BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 232
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|AUTHOR: |Obernolte |
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|VERSION: |September 4, 2015 |
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|HEARING DATE: |September 10, | | |
| |2015 | | |
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|CONSULTANT: |Vince Marchand |
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PURSUANT TO SENATE RULE 29.10
SUBJECT : Hospitals: seismic safety.
SUMMARY : Permits a critical access hospital located in the City of
Tehachapi to submit a seismic safety extension application,
pursuant to specified provisions of existing law that allow an
extension up to January 1, 2020, notwithstanding a deadline of
September 2012 to apply for this extension.
Existing state law:
1)Establishes, under the Alfred E. Alquist Hospital Facilities
Seismic Safety Act of 1983 (Alquist Act), timelines for
hospital compliance with seismic 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 continued operation after an
earthquake 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.
3)Permits OSHPD to grant various further extensions beyond the
initial five year extension in 2) above, under various
eligibility requirements, with January 1, 2020, being the
final permissible extension for SPC-1 buildings allowed under
AB 232 (Obernolte) Page 2 of ?
any of the various extensions.
4)Requires owners of general acute care hospital buildings that
are classified as SPC-1 buildings to submit reports to OSHPD
annually describing the status of each building in complying
with the January 1, 2013, deadline.
5)Allows OSHPD to utilize computer modeling based on HAZUS,
which is a seismic risks analysis tool, for purposes of
determining the structural performance category of general
acute care hospital buildings.
Existing federal law:
1)Establishes the Medicare Rural Hospital Flexibility Program to
permit states to designate certain health facilities to be
critical access hospitals. Requires critical access hospitals
to meet specified criteria, including that the facility be a
rural public or nonprofit hospital that is located more than a
35-mile drive from any other hospital or is certified by the
state as being a necessary provider of health care services to
residents in the area.
2)Requires critical access hospitals to receive reasonable
cost-based reimbursement for their services from Medicare.
This bill:
1)Permits a critical access hospital located in the City of
Tehachapi to submit a seismic safety extension application,
pursuant to specified provisions of existing law that allow an
extension of the deadline until up to January 1, 2020,
notwithstanding deadlines in those provisions of existing law
that are earlier than the effective date of this bill,
including the September 2012 deadline to submit an
application.
2)Requires the application submitted pursuant to 1) above to
include a timetable, as required under existing law, detailing
how the hospital intends to meet the requested deadline.
3)Contains an urgency clause so that the bill will take effect
immediately, in order to prevent the loss of hospital
licensure and Medicaid and Medicare Funding that would lead to
closure of a critical access hospital and a loss of access to
health care in the City of Tehachapi.
AB 232 (Obernolte) Page 3 of ?
FISCAL
EFFECT : This version of the bill has not been analyzed by a
fiscal committee.
COMMENTS :
1)Author's statement. According to the author, this bill would
assist a small critical access hospital serving a remote rural
community located in the Tehachapi Mountains. The next
closest hospital is more than 38 miles away. Tehachapi
Hospital has set out to comply with the state's seismic
mandate by building a brand new hospital. The new Tehachapi
Hospital is currently under construction. However, in the
interim, the hospital must retrofit existing buildings in
order to remain operational and to ensure continued access to
critical health care services. The author states that under
the current seismic mandate, this hospital will be unable to
continue operating in its existing hospital buildings beyond
January 1, 2016. Should the hospital not be granted an
extension to this deadline, the consequences are severe -
including loss of hospital licensure and the exclusion from
federal participation in Medicaid and Medicare. According to
the author, this bill would provide an exception for Tehachapi
Hospital to resubmit their seismic safety extension
application to OSHPD in accordance with laws that would
provide an extension through January 1, 2020, for them to
retrofit their existing buildings.
