BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: AB 1235
A
AUTHOR: Hayashi
B
AMENDED: June 16, 2009
HEARING DATE: July 15, 2009
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CONSULTANT:
2
Hansel/cjt
3
5
SUBJECT
Hospitals: seismic safety
SUMMARY
Authorizes the Office of Statewide Health Planning and
Development (OSHPD) to approve, in lieu of a current
extension for a hospital building that is owned and
operated by a county, city, or city and county, under which
the hospital owner is allowed to replace a hospital
building by January 1, 2020 with a building that meets the
January 1, 2030 standards in lieu of retrofitting the
hospital, a specific extension for a hospital building that
is owned or operated by Alameda County on the Alameda
County Medical Center's Fairmont campus. Requires that the
approval be on the basis of a declaration filed by the
Alameda County board of supervisors that the county lacks
the ability to meet the 2013 deadline, as specified.
CHANGES TO EXISTING LAW
Existing law:
Requires OSHPD to review and approve all plans relating to
Continued---
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construction, additions to, reconstruction, or alteration
of, hospital buildings, as defined.
Establishes timelines for hospital compliance with seismic
safety standards:
By January 1, 2008, buildings posing a significant risk
of collapse and a danger to the public (referred to as
Structural Performance Category - 1, or SPC - 1
buildings) must be rebuilt or retrofitted to be capable
of withstanding an earthquake, or be removed from acute
care service; and,
By January 1, 2030, hospital buildings must be capable of
remaining intact after an earthquake, and must also be
capable of continued operation and provision of acute
care medical services, or else be changed to non-acute
care use.
Allows OSHPD to grant delays of up to five years beyond the
2008 deadline under certain circumstances, including upon a
demonstration 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.
Additionally permits a hospital owner, in lieu of
retrofitting or rebuilding hospital buildings at risk of
collapse by 2013, to instead replace them by January 1,
2020, if the hospital owner meets several conditions and
OSHPD certifies that the hospital owner lacks the financial
capacity to meet seismic standards, as defined. Provides
that to be eligible for this extension, a hospital owner
must meet the following interim deadlines:
Submit by January 1, 2010, a facility master plan for the
buildings the hospital intends to replace by January 1,
2020, including a copy of the preliminary design for the
new building or buildings, the timeline for completed
plan submission, the proposed construction timeline, and
a copy of the hospital governing board's approval of the
facility plan;
Submit by January 1, 2013, a building plan that is deemed
ready to review by OSHPD, for each building;
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Receive a building permit to begin construction by
January 1, 2015, for each building the owner intends to
replace; and,
Submit a revised construction timeline within six months
of receipt of the building permit containing, among other
things, the projected construction start and completion
dates;
Submit status reports every six months thereafter,
including any delays or circumstances that could affect
the construction completion date.
Provides that a hospital opting for this extension that
fails to meet any of the interim deadlines above shall be
deemed in violation of the law that establishes the
extension, as well as the deadlines for seismic compliance,
and shall be subject to loss of licensure.
Provides that OSHPD may approve a similar extension to 2020
for a SPC - 1 hospital building that is owned and operated
by a county, city, or city and county, that has requested
an extension of the 2013 deadline by June 30, 2009, upon
the filing of a declaration with OSHPD that the owner lacks
the ability to meet the 2013 deadline, as specified.
Allows OSHPD to enter into an agreement with a hospital
governing authority for the phased submittal and approval
of its hospital construction plans.
This bill:
Authorizes OSHPD to approve, in lieu of the extension
allowed for a hospital building that is owned and operated
by a county, city, or city and county, by which the
hospital building is allowed to replace a SPC - 1 hospital
building by January 1, 2020 with a building that meets the
January 1, 2030 standards in lieu of retrofitting the
hospital, a specific extension for a hospital building that
is owned or operated by Alameda County on the Alameda
County Medical Center's Fairmont campus.
Requires that the approval be on the basis of a declaration
filed by the Alameda County board of supervisors that the
county lacks the ability to meet the 2013 deadline, as
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specified.
