BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                         AB 81|
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                                      CONSENT 


          Bill No:  AB 81
          Author:   Wood (D), et al.
          Introduced:1/5/15  
          Vote:     27  - Urgency

           SENATE HEALTH COMMITTEE:  9-0, 6/10/15
           AYES:  Hernandez, Nguyen, Hall, Mitchell, Monning, Nielsen,  
            Pan, Roth, Wolk

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  78-0, 4/23/15 (Consent) - See last page for  
            vote

           SUBJECT:   Hospitals: seismic safety


          SOURCE:    Frank R. Howard Memorial Hospital


          DIGEST:  This bill permits a hospital in the City of Willits to  
          request an eight-month deadline extension of a seismic safety  
          requirement that hospitals be rebuilt or retrofitted to be  
          capable of withstanding an earthquake, which it is currently  
          required to meet by January 1, 2015, so that this hospital could  
          have until September 1, 2015, to meet this seismic safety  
          requirement.


          ANALYSIS:   


          Existing law:

          1)Establishes timelines for hospital compliance with seismic  








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            safety standards, including a requirement that buildings  
            posing a significant risk of collapse and a danger to the  
            public (referred to as SPC -1 buildings) be rebuilt or  
            retrofitted to be capable of withstanding an earthquake, or  
            removed from acute care service, by January 1, 2008, and a  
            requirement that hospital buildings be capable of remaining  
            intact after an earthquake, and must also be capable of  
            continued operation by January 1, 2030.

          2)Permits the Office of Statewide Health Planning and  
            Development (OSHPD) to grant an extension of up to five years  
            to the 2008 deadline, which would be January 1, 2013, for  
            hospitals for which compliance will result in a loss of health  
            care capacity, as defined.  Existing law also allows OSHPD to  
            grant various further extensions beyond this, including up to  
            two years, which would be January 1, 2015, for certain  
            hospitals that face construction delays, hospitals that  
            encounter delays due to an attempt to reclassify their  
            buildings to higher seismic status, and hospitals that  
            experience local planning delays.  

          3)Permits a hospital to continue operating under  a deadline  
            extension if 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. 

          4)Permits a hospital located in the Counties of Sacramento, San  
            Mateo, or Santa Barbara, or the City of San Jose, that has  
            received the additional two-year extension to January 1, 2015,  
            described in 2) above, to request an additional extension  
            until September 1, 2015, to obtain either a certificate of  
            occupancy from OSHPD for a replacement building, or a  
            construction final from OSHPD on a retrofitted building.

          This bill:









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          1)Adds a hospital located in the City of Willits to existing  
            provisions of law that permit hospitals located in the  
            Counties of Sacramento, San Mateo, or Santa Barbara, or the  
            City of San Jose, that have received an additional extension  
            of the January 1, 2008, seismic safety requirement under  
            specified provisions of existing law to January 1, 2015, to  
            request an additional extension until September 1, 2015, in  
            order to obtain either a certificate of occupancy or a  
            construction final from OSHPD.

          2)Contains an urgency clause, stating that to prevent the loss  
            of hospital licensure, Medicaid and Medicare funding, and  
            eligibility for Federal Emergency Management Agency assistance  
            following a disaster that would lead to hospital closures and  
            loss of access to health care in the City of Willits, it is  
            necessary for this act to take effect immediately.

          3)Makes legislative findings and declarations that a special law  
            is necessary and that a general law cannot be made applicable  
            because of the unique circumstances facing hospitals in the  
            City of Willits that are working on meeting seismic safety  
            building standards.

          Comments
          
          1)Author's statement.  According to the author, the Frank R.  
            Howard Memorial Hospital (HMH) has been in construction and  
            working to meet the seismic safety requirements. However,  
            given the rural nature of the area, the construction project  
            has encountered unforeseen circumstances that delayed  
            completion of the hospital from meeting the deadline. This  
            bill seeks to provide an extension to HMH until September 1,  
            2015, to complete construction on a project that is nearly  
            completed. This is the same extension given to five other  
            hospitals last year, provided by the passage of AB 2557 (Pan,  
            Chapter 821, Statutes of 2014). If the deadline is not  
            extended, HMH could lose its license and even jeopardize its  
            ability to participate in Medicare and Medicaid program, which  
            is about 80 percent of their patients this hospital serves.
            
          2)Hospital seismic requirements.  Following the 1971 San  
            Fernando Valley earthquake, California enacted the Alfred E.  








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            Alquist Hospital Facility Seismic Safety Act of 1973 (Alquist  
            Act), which mandated that all new hospital construction meet  
            stringent seismic safety standards.  In 1994, after the  
            Northridge earthquake, the Legislature passed and the Governor  
            signed SB 1953 (Alquist, Chapter 740, Statutes of 1994), which  
            required OSHPD to establish earthquake performance categories  
            for hospitals, and established a January 1, 2008, deadline by  
            which general acute care hospitals must be retrofitted or  
            replaced so that they do not pose a risk of collapse in the  
            event of an earthquake, and a January 1, 2030, deadline by  
            which they must be capable of remaining operational following  
            an earthquake.  SB 1953 also allowed most hospitals to qualify  
            for an extension of the January 1, 2008 deadline to January 1,  
            2013.