2)Hospital seismic requirements. Following the 1971 San
Fernando Valley earthquake, California enacted the 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. Hospital buildings are categorized under a
structural performance category (SPC) rating system, whereby
buildings with a relatively high probability of collapse are
designated as SPC-1, and these are the buildings subject to
the original January 1, 2008 deadline and its various
extensions. Current law allowed most hospitals to qualify for
AB 232 (Obernolte) Page 4 of ?
an extension of the 2008 deadline, with hospitals able to
request extensions in one-year increments up to a maximum of
five years after January 1, 2008. Therefore, practically
speaking, the real initial deadline for hospitals to retrofit
or replace SPC-1 buildings was January 1, 2013.
In addition to this five-year extension, the Legislature has
passed additional bills allowing hospitals to extend the
deadlines for retrofitting or replacing SPC-1 buildings beyond
the 2013 deadline, with the very latest of the extensions
ending on January 1, 2020. After January 1, 2020, all SPC-1
buildings will either have been removed from service, or
brought up to at least SPC-2 status. The next deadline is the
January 1, 2030 deadline for hospitals to remain operational
following an earthquake, and at that time SPC-2 buildings will
no longer be permitted, and all buildings will have to at
least meet SPC-3, and in many cases, SPC-4 or SPC-5 (the
highest rating). According to OSHPD, only about 10 percent of
remaining hospital buildings are still classified as SPC-1.
The following are the Alquist Act deadline extensions that are
relevant to Tehachapi Hospital and this bill:
a) 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 retrofitting to SPC-2 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. Tehachapi Hospital applied for an
extension under SB 306, but the application was denied by
OSHPD due to financial criteria.
b) SB 608 (Alquist, Chapter 623, Statutes of 2010)
provided for an extension of hospital seismic deadlines,
for hospitals that have already received the five year
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extension to January 1, 2013, of up to three years for
hospitals that document that a local planning delay will
cause them to miss the January 1, 2013 deadline.
Tehachapi Hospital was approved for an extension under SB
608 for the maximum of three years, to January 1, 2016.
This is the deadline currently facing Tehachapi Hospital.
c) 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. The deadline for submitting an application
under SB 90 was September 30, 2012. A hospital applying
under SB 90, as part of its application, was required to
specify whether it intended to rebuild, replace, or
retrofit the building, and the amount of time necessary
to complete the construction. Additionally, a hospital
seeking an SB 90 extension was required to submit to
OSHPD, as part of its application, a structural
reassessment, known as a HAZUS assessment, for each of
its SPC-1 buildings. Tehachapi Hospital initially
submitted an application for an extension under SB 90 in
2012, but withdrew the application because it intended to
build a new facility rather than retrofit their existing
building to SPC-2 standards.
3)Background on Tehachapi Hospital. Tehachapi Hospital is
operated by the Tehachapi Valley Healthcare District, and is
licensed as a 24-bed general acute care hospital, of which 19
beds are classified as "swing" beds, and can be used for
long-term skilled nursing care. Tehachapi Hospital is located
in the City of Tehachapi, which is about 35 miles southeast of
Bakersfield. The nearest hospital is Kern Medical Center in
Bakersfield, 38 miles away. Tehachapi Hospital is designated
by the Department of Public Health as a critical access
hospital, which under federal Medicare law means they are
eligible to receive cost-based reimbursement from Medicare,
and is intended to reduce hospital closures in rural areas. As
discussed above, Tehachapi Hospital was granted extensions
from the original January 1, 2008, deadline to bring their
SPC-1 buildings into SPC-2 compliance. Under its SB 608
extension, they have until January 1, 2016 to bring their
SPC-1 buildings into compliance, or stop providing services as
AB 232 (Obernolte) Page 6 of ?
a general acute care hospital.
According to OSHPD, in March of 2012, Tehachapi Hospital applied
for an extension under SB 90, which would have provided for an
extension of up to 7 years beyond the 2013 deadline, or as
late as January 1, 2020. Because this application did not
include the required HAZUS assessment, OSHPD issued a letter
to Tehachapi informing the hospital that their application was
in jeopardy of being denied without the HAZUS assessment.
Rather than complete a HAZUS assessment, Tehachapi Hospital
withdrew their request for an SB 90 extension in June of 2012.