The declaration would have to commit the county to meet
interim deadlines similar to those that apply under the
existing 2020 extension option for counties, cities, and
cities and counties, with the following exceptions:
The interim deadline for submission of a facility master
plan for the buildings would be shifted from January 1,
2010 to June 1, 2010;
The deadline for submission of a building plan would be
shifted from January 1, 2013 to June 1, 2013;
The deadline for receipt of a building permit to begin
construction would be shifted from January 1, 2015 to
June 1, 2015;
Deadlines for submission of a construction timeline and
required status reports would be shifted accordingly.
Contains legislative findings and declarations that a
special law is necessary to address the needs of Alameda
County because of the unique circumstances that its
inability to meet the current seismic deadlines will result
in a loss of health care capacity that may not be provided
by another acute care rehabilitation center within a
reasonable proximity of the Alameda County Medical Center
Fairmont campus.
FISCAL IMPACT
This bill has not been analyzed by a fiscal committee.
BACKGROUND AND DISCUSSION
According to the author, the six-month extension to the
interim deadlines contained in AB 1235 is needed to allow
Alameda County more time to find an alternative and
appropriate replacement hospital for Fairmont Hospital,
which is part of the Alameda County Medical Center. The
county is considering several options for the facility,
which will have to cease offering acute care services in
2013, including moving the rehabilitative services that are
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currently provided by the hospital to nearby San Leandro
Hospital, which the county may have an option to acquire
this year, or reconstructing the hospital or relocating its
services to another, as yet unidentified hospital. If the
county has to move the services to another hospital, the
author argues that AB 1235 will provide the county more
time to find an alternative replacement for Fairmont
hospital.
San Leandro Hospital
San Leandro Hospital is an acute care hospital that
currently provides medical, surgical, and rehabilitative
services, including an emergency room that receives
approximately 25,000 visits per year. In 2007, the Eden
Township Healthcare District, which owns the hospital,
leased it to Sutter Health. The amended hospital lease and
operating agreement they approved with Sutter states that
Sutter may assign its interests, or any portion of its
interest, in the purchase option without the landlord's
consent. Sutter Health has recently indicated that it will
continue to operate the hospital only until September 30 of
this year and that it intends to sign over its purchase
option for the hospital to Alameda County.
Hospital seismic safety requirements
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
hospital buildings as well as deadlines for compliance with
those standards. 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
capable of remaining intact after an earthquake, and must
also be capable of continued operation and provision of
acute care medical services, or else be changed to
non-acute care use.
OSHPD has classified 948 (35 percent) of California's
hospital buildings as Structural Performance Category-1
(SPC-1) buildings, meaning that they are at risk for
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collapse in an earthquake. These buildings must be
retrofitted, replaced, or removed from acute care services
by January 1, 2008 (or 2013 if they receive extensions).
Another 231 buildings (roughly 9 percent) are categorized
as SPC-2 buildings, meaning that they are not at risk of
collapse, but may not be reparable or functional following
a strong quake. These buildings must be brought into
compliance with the requirements of SB 1953 by 2030 or be
removed from acute care service. Finally, over 1,536
buildings (56 percent) are categorized as SPC-3, SPC- 4,
and SPC- 5 buildings, meaning that they are considered
capable of providing services following a strong quake and
may be used without restriction beyond 2030.
Extensions permitted under existing law
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 two additional bills allowing hospitals to extend
the deadlines for seismic deadline. SB 1661 (Cox, Chapter
679, Statues of 2006) authorizes an extension of up to an
additional two years for hospitals that have already
received 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 the 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.
To be eligible for this extension, hospitals must meet
several interim deadlines, including submitting building
plans by December 31, 2008, and securing a building permit
and submitting a construction timetable by December 31,
2010. Requests for this two-year extension have been
approved for 75 hospital buildings.
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SB 306 (Ducheny) of 2007-2008 permits a hospital owner to
comply with seismic safety deadlines and requirements in
current law by replacing its buildings subject to seismic
retrofit by January 1, 2020, rather than retrofitting by
2013, and then 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.
