BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Deborah V. Ortiz, Chair
BILL NO: SB 1661
S
AUTHOR: Cox
B
AMENDED: As Introduced
HEARING DATE: March 29, 2006
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FISCAL: Appropriations
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CONSULTANT:
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Hansel / ag
SUBJECT
Hospital facilities: seismic safety: construction
SUMMARY
Allows a hospital that has received a five-year extension
of the January 1, 2008 seismic compliance deadline to
request, and authorizes the Office of Statewide Health
Planning and Development to grant, an additional two-year
extension of the deadline if the hospital building subject
to the extension is under construction at the time of the
request and the hospital has made a good faith effort to
comply with the January 1, 2013 deadline.
ABSTRACT
Existing law:
1.Expresses the intent of the Legislature that hospital
buildings that house patients who have less than the
capacity of normally healthy persons to protect
themselves shall be designed and constructed to resist,
insofar as practical, the forces generated by
earthquakes, gravity, and winds.
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2.Requires, after January 1, 2008, that any general acute
care hospital building that is determined to be a
potential risk of collapse or pose significant loss of
life shall only be used for non-acute care hospital
purposes.
3.Allows the Office of Statewide Health Planning and
Development (OSHPD) to grant a delay in the 2008 deadline
upon a demonstration by the owner that compliance will
result in a loss of health care capacity that may not be
provided by other general acute care hospitals within a
reasonable proximity.
4.Allows a functional contiguous grouping of hospital
buildings of a general acute care hospital, to receive a
five-year extension of the January 1, 2008 deadline for
both structural and nonstructural requirements, under
specified circumstances.
5.Allows a general acute care hospital building located in
Seismic Zone 3 to request a five-year exemption from
non-structural performance requirements in Title 24 of
the California Code of Regulations under specified
circumstances.
6.Requires the California Building Standards Commission to
review and adopt earthquake performance categories,
seismic evaluation procedures, and standards and
timeframes for upgrading structural and nonstructural
systems in hospital buildings.
7.Establishes within OSHPD a Hospital Building Safety Board
comprised of members appointed by the director to act as
a board of appeals in all matters relating to the
administration and enforcement of building standards for
the design, construction, alteration, and seismic safety
of hospital building projects submitted to OSHPD.
8.Requires OSHPD to approve or reject all plans for the
construction or the alteration of any hospital building.
9.Requires, no later than January 1, 2030, that owners of
acute care hospitals to either demolish, replace, or
change to non-acute care use all buildings not in
substantial compliance with regulations and standards
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developed by OSHPD, or seismically retrofit all acute
care buildings so that they are in substantial compliance
with regulations and standards developed by OSHPD.
This bill:
1.Authorizes a hospital that has received a five-year
extension of the January 1, 2008 seismic compliance
deadline to request an additional two-year extension of
the deadline; authorizes OSHPD to grant the extension if
the hospital building subject to the extension is under
construction at the time of the request and the hospital
has made a good faith effort to comply with the January
1, 2013 deadline.
FISCAL IMPACT
Unknown costs to the Hospital Building Fund (special fund)
for OSHPD to review and grant requests for two-year
extensions pursuant to the bill.
BACKGROUND AND DISCUSSION
Background
According to the author, as hospitals assess the level of
retrofitting for their buildings to meet the 2008 and 2013
seismic deadlines, a number have found the most
cost-effective strategy to be new construction, rather than
retrofitting. At the same time, costs of hospital
construction are escalating rapidly, due to higher
commercial construction activity overall, effects of
hurricane Katrina, and other factors. Because of the
increased amount of construction and escalating costs of
construction, hospitals are having to shift back their
estimated dates for compliance with the deadlines.
Hospitals cite a number of specific factors influencing the
delays, including longer OSHPD review times associated with
new construction projects, now estimated at 1 years or
more for larger projects; limited construction resources;
difficulties accessing financial resources for larger
construction projects; and delays, downsizings, and
modifications of plans in response to escalating
construction costs. The author argues that without the
option to extend the deadlines for an additional two years
for hospitals that are making a good faith effort to meet
the deadlines, many hospitals would have to cease operating
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as acute care facilities, even though a newer facility is
under construction and millions of dollars has been spent.
California's hospital seismic laws
California's first hospital seismic requirements were put
in place in 1973, after the 1971 Sylmar earthquake. The
requirements were strengthened through enactment of the
Alfred E. Alquist Hospital Facilities Seismic Safety Act of
1983. Both acts established standards for new hospital
buildings, but grandfathered in pre-1973 buildings.
In response to the 6.7 magnitude Northridge earthquake in
January 1994, the Legislature passed and then-Governor
Wilson signed into law SB 1953 (Alquist -- Chapter 740,
Statutes of 1994), establishing seismic standards for
existing hospital buildings. Hospitals built in accordance
with the standards of the Act resisted the 1994 Northridge
earthquake with minimal structural damage, while several
facilities built before the Act experienced major
structural damage and had to be evacuated.