According to Tehachapi Hospital, the reason it withdrew its SB
90 application was because it was planning on building a new
hospital. Because Tehachapi Hospital planned to have this
building completed by their current deadline, the hospital
determined that an SB 90 extension was unnecessary. However,
Tehachapi Hospital states that in the ensuing years, it has
had construction delays, and inconsistent leadership. The
hospital is on its third Chief Executive Officer (CEO) in the
last year and a half. According to the current CEO, the new
hospital construction, while behind schedule by more than a
year, is moving forward, and the health care district is on
much firmer financial footing as well. Construction on the new
hospital is expected to be finished by the end of May 2016,
and after inspections, setting up the new hospital, and
achieving licensure, the new Tehachapi Hospital is expected to
be operational by sometime in November of 2016.
In addition to completing the new building, the CEO of Tehachapi
Hospital states that it is continuing with efforts to retrofit
the existing hospital to meet SPC-2 standards, so that even
once the new hospital is up and running, the existing building
can continue to be used to provide non-acute care services.
4)Prior legislation. AB 2557 (Pan, Chapter 821, Statutes of
2014) permitted hospitals 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.
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SB 90 (Steinberg, Chapter 19, Statutes of 2011) allowed a
hospital that had already received an extension to January 1,
2013, to seek an extension for seismic compliance for its
SPC-1 buildings of up to seven additional years, if the
hospital meets several interim deadlines and requirements.
Required OSHPD, in deciding whether to grant the extension and
in deciding how long the extension should be, to base its
decision 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 608 (Alquist, Chapter 623, Statutes of 2010) provided for
an extension of hospital seismic deadlines of up to three
years for hospitals that document that a local planning delay
will cause them to miss the January 1, 2013 deadline.
Permitted OSHPD to grant an additional extension of up to two
years, beyond the three years, for projects that do not
provide acute care services and meet other criteria regarding
life support systems and structural risk, as specified.
SB 499 (Ducheny, Chapter 601, Statutes of 2009) required all
general acute care hospitals that have SPC-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, Statues of 2007) amended the Alfred
E. Alquist Hospital Facilities Seismic Safety 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.
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.
5)Support. This bill is sponsored by the Association of
California Healthcare Districts (ACHD), which states that
without the authority granted by this bill, Tehachapi Hospital
will be unable to continue operating in its existing hospital
as of January 1, 2016. ACHD states that as a critical access
hospital serving a remote rural community located west of the
Mojave Desert in the Tehachapi Mountains, Tehachapi Hospital
AB 232 (Obernolte) Page 8 of ?
faces a greater disadvantage than larger, urban hospitals and
has faced both financial and design challenges. Tehachapi
Hospital planned to comply with the state's seismic mandate by
building a new hospital, and is in the midst of constructing
this hospital, which is more than 50 percent completed. ACHD
states that this bill will ensure that Tehachapi Hospital can
continue to provide critical health care services to a very
rural and underserved community. This bill is supported by the
Tehachapi Valley Healthcare District (TVHD), which states that
under SB 90, hospitals were allowed to apply for an extension
through January 1, 2020. According to TVHD, although its
hospital meets the criteria for this extension, it is unable
to take advantage of the time frame established under this law
because they failed to submit an application, believing that
construction of the new hospital would be complete by January
1, 2016. TVHD states that this bill would provide an exception
for TVHD to resubmit the seismic safety extension application
and acceptable plan to OSHPD in compliance with the 2020
deadline established under SB 90. Adventist Health states in
support that ensuring that a hospital's structural,
electrical, mechanical and plumbing systems can remain
operational following an earthquake is a very complex and
expensive process, and this bill will provide the hospital
with adequate time to retrofit the appropriate buildings and
allow Tehachapi Hospital to remain operational until the new
hospital is built.
SUPPORT AND OPPOSITION :
Support: Association of California Healthcare Districts
(sponsor)
Adventist Health
California Hospital Association
Tehachapi Valley Healthcare District
Oppose: None received
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