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Financial Jolt
(continued)

Page 2

 
 

Continued from Page 1

Legislative Legacy

1946 The Hill-Burton Act, also known as The Federal Hospital Survey and Construction Act, provided financial assistance to public and nonprofit hospitals for renovations, additions and new construction. In return for funding, hospitals were committed to providing health care to their entire communities, including free or discounted services for those unable to pay. A boom of construction took place, and as a result, many hospital buildings in California from that post-World War II era are outdated and seismically unsafe.

1973 The Alfred E. Alquist Hospital Seismic Safety Act was enacted in 1973 in response to the moderate 6.6 magnitude San Fernando (Sylmar) earthquake in 1971, when four major hospital campuses were severely damaged and evacuated. Two hospital buildings collapsed, killing 47 people and three more were killed in a building that nearly collapsed. The Alquist Act established a seismic safety building standards program under OSHPD’s jurisdiction for hospitals built on or after March 7, 1973. The Alquist Act emphasized that essential facilities such as hospitals should remain operational after an earthquake.

1994 The Northridge earthquake triggered a major amendment to the Alquist Act in SB 1953. While hospitals built after the Alquist Act got through the 6.7 magnitude quake with minimum structural damage, several older structures sustained extensive damage and were evacuated. Nonstructural damage was extensive in buildings regardless of age. SB 1953 set deadlines for seismic standards to ensure hospitals can withstand a moderate quake without collapsing. By 2008, all general acute care inpatient buildings at risk of collapsing during a strong earthquake must be rebuilt, retrofitted or closed. Nonstructural mechanical, electrical and plumbing systems, including fire sprinkler branch lines, must be braced and anchored in critical care areas such as surgery, intensive care, pharmacy, central supply, emergency department and radiology. (Extensions to 2013 are being granted.) By 2030, all hospital buildings in the state must be operational after a major earthquake.

To ease the pressure on hospitals, extensions of up to five years for the 2008 deadline can be granted by the state planning office. So far, about 150 hospitals have applied for extensions under the “diminished capacity” category and most of the requests are being granted. To qualify, the hospital must demonstrate that:

“Compliance [to the Jan. 1, 2008 deadline] will result in diminished health care capacity which cannot be provided by other general acute care hospitals within a reasonable proximity.”

At the 156-bed St. Rose Hospital, about two miles from the active Hayward fault on the east side of the San Francisco Bay, CEO Mike Mahoney has been granted an extension to the 2008 deadline and said the extra time will enable him to figure out ways to fund about $25 million in upgrades and new construction. He said St. Rose’s situation was unique because it has a lot of land that will allow the hospital to expand horizontally instead of vertically.

“I’m very confident we’ll be able to finance the project with retained earnings and some borrowing,” said Mahoney, who was chief operating officer at Dominican Hospital in Santa Cruz during the magnitude-7.1 Loma Prieta quake in 1989. Although no structural problems were found at Dominican Hospital, about $1 million in damage occurred because equipment and fixtures such as filing cabinets, bookcases and water coolers weren’t bolted to the walls.

Predictions that a major earthquake could occur along the Hayward fault don’t worry Mahoney, who drives across the zone every day going to and from work and to meetings. “I think about meeting the seismic standards requirements,” he said. “I don’t think about the fault next door.”

Time and money

Mahoney and other hospital officials are worried, however, about long delays in getting inspections, permits and approvals from the state planning office and other agencies that could deter them from meeting compliance deadlines. If the deadlines aren’t met, the State Department of Health Services could shut them down.

Emerson said the CHA is spearheading efforts to fill 44 staff vacancies at the state office that would clear the approval logjam without costing the state extra money because hospitals pay 1.6 percent of the estimated cost of each seismic upgrade project to support the agency.

The problem, she said, has been a hiring freeze imposed on all state agencies because of the state budget crisis, regardless of how they’re funded. A CHA-sponsored bill to exempt the office from the freeze failed to make its way through the Legislature last year. This year’s proposed budget includes an item supported by the hospital industry to add the 44 positions.

“A hospital can’t move one piece of dirt without approval by OSHPD,” said Emerson, adding that delays usually result in additional expenses.

Earthquakes are also a danger in other parts of the United States, including the Western coast states, the mid-Central region and New York. A magnitude-5.0 quake rolled through Indiana a couple years ago and fault zones crisscross several Eastern states. However, California is the only state to mandate tough seismic standards specifically for hospitals.