BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 81| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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 AB 81 Page 2 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: AB 81 Page 3 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. AB 81 Page 4 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 AB 81 Page 5 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. AB 81 Page 6 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, AB 81 Page 7 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 **** END **** AB 81 Page 8