BILL ANALYSIS
SENATE HEALTH
COMMITTEE ANALYSIS
Senator Elaine K. Alquist, Chair
BILL NO: SB 289
S
AUTHOR: Ducheny
B
AMENDED: As Introduced
HEARING DATE: April 15, 2009
2
CONSULTANT:
8
Hansel/sh
9
SUBJECT
Hospitals: seismic safety: periodic reports
SUMMARY
Requires owners of hospital buildings that do not meet
existing requirements to be retrofitted or rebuilt by 2008
or 2013 to avoid risk of collapse in an earthquake, and who
have requested extensions of the 2008 and 2013 deadlines,
to include additional information in the reports they are
required to file with the Office of Statewide Health
Planning and Development (OSHPD) by June 30, 2011,
regarding buildings they intend to remove from acute care
service.
CHANGES TO EXISTING LAW
Existing law:
Under existing law, OSHPD has responsibility for reviewing
and approving all plans relating to construction, additions
to, reconstruction, or alteration of, hospital buildings,
as defined. Before adopting any such plans, hospitals must
submit the plans to OSHPD for approval and pay an
application filing fee that is determined by the office and
that is based on the project's estimated construction cost.
Continued---
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 2
Existing law 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 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.
Existing law 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. Existing law also authorizes an extension of up
to an additional two years beyond this 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 extension, and
that the hospital submitted a construction timeline at
least two years prior to the applicable deadline and is
making reasonable progress toward meeting the deadline, but
factors beyond the hospital's control make it impossible
for the hospital to meet the deadline.
Existing law 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. Among the
conditions the hospital must meet to be eligible for this
extension are that the hospital:
Maintains a Medi-Cal contract with the California Medical
Assistance Commission (CMAC), with exceptions;
Maintains basic emergency medical services if the
hospital provided such services as of July 1, 2007; and
Meets one of the following:
--The hospital is located within a Medically Underserved
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 3
Area or a Health Professions Shortage Area, as specified;
--OSHPD determines, by means of a health impact
assessment, that removal of the building or buildings
from service may diminish significantly the availability
or accessibility of health care services to an
underserved community;
--CMAC determines that the hospital is an essential
provider of Medi-Cal services in the hospital's service
area; or
-- The hospital demonstrates that, based on annual
utilization data submitted to the office for 2006 or
later, the hospital had in one year over 30 percent of
all discharges for either Medi-Cal or indigent patients
in the county in which the hospital is located.
Existing law also requires an owner of a general acute care
hospital building that is classified as a nonconforming
Structural Performance Category-1 (SPC-1) building (defined
in regulations as a building that is at risk of collapse in
an earthquake) who has not requested an extension of the
2008 deadline, to submit a report to the office no later
than April 15, 2007, describing the status of each building
in complying with the deadline. Existing law requires the
report to identify the following:
Each building that is subject to the deadline;
The project number or numbers for retrofit or replacement
of each building;
The projected construction start date or dates and
projected construction completion date or dates; and
The building or buildings to be removed from acute care
service and the projected date or dates of this action;
Existing law requires owners of general acute care hospital
buildings classified as nonconforming SPC-1 buildings who
have requested an extension of the 2008 deadline to submit
similar reports by June 30, 2009, and June 30, 2011.
Existing law requires OSHPD to adopt regulations and
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 4
standards to administer its responsibilities, and to submit
building standards relating to seismic safety for hospital
buildings and relating to requests for extensions of
deadlines for seismic compliance to the California Building
Standards Commission for adoption and approval.
This bill:
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. The additional information would include:
The projected dates the buildings will be removed from
service;
The inpatient and outpatient services currently delivered
in the buildings;
The number of inpatient and outpatient visits in 2008,
2009, and 2010.
FISCAL IMPACT
Unknown special fund costs.
BACKGROUND AND DISCUSSION
According to the author, SB 289 will enable the state to
better assess the scope and impact of hospital closures
that may result from enforcement of the state's hospital
seismic safety deadlines, by requiring hospital owners to
provide more specific information concerning the types of
services and numbers of patients served by buildings that
will be removed from acute care service, rather than
retrofitted by the 2013 deadlines.
The author states that the reports hospitals are required
to file with OSHPD in June of this year will begin to
provide the state with a preliminary look at the impact of
the 2013 seismic deadline on hospital services and
capacity. The author indicates the reports will capture
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 5
information about new buildings under construction, as well
as about buildings to be removed from service, and thus
provide the state with an accurate picture of the net
effects on hospital capacity after 2013.
The author also indicates that her intent is to begin
discussions about hospital seismic deadlines based on the
June, 2009 reports to OSHPD, as well the second round of
reports, which are due in June, 2011. The author states
that the reports, along with more information about which
hospital buildings may be reclassified to higher status
based on newer, more sophisticated modeling tools, are
likely to raise difficult questions about the impacts of
hospital seismic safety mandates and state budget-related
fiscal pressures on access and quality of care,
particularly in underserved communities. The author notes
that recent reports indicate that several regions of the
state will need additional hospital beds to meet the needs
of the growing elderly population, which additionally needs
to be factored into the assessment of the net impact of the
2013 deadlines.
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.