SB 306 provides that OSHPD may approve a similar extension
to 2020 for a SPC - 1 hospital building that is owned and
operated by a county, city, or city and county, that has
requested an extension of the 2013 deadline by June 30,
2009, upon the filing of a declaration with OSHPD that the
owner lacks the ability to meet the 2013 deadline, as
specified. According to OSHPD, 13 city or county owned
hospitals have applied for this extension, and 12 have been
approved. Alameda County has applied for extensions for
Highland Hospital and Fairmont Hospital.
Reclassification of some hospital buildings
In May 2006, the Hospital Safety Board authorized OSHPD to
reevaluate the seismic risk of SPC-1 buildings utilizing a
more up-to-date seismic risk analysis tool, known as HAZUS.
Under this authority, OSHPD is reclassifying SPC-1
building to SPC-2 status if they are found to have a small
(.75 percent) probability of collapse. To date, requests
for reclassification have been submitted for 437 SPC-1
buildings, and 163 buildings have been reclassified to
SPC-2 status. OSHPD staff informally estimate that 500
SPC-1 buildings will not qualify for reclassification under
HAZUS and will not qualify for the extension of the
deadline to 2020 provided by SB 306.
Hospital letter on seismic deadlines
In June of this year, nine hospital systems sent a letter
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to Governor Schwarzenegger, stating that the current
economic recession has created significant challenges in
meeting the state's hospital seismic deadlines, and
requesting to open a dialogue on extending the deadlines.
The letter states that Californians will have reduced
access to care if any hospitals are taken out of service
due to their inability to meet the existing deadlines.
According the letter, the demand for capital to meet
seismic deadlines comes at a time when hospitals are
experiencing declining reimbursements, rising numbers of
uninsured, declining numbers of elective surgeries, and
increasing needs for funds for health information
technology.
Cost of seismic compliance
A 2002 RAND study estimated that California hospitals would
be required to spend up to $41.7 billion to meet SB 1953
standards. The study found that all but $3 billion of that
total would be of expenditures required to upgrade and
modernize facilities regardless of the state's seismic
requirements. According to RAND, the average age of the
noncompliant buildings will be between 45 and 49 years in
2008, while the approximate lifespan for a California
hospital is 40 to 50 years. A more recent study by Rand in
January 2007 found that, based on building permit data,
about half of the existing SPC-1 buildings are not likely
to meet the 2008 and 2013 deadlines. The study also noted
that hospital construction costs have almost doubled since
2001, driven by a limited number of qualified contractors,
competition for labor and materials from other types of
commercial construction, and inflation.
Risk of future earthquakes
According to a report issued in 2008 by the U.S. Geological
Survey, the California Geological Survey, and the Southern
California Earthquake Center, California has a 99 percent
chance of having a magnitude 6.7 or greater earthquake
within the next 30 years. The probability of an earthquake
with magnitude of 6.7 or greater occurring over the next 30
years in the greater Los Angeles area is 67 percent. In
the San Francisco Bay Area, the probability of such an
earthquake occurring is 63 percent. For the entire
California region, the fault with the highest probability
of generating at least one magnitude 6.7 earthquake or
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larger is the southern San Andreas (59 percent in the next
30 years). For northern California, the most likely source
of such earthquakes is the Hayward-Rodgers Creek Fault (31
percent probability in the next 30 years). Such quakes can
be deadly, as
shown by the 1989 magnitude 6.9 Loma Prieta and the 1994
magnitude 6.7 Northridge earthquakes.
Related bills
SB 289 (Ducheny) requires owners of hospital buildings that
are classified as nonconforming, SPC-1 buildings, who have
requested extensions of the 2008 deadlines for retrofitting
or rebuilding, to include additional information in the
reports they are required to file with OSHPD by June 30,
2011, regarding buildings they intend to remove from acute
care service. Currently in Assembly Appropriations
Committee.
