BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                AB 2557
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        (  Without Reference to File  )

        CONCURRENCE IN SENATE AMENDMENTS
        AB 2557 (Pan)
        As Amended August 22, 2014
        2/3 vote.  Urgency
         
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        |ASSEMBLY: |     |(May 23, 2014)  |SENATE: |     |                     |
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             (vote not relevant)                (vote not available)


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        |COMMITTEE VOTE:  |15-2 |(August 29, 2014)   |RECOMMENDATION: |concur    |
        |(Health)         |     |                    |                |          |
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        Original Committee Reference:   HIGHER ED.  

         SUMMARY  :  Authorizes the Office of Statewide Health Planning and  
        Development (OSHPD) to grant certain hospitals, who have already  
        received an extension of the January 1, 2008, seismic safety  
        deadline, an additional extension until September 1, 2015.   
        Contains an urgency clause to ensure that the provisions of this  
        bill go into immediate effect upon enactment. 

         The Senate amendments  delete the contents of the Assembly approved  
        version of this bill and instead:

        1)Clarify that, after January 1, 2008, a general acute care  
          hospital determined to be a potential risk of collapse can only  
          be used for non-acute purposes unless an extension of the  
          deadline has already been granted and either of the following  
          occurs before the end of the extension:

           a)   A replacement building has been constructed and a  
             certificate of occupancy has been granted by OSHPD for the  
             replacement building; or,

           b)   A retrofit has been performed on the building and a  
             construction final has been obtained by OSHPD.

        2)Authorize OSHPD to grant hospitals located in the Counties of  
          Sacramento, San Mateo, or Santa Barbara or the City of San Jose  








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          that have received an extension of the January 1, 2008, deadline,  
          an additional extension until September 1, 2015, in order to  
          obtain either a certificate of occupancy from OSHPD for a  
          replacement building, or a construction final from OSHPD for a  
          building on which a retrofit has been performed.

         EXISTING LAW  :  

        1)Establishes the Alfred E. Alquist Hospital Facilities Seismic  
          Safety Act of 1983 (the Act), to ensure that hospital buildings  
          be designed and constructed to resist the forces generated by  
          earthquakes and requires OSHPD to propose building standards for  
          earthquake resistance and to provide independent review of the  
          design and construction of hospital buildings.

        2)Requires hospitals to evaluate and rate all their general acute  
          care hospital buildings for seismic resistance.

        3)Creates a 16-member Hospital Building Safety Board appointed by  
          the Director of OSHPD to act as a board of appeals in all matters  
          relating to the administration and enforcement of seismic safety  
          requirements.

        4)Provides the ability for hospitals to request and receive a delay  
          in their January 1, 2008, seismic compliance deadline if the  
          hospital can demonstrate that compliance will result in a loss of  
          health care capacity that may not be provided by another hospital  
          within a reasonable distance.  Requires the requesting hospital  
          to state why it cannot comply with the deadline.

        5)Requires OSHPD, prior to granting an extension of the 2008  
          deadline, to:

           a)   Provide public notice of a hospital's request for an  
             extension which includes the facility's name, identification  
             number, the status of the request, and the beginning and  
             ending dates of the public comment period, as well as provide  
             copies of extension requests to interested parties within 10  
             working days; and, 

           b)   Allow the public to submit written comments on the  
             extension proposal for at least 45 days from the date of the  
             public notice.

        6)Requires OSHPD to notify the Department of Health Services, now  








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          the Department of Public Health (DPH), of the hospital owners  
          that have received a written notice of violation for failure to  
          comply with either the 2008 requirements or the 2030  
          requirements.  Requires DPH, unless the hospital places its  
          license in voluntary suspense, to suspend or refuse to renew the  
          license of a hospital that has received a notice of violation  
          from OSHPD because of its failure to comply with either of those  
          requirements.

         AS PASSED BY THE ASSEMBLY  , this bill removed Pasadena City College  
        from the list of eligible community college campuses that may  
        participate in the California Community Colleges summer and winter  
        intersessions pilot program.

         FISCAL EFFECT  :  According to the Senate Appropriations Committee,  
        pursuant to Rule 28.8, negligible state costs.

         COMMENTS  :  According to the author, OSHPD recently identified five  
        outstanding hospital projects that are working toward the January  
        1, 2015, deadline, which, due to extenuating circumstances such as  
        flooding and unforeseeable construction delays, may not be  
        completed on time.  Not meeting the January 1, 2015, deadline could  
        result in the hospitals' losing their licenses and jeopardizing  
        their ability to participate in Medicare and Medicaid.  This bill  
        provides an eight-month extension to the January 1, 2015, deadline  
        for those hospitals, ensuring their communities' uninterrupted  
        access to health care.

