California proposed laws would mandate structural safety

As of Jan. 1, 2020, all hospitals in the state will be required to structurally survive a major earthquake. Ten years later, they will not only have to show they are sound, but can keep their doors open.

Blame, or thank, the 1994 Northridge earthquake.

After the Southern California catastrophe that damaged 11 hospitals and caused evacuation of eight, the Legislature adopted Senate Bill 1953, which requires all hospitals to be resilient in seismic events. The bill was signed into law later that year. Revisions and extensions pushed the deadline to Jan. 1.

While most hospitals are already compliant, including in the North Bay, there is a legislative effort (Assembly Bill 2190) to give the few hospitals that haven't already met the requirement another two years to complete the work. Otherwise, they'll have to close.

The caveat is that retrofitting work must already be underway, according to Jan Emerson-Shea, vice president of external affairs at the California Hospital Association, a membership-based health policy and advocacy organization representing 400 hospitals statewide. Sacramento-based CHA is the state arm of the American Hospital Association.

Whether for 2020 or in another 10 years, hospitals are on the hook to pay millions - or even billions - for all costs, depending on how much work needs to be done to meet the standards.

“There has never been any state or federal money made available to hospitals to pay for the costs of seismic compliance,” Emerson-Shea said.

In some cases, such as for smaller hospitals, it makes more sense to just start over.

SONOMA VALLEY HOSPITAL

Knowing its central wing would never meet 2020 seismic requirements because it was built in 1957, Sonoma Valley Hospital in 2010 began construction on a $46 million wing that was built to survive a quake. The wing, which opened in 2014, houses the hospital's emergency department, surgery center and central utility plant, according to CEO Kelly Mather.

Securing the funds wasn't easy.

After voters rejected two previous measures dating back to 2006, a general obligation bond passed in late 2008, which covered $35 million of the cost. The additional $11.5 million needed for the project was raised through philanthropy, Mather said.

“We're now working on 2030,” she said, adding that under current compliance standards, the hospital's patient tower that was built in 1972 would be at risk for closure.

“We did a study on that tower 1.5 years ago and it showed that in order to meet compliance for 2030, it would cost us $100 million,” Mather said,

Mather is referring to another piece of legislation sponsored by CHA, known as SB 758.

That bill would narrow the compliance requirement only to the hospital buildings that provide emergency services, surgical suites and after-surgery recovery areas - not the entire campus, Emerson-Shea said.

“After patients are stabilized, they would be safely transferred out of the disaster zone to whatever level of care they need, whether to another hospital, a skilled nursing facility, to other care facilities outside the disaster zone, or even their own home.”

Bottom line, the proposed change in SB 758 would allow hospitals to focus their financial resources and patient care capabilities on the most essential services in the aftermath of an earthquake, she said.

The bill was introduced earlier this year and was passed by the state Senate in the spring. But at CHA's request, it was converted into a “two-year bill,” meaning it will be considered in the state Assembly next year. CHA wants more time to collaborate with other invested entities, such as labor unions and community groups, in order to gain broader support, she said.

HEALDSBURG DISTRICT HOSPITAL

In April, the RAND organization, a Santa Monica-based nonprofit think tank, released a report commissioned by CHA that showed California hospitals would need to make substantial investments - between $34 billion and $143 billion statewide - to meet 2030 state seismic-safety standards.

There is one exception when it comes to hospitals having to fund the costs: publicly owned hospitals, such as district or county-owned facilities.

“Hospitals owned by health care districts can seek funding via parcel-tax increases from the voters,” Emerson-Shea said. “Some district hospitals have successfully passed parcel-tax measures; others have not been as successful.”

But Joe Harrington, CEO of Healdsburg District Hospital, doesn't necessarily want to turn to voters.

In fact, the Healdsburg hospital may follow in Sonoma Valley Hospital's footsteps because of the cost to retrofit the current hospital, which is 50 years old.

“Our preliminary estimate, just with our architect and engineers, is that it's going to cost somewhere between $15 million and $25 million, and that's just the physical construction,” Harrington said. “We'd have to piecemeal it. We currently have 17 patients in our subacute unit. We'd have to move the patients, do the seismic upgrades, which involve reinforcing the wall and foundation. ”

Harrington said the board wasn't too keen on that scenario.

The other option, to build a new facility, would allow for scaling down to between 12 and 15 beds, based on the average eight-to-nine patients in the hospital on a given day, he said.

With land costs, preliminary estimates to build a 16-bed hospital would be about $32 million, he said.

“If we decide to look at building a new hospital, do we raise the parcel tax or go out and incur the debt? There are lots of sources of funding out there; it's just a matter of if you qualify or not,” Harrington said. “For us, we think we would be able to. It would still be a struggle, but we think we could find people to help us raise the money without … going to the voters.”

Harrington noted the hospital met 2020 seismic-compliance standards several years ago, before he was named CEO in October 2017. Total retrofitting costs to meet 2020 requirements was unavailable.

ADVENTIST HEALTH

Adventist Health, which has four hospitals in the North Bay, has met the seismic-compliance standards for 2020, according to Matthew Beehler, network development executive at Adventist Health Northern California. Those hospitals are Adventist Health St. Helena, Adventist Health Clear Lake, Adventist Health Ukiah Valley and Adventist Health Howard Memorial in Willits. Adventist Health Vallejo is a psychiatric hospital and not held to the same seismic regulations as other acute facilities, he said.

Most of the work so far has been funded through system capital and philanthropy, he said.

The total cost for the Adventist hospitals to remain operational after an earthquake in order to meet 2030 standards is currently north of $225 million, he said. That number includes some of the seismic-compliance work already completed for 2020, including the $64 million rebuild of Adventist's Howard Memorial facility that was deemed structurally unsafe nearly 10 years ago. The new hospital opened in October 2015.

“Clear Lake has a minimum of $25 million that is if we just do compliance and make no improvements in the process, and that work is planned to be completed by 2030,” Beehler wrote in an email. “Ukiah is also around $25 million, and that work should likely be completed in the next two years.”

The anticipated cost to bring the St. Helena hospital to 2030 compliance standards is somewhere between $80 million and $100 million, he said. How to pay for that work has not been determined.