          Current law allows an extension of the 2008 deadline if  
            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.  Hospitals may  
            also request extensions of up to five years if acute care  
            services will be moved to an existing conforming building,  
            relocated to a new building, or if the existing building will  
            be retrofitted to designated seismic performance categories.

          In addition to the five-year extension, the Legislature has  
            passed additional bills allowing hospitals to extend the  
            deadlines for retrofitting beyond the 2013 deadline.  SB 1661  
            (Cox, Chapter 679, Statutes of 2006) authorized an extension  
            of up to an additional two years for hospitals that have  
            already received five-year extensions of the January 1, 2008,  
            seismic safety compliance deadline if specified criteria are  
            met, including that the hospital building is under  
            construction at the time of the request for extension and the  
            hospital is making reasonable progress toward meeting its  
            deadline, but factors beyond the hospital's control make it  
            impossible for the hospital to meet the deadline.  

            SB 306 (Ducheny, Chapter 642, Statutes of 2007) permitted a  
            hospital owner to comply with seismic safety deadlines and  
            requirements in current law by replacing all of its buildings  
            subject to seismic retrofit by January 1, 2020, rather than  








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            retrofitting by 2013 and replacing them by 2030, if the  
            hospital meets several conditions and OSHPD certifies that the  
            hospital owner lacks the financial capacity to meet seismic  
            standards, as defined.  Among the conditions a hospital must  
            meet to be eligible for this extension are that it maintains a  
            contract to provide Medi-Cal services, maintains a basic  
            emergency room, and is either in an underserved area, serves  
            an underserved community, is an essential provider of Medi-Cal  
            services, or is a heavy provider of services to Medi-Cal and  
            indigent patients.  Eighteen hospitals have qualified for  
            extensions to 2020 under this authority.
          
          Prior Legislation

          AB 2557 (Pan, Chapter 821, Statutes of 2014) permitted a  
          hospital located in the Counties of Sacramento, San Mateo, or  
          Santa Barbara or the City of San Jose, that had received an  
          additional extension of the January 1, 2008, seismic safety  
          requirements under specified provisions of existing law to  
          January 1, 2015, to request an additional extension until  
          September 1, 2015, in order to obtain either a certificate of  
          occupancy or a construction final from OSHPD.
          
          SB 90 (Steinberg, Chapter 19, Statutes of 2011) allowed a  
          hospital to seek an extension for seismic compliance for its  
          SPC-1 buildings of up to seven years based on the following  
          elements: the structural integrity of the building, the loss of  
          essential hospital services to the community if the hospital  
          closed, and financial hardship.
          
          SB 499 (Ducheny, Chapter 601, Statutes of 2009) required all general  
          acute care hospitals that have Structural Performance Category-1  
          buildings to report to OSHPD by November 1, 2010, and annually  
          thereafter, on the status of their compliance with the seismic  
          safety deadlines.

          SB 306 (Ducheny, Chapter 642, Statutes of 2007) amended the Alquist  
          Act to permit hospitals to delay compliance with the July 1, 2008  
          seismic retro deadline, and the 2013 extension, to the year 2020, by  
          filing a declaration with OSHPD that the owner lacks financial  
          capacity to comply with the law.









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          SB 1661 (Cox, Chapter 679, Statutes of 2006) authorized an  
          extension of up to an additional two years for hospitals that  
          had already received extensions of the January 1, 2008 seismic  
          safety compliance deadline if specified criteria were met, and  
          required specified hospital reports to be posted on the OSHPD  
          Web site.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified6/23/15)


          Frank R. Howard Memorial Hospital (source)
          Adventist Health
          California Hospital Association
          Loma Linda University Medical Center


          OPPOSITION:   (Verified6/23/15)


          None received


          ARGUMENTS IN SUPPORT:     This bill is sponsored by the Frank R.  
          Howard Memorial Hospital (HMH), which states that it is a 25-bed  
          Critical Access Hospital located in northern Mendocino County.  
          HMH states that it has been engaged for since 2009 in the design  
          and construction of a new facility which was planned to open for  
          occupancy in advance of January 1, 2015. The contractor's  
          written construction schedule, in place through the summer of  
          2014, called for substantial completion of HMH's new facility in  
          early October 2014, which would have given the hospital time to  
          open in advance of January 1, 2015. In mid-September 2014, HMH  
          states that the contractor, citing unanticipated construction  
          delays, provided HMH with a new schedule reflecting completion  
          of construction in mid-January 2015, which was later pushed back  
          into the spring. HMH notes that last year, five hospital  
          construction projects were identified as working toward the  
          January 1, 2015 deadline, but due to extenuating circumstances,  








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          were not likely to be completed in time. Legislation was passed  
          to allow these five hospitals to request an additional  
          eight-month extension, and that this bill is seeking to provide  
          HMH with this same ability. Adventist Health, and Loma Linda  
          University Medical Center state in support that HMH is an  
          important health care provider in northern Mendocino County,  
          with more than 80 percent of the hospital's inpatient payor mix  
          is a combination of Medicare and Medi-Cal, and that  
          non-compliance with seismic deadlines could cause a hospital to  
          lose its license. The California Hospital Association states in  
          support 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.

          ASSEMBLY FLOOR:  78-0, 4/23/15
          AYES:  Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Chang, Chau,  
            Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly,  
            Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,  
            Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,  
            Waldron, Weber, Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Campos, Salas


          Prepared by:Vince Marchand / HEALTH / 
          6/24/15 17:31:38


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