        1)BACKGROUND.  The Act establishes a seismic safety building  
          standards program under OSHPD's jurisdiction for hospitals built  
          on or after March 7, 1973.  The Act was initiated because of the  
          loss of life incurred due to the collapse of hospitals during the  
          Sylmar earthquake of 1971.  Approximately 470 general acute care  
          hospital facilities comprised of 2,673 hospital buildings are  
          impacted by the provisions of the Act.  Hospitals built in  
          accordance with the standards of the Act resisted the January  
          1994 Northridge earthquake with minimal structural damage, while  
          several facilities built prior to the Act experienced major  
          structural damage and had to be evacuated.

        One of the main provisions of the Act was the development, via  
          regulation, of earthquake or seismic performance categories,  
          specifically the Structural Performance Categories (SPC) and  
          Nonstructural Performance Categories.  These include seismic  
          performance categories for new and existing general acute care  








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          hospital facilities at various levels, i.e., from those capable  
          of providing services to the public after a seismic event to  
          those at significant risk of collapse and that represent a danger  
          to the public.  The goal of these regulations is to develop  
          retrofit and repair designs for existing hospital buildings to  
          yield predictable seismic performance, whether at the essential  
          life safety level or post-earthquake continued operations level.

        Each general acute care hospital facility must be at certain SPC  
          levels by specified timeframes. For example, in the initial law  
          all general acute care hospital facility buildings must be at the  
          SPC 2 ("Life Safety Level") by January 1, 2008, to be in  
          compliance with the regulations, however, provisions were made to  
          allow this deadline to be extended to January 1, 2013, if  
          compliance with the 2008 deadline would result in a diminished  
          capacity of healthcare services to the community.  In addition,  
          timeframes for submittal of seismic evaluations, compliance  
          plans, and other seismic performance levels are cited in the  
          seismic evaluation procedure regulations.

        2)STATUS OF WAIVERS AND COMPLIANCE.  Subsequent legislation  
          affecting the Act has provided for additional seismic compliance  
          extensions.  Statewide, many hospitals are on different timelines  
          based on the extension they applied for.  The five hospitals  
          subject to the provisions of this bill all have what are commonly  
          known as SB 1661 (Cox), Chapter 679, Statutes of 2006, waivers.

        SB 1661 requires all general acute care hospitals that have  
          nonconforming SPC-1 buildings to report to OSHPD by June 30,  
          2009, on the status of their compliance with the seismic safety  
          deadlines.  SPC-1 buildings are buildings posing significant risk  
          of collapse and danger to the public.  Buildings with an approved  
          extension are permitted to provide acute care service only up to  
          the length of extension granted, the maximum extension that may  
          be granted per statute is January 1, 2020, beyond which the  
          building can no longer provide general acute care services.  In  
          order to grant an extension to the hospital, OSHPD must consider  
          the structural integrity of the building, the loss of essential  
          healthcare services to the community should the hospital be  
          closed, and the financial hardship that the hospital may have  
          experienced.  The extensions granted to the five hospitals that  
          would be subject to this bill were until January 1, 2015, and all  
          five have complied with the SB 1661 reporting requirements, which  
          state:









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           a)   The hospital building was under construction at the time of  
             the request for extension;

           b)   The hospital building plans were submitted to OSHPD and  
             were deemed ready for review by OSHPD at least four years  
             prior to the applicable deadline for the building;

           c)   The hospital received a building permit at least two years  
             prior to the applicable deadline for the building;

           d)   The hospital submitted a construction timeline at least two  
             years prior to the applicable deadline for the building  
             demonstrating the hospital's intent to meet the applicable  
             deadline.  Requires the timeline to include all of the  
             following:

             i)     The projected construction start date;

             ii)    The projected construction completion date;

             iii)   Identification of the contractor; and,

             iv)    The hospital is making reasonable progress toward  
               meeting the timeline set forth in d) above, but factors  
               beyond the hospital's control make it impossible for the  
               hospital to meet the deadline.

        STATUS OF CONSTRUCTION

        1)Goleta Valley Cottage Hospital (GVCH).  The design build  
          contractor for the new hospital building was selected in 2007 and  
          the initial schedule was for the project to commence in January,  
          2009 and be completed in its entirety by August, 2011.   
          Construction began in January 2009 on the initial phases, which  
          included a temporary parking lot, site excavation and shoring,  
          re-location of utilities and the installation of 2,300 rock  
          columns.  According to GVCH, this work was not completed until  
          late 2010 due to poor contractor coordination, lack of manpower,  
          and subcontractor issues.  As a result, the new GVCH may not be  
          completed and certainly, will not be occupied until after the  
          deadline.  Overall, the project is 93.6% complete through June  
          2014 and GVCH has expended $95.1 million of its anticipated  
          $124.6 million budget.