SB 1953 establishes timelines and standards for both
structural and nonstructural components of all existing
hospital buildings. Under the bill, hospitals were
required to brace basic nonstructural and power systems by
January 1, 2002. By January 1, 2008, buildings posing a
significant risk of collapse and a danger to the public
must be rebuilt or retrofitted to be capable of
withstanding an earthquake or be removed from acute care
service. By January 1, 2030, hospital buildings must be
not only capable of remaining intact after an earthquake,
but also capable of continued operation and provision of
acute care medical services after an earthquake.
Regulations implementing SB 1953 established structural
(SPC) and nonstructural performance categories (NPC) for
hospital buildings. All general acute care hospital
facility buildings in the SPC 1 category (buildings posing
a significant risk of collapse and a danger to the public)
must be at SPC 2 (buildings do not jeopardize life, but may
not be repairable or functional following strong ground
motion) by January 1, 2008. The NPCs are based on the
expected performance of non-structural systems and
equipment critical to patient care.
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There are approximately 470 general acute care hospital
facilities with 2,500 hospital
buildings. According to OSHPD, nearly 40 percent of
hospital buildings (975) are in the SPC 1 (significant risk
of collapse and a danger to the public) category. These
buildings need to be retrofitted or rebuilt to meet the
January 1, 2008, SPC 2 deadline.
Current law allows three types of extensions of the 2008
deadline requirement for structural and non-structural
requirements:
1.If it is evident that compliance will result in an
interruption of health care services provided by
hospitals within the area. Hospital owners can request
extensions in one-year increments up to a maximum of five
years after January 1, 2008.
2.If the hospital agrees that on or before January 1, 2013,
designated services will be provided by moving into an
existing conforming building, relocated to a new building
or the existing building will be retrofitted to
designated seismic performance categories.
3.If the hospital is located in Seismic Zone 3 (inland
areas that are less likely to incur seismic activity of
significant force) as indicated in the 1995 edition of
the California Building Standards Code and have met the
NPC 2 requirements and associated deadlines.
A 2002 RAND study estimated that California hospitals would
have to spend up to $41.7 billion to meet SB 1953
standards. However, the study found that the bulk of the
expenditures, all but $3 billon, constituted necessary
expenditures to upgrade and modernize facilities that were
prompted by the seismic deadlines. According to RAND, the
average age of the affected buildings will be between 45
and 49 years in 2008, while the approximate lifespan for a
California hospital is 40 to 50 years.
According to OSHPD and hospital representatives, OSHPD
currently has approximately $11.4 billion in hospital
construction projects under review. During 2005, 1,803
projects were submitted for review, the overwhelming
majority of which are smaller projects. As a result of
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pending deadlines for rebuilding or retrofitting of
hospitals, the number of projects submitted to OSHPD for
review is expected to increase significantly in the next
few years. The average time to review a project that is
submitted for review ranges from six months for projects
under $5 million to a 1 years for projects up to $100
million, and slightly more than 1 years for projects over
$100 million.
At the same time, hospital construction costs are rising
rapidly. According to a report by Davis Langdon, a
construction consulting firm, average construction costs
for hospitals in California have risen from $330 per square
foot in early 2003 to around $550 in January, 2006, a 66
percent increase and higher than in other states. The
report attributes the sharp increases to increases in the
overall volume of commercial construction, delays in
construction schedules in response to rising costs, labor
and material cost increases, effects of Hurrican Katrina
and other major disasters, and risk aversion on the part of
commercial contractors.
Related legislation
SB 167 (Speier) - Exempts under certain circumstances a
hospital that is subject to state seismic safety
standards for hospitals from the 2008 deadline if the
governing body adopts and submits to the State Department
of Health Services by July 1, 2006, a resolution that the
governing body commits to comply with the January 1,
2030, seismic safety standards by January 1, 2020. This
bill is currently in the Assembly Health Committee.
SB 491 (Ducheny) - Enacts the Earthquake Safety and
Hospital Preservation Bond Act which, if adopted, would
authorize the issuance of general obligations bonds in an
unspecified amount for purposes of financing a seismic
safety program for nonprofit and public general acute
care hospitals. This bill is currently being held at the
Assembly Desk.
SB 1838 (Perata) - Allows OSHPD to establish a training
program to ensure that a sufficient number of qualified
persons are available to facilitate the timely review of
health facility design and construction plans, to ensure
compliance with applicable fire and life safety codes and
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standards. This bill is scheduled to be heard in the
Senate Health Committee on March 29, 2006.
AB 1275 (Frommer) - Enacts the Earthquake Safety and
Hospital Preservation Bond Act which, if adopted, would
authorize the issuance of $5 billion in general
obligations bonds for purposes of financing a seismic
safety program for nonprofit and public general acute
care hospitals. This bill died in the Assembly.
Prior legislation
SB 224 (Chesbro, Chapter 494, Statutes of 2005) -
Requires OSHPD to establish a plan review project that
would exempt multistory hospital buildings from plan
review and inspection by OSHPD if the facility
demonstrates to OSHPD by written description of the
project that those same specified conditions are met.