Based on its latest assessment of seismic risk, 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 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 SPC-3, SPC- 4, and SPC- 5, meaning that they are
considered capable of providing services following a strong
quake and may be used without restriction beyond 2030.
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 6
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 retrofitting beyond the 2013 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 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. Requests for this two-year extension have been
filed for 75 hospital buildings.
SB 306 (Ducheny) of 2007-2008 permits 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 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.
Reclassification of some hospital buildings
In May 2006, the Hospital Safety Board authorized OSHPD to
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 7
reevaluate the seismic risk of SPC-1 buildings utilizing a
more up-to-date seismic risk analysis tool, known as HAZUS,
which was developed by the Federal Emergency Management
Agency. OSHPD is currently using HAZUS to reexamine the
seismic risk of acute health care facilities that are
currently rated SPC-1, and an independent contractor is
reviewing the analysis. Using the reevluations, OSHPD is
reclassifying SPC-1 building to SPC-2 status if they are
found to have a small (.75 percent) probability of
collapse.
According to OSHPD, the deadline for hospitals to apply for
a reclassification is June 30, 2009. To date, requests for
reclassification have been submitted for 441 SPC-1
buildings and 148 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.
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, the probability of a 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
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 8
California region, the fault with the highest probability
of generating at least one magnitude 6.7 earthquake or
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.
According to the report, the likelihood of a major quake of
magnitude 7.5 or greater occurring in California in the
next 30 years is 46 percent. Such a quake is most likely
to occur in the southern half of the state.
Timeliness of OSHPD review
The Legislature has taken a number of steps to shorten the
review time for hospital projects that are submitted to
OSHPD. The 2006-2007 Budget contained 16 new positions and
$1.3 million in additional funding for hospital plan review
functions. The budget also included $1.2 million to expand
training of fire and life safety officers who are needed to
review building plans.
SB 1838 (Perata), Chapter 693, Statutes of 2006
additionally authorizes the establishment of other training
programs as necessary to ensure that a sufficient number of
qualified personnel are available to review hospital
construction plans. It also exempts hospital and skilled
nursing facility projects that cost less than $50,000 from
the OSHPD plan review process and requires a pre-submittal
meeting with OSHPD plan review staff for hospital and
skilled nursing facility projects costing over $20 million.
SB 1838 also requires OSHPD to assess the processing time
for its review of hospital construction plans and to report
annually to the appropriate policy and fiscal committees of
the Legislature.
According to OSHPD's SB 1838 report to the Legislature for
fiscal year 2007-2008, OSHPD met its goal of conducting
initial plan reviews within 90 calendar days 86 percent of
the time for large projects (over $20 million) and 91
percent of the time for small and medium size projects. It
met its goal of conducting backchecks (subsequent reviews
of plan corrections) within 40 calendar days 86 percent of
the time for large projects, and 96 percent of the time for
small and medium size projects. According to the report,
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 9
plan review and field staff approved 2,406 projects in
2007-2008. The total number of days required to approve
projects that were approved in 2007-2008 (not counting the
time needed to make corrections or alterations required to
obtain approval) ranged from 16 for very small projects
(under $50,000) to 348 for very large projects (over $100
million). In total, hospital projects totaling $8.2
billion were received by OSHPD in 2007-2008, a marked
increase from prior years.
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 167 (Speier) of 2005 -2006 Session - Would have exempted
a hospital that is subject to state seismic safety
standards from the 2008 deadline if its governing body
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 10
adopts and submits to the State Department of Health
Services by July 1, 2006, a resolution that the governing
body commits to comply with the January 1, 2030 seismic
safety standards by January 1, 2020. Failed passage in
Assembly Health Committee.
SB 491 (Ducheny) of 2005 - 2006 Session - 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
conditions are met.
SB 2006 (Leslie) Chapter 851, Statutes of 2000 Extends
deadlines for seismic safety compliance for hospitals in
low seismic risk zones.
Arguments in support
The California Hospital Association, the sponsor of SB 289,
states that SB 289 will add important information to the
reports hospitals must report to the state concerning
buildings they intend to remove from service by 2013,
rather than retrofit. Specifically, the information will
include the types of services provided by the buildings to
be removed from service and number of patient visits by
type of service. CHA believes this information will give
the state a more complete picture of the effect of hospital
closures that result from hospital seismic mandates.
COMMENTS
1. Information requested may not give complete picture of
impacts on services. The information hospitals would
provide under the bill would be limited to the inpatient
and outpatient services provided in the buildings scheduled
to be removed from service, and the number of patient
visits for each service. However, the same hospital, or
other hospitals in the same service area, may have plans to
add new buildings or expand services to make up for the
STAFF ANALYSIS OF SENATE BILL SB 289 (Ducheny)Page 11
lost services. Thus, the information to be reported
wouldn't reflect the net effect on hospital capacity in the
region. A suggested amendment would be to require the
reports filed under the bill to include additional
information about beds and services to be provided in both
existing and new buildings associated with each facility
for which reports are filed, as well as beds and services
being provided by facilities that are not impacted by the
2013 deadline.
POSITIONS
Support: California Hospital Association (sponsor)
Hospital Corporation of America
Oppose: None received
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