AB 303 (Beall) allows specified county and University of
California (UC) disproportionate share hospitals (DSH) that
contract with the California Medical Assistance Commission
(CMAC) to serve Medi-Cal patients to receive supplemental
Medi-Cal reimbursement from the Construction and Renovation
Reimbursement Program
(CRRP) for new capital projects to meet state seismic
safety deadlines for which plans have been submitted to the
state after January 1, 2007 and before December 31, 2011.
Currently in Senate Appropriations Committee.
AB 411 (Garrick) requires a health care district that has
been denied an extension of the seismic retrofit and
replacement deadlines to make a specified report to the
office. Currently in Senate Rules Committee.
AB 523 (Huffman) allows OSHPD to grant a two-year extension
of the 2013 seismic deadline for a hospital building that
is owned by a health care district, but is operated by a
third party under a lease that extends at least through
December 31, 2009, based on a declaration that the district
has lacked, and continues to lack, unrestricted access to
the hospital building for seismic planning purposes during
the time of the lease. Establishes interim deadlines and
requirements the hospital must meet in order to qualify for
the extension, as specified. Currently in Senate
Appropriations Committee.
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Prior legislation
SB 306 (Ducheny), Chapter 642, Statutes of 2007, amends the
Alfred E. Alquist Hospital Facilities Seismic Safety Act
(Act) to permit specified hospitals to delay compliance
with the July 1, 2008 seismic retrofitting deadline, and
the 2013 extension, to the year 2020, by filing a
declaration with the Office of Statewide Health Planning
and Development (OSHPD) that the owner lacks financial
capacity to comply with the law.
SB 1661 (Cox), Chapter 679, Statutes of 2006, authorizes an
extension of up to two additional years for hospitals that
have already received extensions of the January 1,
2008 seismic safety compliance deadline, if specified
criteria are met. Requires owners of SPC-1 general acute
care hospital buildings who have not requested extensions
of the January 1, 2008 deadline to submit a report to OSHPD
no later than April 15, 2007, describing their progress in
complying with the 2008 requirement. Requires hospitals
that have requested an extension of the 2008 deadline to
submit reports to OSHPD by June 30, 2009 and June 30, 2011,
describing the status of each building in complying with
the 2008 requirement.
SB 1838 (Perata), Chapter 693, Statutes of 2006, authorizes
OSHPD to establish a training program for personnel who
review hospital construction and design plans. Exempts
hospital and skilled nursing facility projects that cost
less than $50,000 from the OSHPD plan review process.
Requires a pre-submittal meeting with OSHPD plan review
staff on hospital and skilled nursing facility projects
costing over $20 million.
SB 491 (Ducheny) of 2005 - 2006 would have enacted the
Earthquake Safety and Hospital Preservation Bond Act and
would have authorized 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. Held at Assembly Desk.
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
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conditions are met.
SB 2006 (Leslie), Chapter 851, Statutes of 2000, extends
deadlines for seismic safety compliance for hospitals in
low seismic risk zones.
PRIOR ACTIONS
Assembly Floor: 51-22
Assembly Appropriations: 13-4
Assembly Labor and Employment:5-0
COMMENTS
1. Extension is not linked to a specific hospital
construction plan. Similar to AB 523
(Huffman) which the committee heard on July 9, 2009, this
bill would create a new extension for a specific hospital
owner. However, unlike AB 523, the extension of
timelines in AB 1235 is not linked to a specific
construction plan. While Alameda County is examining its
options for constructing or acquiring a hospital to
assume the services that are currently offered by
Fairmont Hospital, it has not decided on a course of
action. In addition, if the county opts to acquire
another hospital to provide the services, the need for an
extension of the 2013 deadline will depend on what
hospital is acquired and what its seismic status is. If
the committee decides that there is merit in giving
Alameda County more time to formulate its plan for moving
or replacing the services at Fairmont Hospital, a
suggested amendment would be to limit the scope of the
bill to providing a six-month extension of the first
interim deadline, the deadline for submitting a master
plan.
POSITIONS
Support: None received
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Oppose: None received
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