        2)Regional Medical Center of San Jose (RMC).  RMC submitted plans  








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          for its seismic retrofit and new addition project on August 8,  
          2008, with SB 1661 incremental plans for structural,  
          architectural, mechanical, electrical and plumbing drawings being  
          submitted in 2010 and 2011.  According to RMC they have completed  
          the construction of a new seismically compliant patient tower and  
          connecting corridors but will require additional months beyond  
          the January 1, 2015 deadline to complete renovation work in the  
          non-compliant portions of their non-compliant facilities because  
          their design team and contractors have run into hidden and  
          unknown conditions throughout the demolition and renovation  
          process which has forced them to redesign and resubmit plans to  
          OSHPD for approval, a process which has added months to the  
          project.  RMC anticipates completion of the project in March,  
          2015.

        3)Santa Ynez Valley Cottage Hospital (SYVCH).  The design build  
          contractor for the replacement and remodel was selected in 2006  
          and the initial schedule was for the project to commence in  
          December 2007 and be completed in its entirety by April 2009.   
          Construction of the new addition began in January 2008 and was  
          not completed until December 2010.  According to SYVCH the  
          remodel phase did not begin in earnest until the new addition was  
          occupied and the project has progressed slowly due to poor  
          contractor coordination, lack of manpower and subcontractor  
          issues and as a result, the remodel phase is at risk for not  
          being completed by the deadline.  Overall, the project is  
          approximately 91% complete through June 2014 and SYVCH has  
          expended $13.8 million of its anticipated $15.2 million budget.

        4)Sequoia Hospital.  Sequoia Hospital in Redwood City has completed  
          the retrofitting of six buildings and the construction of a new  
          patient pavilion.  The pavilion is waiting for a certificate of  
          occupancy from OSHPD and a license from DPH.  Sequoia Hospital  
          states that the retrofitting of the final two buildings cannot be  
          completed without disrupting access to health care services for  
          the community, until patients are moved into the new pavilion.   
          If construction proceeds as planned, Sequoia Hospital expects the  
          structural work of the two final buildings to be completed prior  
          to the deadline, although some remaining cosmetic and remodeling  
          work may spill into January.  OSHPD has indicated they will  
          approve the structural work separate from the remodeling.   
          Sequoia Hospital is seeking an extension to allow the  
          administrative process of OSHPD reviewing and approving the work  
          and DPH issuing a new license to take place without impacting  
          access to care for area patients.  








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        5)Sutter Memorial Hospital.  According to Sutter Memorial Hospital  
          the replacement project is a very complex project that includes  
          construction of an eight story Women's and Children's Center and  
          the remodeling of the existing Sutter General Hospital.  Sutter  
          Memorial notes, like many large construction projects, delays  
          have pushed the opening date beyond the anticipated completion.   
          Among the delays, a material defect in a pipe cap led to  
          significant flooding of the Women's and Children's Center  
          building earlier this year.  A comprehensive remediation and  
          restoration effort was undertaken to repair damage on several  
          floors and complicated their ability to complete the project on  
          the scheduled timeline, resulting in $8 million in damage and a  
          four-month delay.  Sutter Memorial states, to ensure the highest  
          quality and safety of patients, the new facility will not be  
          ready to accommodate the patients from Sutter General Hospital  
          until July 2015.

        The California Hospital Association (CHA) is the sponsor of this  
        bill and states that many designers and structural engineers  
        consider California hospitals to be the most complex and costly  
        buildings to construct due to the intricate structural, mechanical,  
        plumbing and electrical systems needed to remain operational  
        following an earthquake.  CHA notes that these five hospitals have  
        met the benchmarks required by SB 1661 at the cost of millions of  
        dollars but, due to the complex nature of the projects and  
        extenuating circumstances, these five hospital construction  
        projects have been slightly delayed and if this bill is not passed,  
        closure of any of these hospitals would create access to care  
        problems in their communities.

        The State Building and Construction Trades Council (SBCTC) supports  
        this bill stating that their members know firsthand the importance  
        of ensuring that California hospitals are seismically compliant so  
        that they will remain operational during the most critical time.   
        SBCTC also notes that there is an added level of complexity for  
        hospital construction projects due to the intricate structural,  
        mechanical, plumbing and electrical systems needed to remain  
        operational following an earthquake.  

        The California Nurses Association (CNA) is opposed to this bill  
        because they maintain it has become routine for the California  
        Hospital Association to rush into the Legislature at the last  
        minute asking for special consideration when they could and should  
        have anticipated the need for extensions earlier in the legislative  








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        year.  CNA notes that concerned members of the public and  
        representatives of healthcare workers should be given enough time  
        to assess the veracity of the excuses made by these hospitals and  
        this cannot be done when the bill is rushed through the process.   
        Finally, CNA states that if seismic standards cannot be met after  
        extensions have already been granted, hospitals should not continue  
        to admit patients and place them and hospital staff at risk for  
        injury due to seismic non-compliance.

         
        Analysis Prepared by  :    Lara Flynn / HEALTH / (916) 319-2097 


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