SB 1801 (Speier, Chapter 850, Statutes of 2000) - Permits
OSHPD to grant a five-year extension of the January 1,
2008, seismic safety deadline for a functional contiguous
grouping of hospital buildings, as defined, if specified
conditions are met.
SB 2006 (Leslie, Chapter 851, Statutes of 2000) - Extends
deadlines for seismic safety compliance for hospitals in
low seismic risk zones.
AB 44 (Cohn) of 2005 - 06 Session - Allows a hospital
owner to request a delay of up to one year for meeting
the Structural Performance Category 2 (SPC-2) or
Non-Structural Performance Category-3 (NPC-3) compliance
deadlines for a general acute care hospital building if
construction delays have occurred that are beyond the
hospital owner's control. Applicable provisions have
been amended out of the bill.
AB 2973 (Cohn) of 2003-04 Session - Establishes a
temporary, voluntary process for Independent Plan
Reviewers to certify hospital construction plans prior to
submission to OSHPD for projects with costs over $50
million. This measure was vetoed by the Governor.
Arguments in support
According to the California Hospital Association (CHA),
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hospitals are facing extreme challenges in meeting the 2008
and 2013 seismic deadlines. Many will be unable to meet
the deadlines because of financial difficulties. For those
that have the resources to build or retrofit, other
challenges have presented themselves over the past few
years, including rising construction costs, review delays,
contractor limitations, and necessary plan modifications.
SB 1661 would provide an extension to hospitals that are
working in good faith toward meeting the 2008 and 2013
deadlines. Unless they are provided an extension, these
hospitals will be forced to close their existing acute care
facility until construction of the new facility was
complete, eliminating needed hospital services in many
communities. According to the California Medical
Association, the financial burden of the state's seismic
mandates could not have been foreseen 20 years ago and some
flexibility is clearly necessary.
Arguments in opposition
The California Nurses Association (CNA) argues in
opposition that legislation requiring acute care hospitals
to retrofit was passed in the 1970s, with the most recent
amendments occurring in 1994 following a severe seismic
event and the collapse of a hospital. Hospitals have known
for a very long time that they must comply with the seismic
standards by 2008 and 2030; some have complied, over 200
have asked for and received extensions until 2013, and some
have done nothing at all. CNA argues that a hospital's
failure to plan for future construction needs is no excuse
to jeopardize the safety of patients and hospital employees
and the bill could encourage some hospitals who have
consistently failed to plan for their seismic upgrades to
continue to procrastinate.
Request for amendments
The Service Employees International Union (SEIU) states
that it has consistently opposed extensions of the seismic
retrofit deadline but recognizes that hospitals that are
attempting to comply with the law may, despite their best
efforts, be unable to meet that deadline. SEIU seeks
amendments to require hospitals seeking extensions to meet
benchmarks towards compliance that reflect public actions,
such as filing design documents with OSHPD, receipt of
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changes in zoning, approval of applicable environmental
impact reports (EIRs), and start of construction. SEIU
states that it is troubled by hospitals that have
seismically unsound buildings but have failed to seek
extensions of the 2008 deadline, and notes that SB 1661
does not address these hospitals.
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QUESTIONS AND ISSUES
1.Should additional criteria be applied to hospitals
seeking extensions under the bill? As drafted, SB 1661
allows hospitals that have received a five-year extension
of the 2008 seismic deadline to request an additional
two-year extension and requires OSHPD to grant the
request for the additional extension if the hospital
building subject to the extension is under construction
at the time of the request and the hospital has made a
good faith effort to comply with the January 1, 2013
deadline. In practice, a variety of factors could result
in construction not being completed by the 2013 deadline,
some of which are related to delays in the planning and
design of the project, which are arguably under the
control of the hospital, and some of which are related to
delays in the actual construction of the project,
including weather related delays, strikes, and lack of
availability of construction materials or labor, which
may be less under the control of the hospital. Should
the bill be amended to limit the grounds for additional
extensions under the bill to construction-related delays?
Should hospitals be required to meet specific
benchmarks in order to receive additional extensions,
including specified times for submission of construction
plans for OSHPD approval, receipt of zoning and planning
approvals, and commencement of construction? Should
additional criteria related to community benefits be met
in order to receive extensions under the bill?
2.One or two-year extensions? As drafted, SB 1661 allows a
hospital that meets the criteria in the bill to receive a
two-year extension, even if a lesser extension would be
sufficient to complete construction of the project by the
2013 deadline. Should the bill be amended to authorize
OSHPD to grant up to a two year extension, to allow it to
determine the length of the extension that is necessary
and justified on a case-by-case basis?
3.Suggested technical amendment:
(d) Notwithstanding subdivision (b), a hospital that
has received a five-year extension of the January 1,
2008, deadline pursuant to subdivisions (a) and (b)
may request a two-year extension in addition to the
January 1, 2013, deadline for a hospital building that
is owned or operated by the hospital. The office may
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grant the additional two- year extension if the
hospital building subject to the extension is under
construction at the time of this request and the
hospital has made a good faith effort to comply with
the January 1, 2013, deadline.
POSITIONS
Support: California Hospital Association
California Medical Association
Oppose:California Nurses Association
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