new. California passed the Alquist Act two years later.

When it all happened again, the results were better. In January of 1994, the Northridge quake struck the Los Angeles area, causing $23 billion in hospital damages, forcing some to shut down. But this time no hospitals collapsed, a fact generally owed to the Alquist Act.

Still, like Sylmar, Northridge inspired new legislation. Later that same year, SB1953 became law, imposing new deadlines for meeting the Alquist Act requirements. It required retrofitting or reconstructing the most at-risk buildings by 2008. That
deadline has been extended twice, to 2013 eight years ago and to 2015 two years ago, with both extensions aimed at lower-income hospital operators.

SB1953’s second deadline requires replacing hospitals that don’t meet the Alquist structural and non-structural standards, referring to the ability to stay fully functional after an earthquake, by 2030.

And now the modern era has brought a turning point: a new computer program, HAZUS-MH (Hazards U.S. Multi-Hazard), was made public in mid-November by the Federal Emergency Management Agency. It’s a tool that helps estimate the economic and social impacts of natural disasters. California’s hospital industry has awaited it for months.

Once put in use, HAZUS is expected to reclassify a large portion of the state’s hospitals out of the most-at-risk category, thus allowing them to brush past the earlier deadlines to focus on the 2030 rebuilding deadline.

Among the challenges is the fact that the pool of available hospital-construction contractors is always small. The work is difficult and expensive — partly because of the cost of a hospital, designed to accommodate complex electrical and ventilation systems that must function with high reliability.

Construction costs have risen by around two-thirds in the last few years. In early 2007, the RAND Corporation published a study for the California Healthcare Foundation that put the combined cost of meeting seismic deadlines among all of California’s hospitals anywhere between $45 billion and $110 billion.

The problems are several-sided, the report said: Hospitals may lack staff members familiar with the process of meeting seismic standards; retrofitting alone would cost tens of billions of dollars; the time required to design and complete new structures can stretch to 20 years.

Hospital operators say constructing new buildings is generally cheaper than retrofitting old ones. But planning and construction takes time, which is partly the reason why, with so many years passed, hospital operators have yet to meet much of their seismic-related improvements. While larger hospital operators have made progress, others are still lagging behind after all these years.

This despite the fact that larger care providers are spending billions on expansions and new facilities in what’s being called nationwide boom times in hospital construction.

Several roadblocks impede efforts to assist smaller hospital operators, Ducheny says. One of them lies with CHA’s membership, which is weighted by larger hospital operators that have already made much progress on seismic standards using their own money.

“Part of the problem is that the hospital association can’t totally get behind something that doesn’t benefit all of their members,” Ducheny said.

But Jan Emerson, spokeswoman for the California Hospital Association, calls the legislature’s failure to assist low-income hospitals “the dilemma of a term-limited legislature.” Other priorities have generally taken precedence, Emerson says, but the ball is moving — albeit slowly.

“I think there is growing awareness among legislators that there is going to have to be government help to finance this,” she said. “Hospital construction is a very complicated type of construction. You have to factor from the ground up, things like infection control. You have to have very fine filtration systems. It’s a very specific type of construction.

“If you’re an independent, stand-alone hospital, if you’re a rural hospital, you can’t go borrow that kind of money. There’s going to have to be a conversation on how we’re going to finance this.”