Hospitals in California may get the extra time some say they need to meet stringent earthquake-safety requirements.
As it stands now, hospitals will be forced to close if they haven't completed the required work by a 2030 deadline under a state law originally crafted following the 1994 Northridge earthquake.
"Almost two-thirds of the hospitals in the state will not meet the 2030 deadline, which requires hospitals to be fully operational after a major earthquake," said Jan Emerson-Shea, vice president of external affairs for the California Hospital Association.
The bill would give hospitals three years beyond the current 2030 deadline to complete the requirements if they follow the hospital compliance plan, and an additional five-year extension depending on the project.
"Knowing the majority of hospitals won't meet the 2030 deadline, which is five and a half years away, there needs to be a modification of this law, or it will have major ramifications on access to care," Emerson-Shea said.
Nearly 98% of hospitals already have met the law's 2025 deadline that all patient-care buildings be structurally safe and remain standing after a major earthquake, Emerson-Shea said.
Among the hospitals that still need time to meet that deadline are three Providence hospitals: Providence St. Jude Medical Center in Fullerton, Providence St. Joseph Hospital in Eureka and Providence Cedars-Sinai in Tarzana.
Separate legislation authored by State Sen. Josh Newman, D-Fullerton,
The bill was approved unanimously by the Senate in May, has passed through the Assembly Health Committee and is scheduled to be heard in the Assembly Appropriations committee soon.
"The COVID-19 pandemic created a cascade of challenges requiring hospitals to focus on ensuring adequate capacity and critical patient care," Newman said in testimony prior to the bill's passage in the Senate. The three Providence hospitals included in the bill are in the midst of rebuild plans, and while the hospital system has worked to meet the seismic deadlines "due to a variety of circumstances beyond its control, particularly the impacts of the pandemic, these three hospitals will not be able to achieve seismic compliance in time to avoid significant financial penalties."
Without the deadline extension, Newman said, the hospitals will be faced with the reality of being unable to renew their licensure with the California Department of Public Health, leading to a loss of vital patient care in their communities.
The state hospital association supports Newman's bill for the Providence hospitals and is the sponsor on SB 1432 to extend the 2030 deadline.
Hospitals are already required to have backup generators that can provide power for at least 72 hours following a power outage under separate state and federal laws, Emerson-Shea said, but California's earthquake law would mean the hospital would need to be able to perform less time sensitive operations like knee replacement surgery in the aftermath, something they would be likely to cancel, because roads wouldn't even be accessible following a major earthquake.
"Right now, the hospitals are fully prepared to respond to any disaster," Emerson-Shea said. "Today, if there were a major earthquake that destroyed the community, the buildings would remain standing and the patients would be safe. If the doctors were in the middle of a medical procedure, the lights would flicker, but the generators would kick in and the power would remain on.
"This law takes to the extreme that every single building, and every single service should be available after a major earthquake," Emerson-Shea said. "But if the water main is down, the electric grid is out and the roads are damaged, the best thing might be to evacuate the patients to a different region that is unaffected by the earthquake."
She added that the state hospital association is not trying to change the law; it is just asking for more time for hospitals to comply with the law.
The California Nurses Association, which opposed both pieces of legislation, views the extension requests through a different lens.
"The tragedy of a major earthquake need not compound upon itself because our hospital infrastructure has failed us," Puneet Majarah, director of government relations for the California Nurses Association/National Nurses United wrote in an April opposition letter addressed to state Sen. Anna Caballero, D-Merced, an author of SB 1432.
"Our communities should expect that our hospitals will be able to care for them in the event of a seismic disaster," Majarah said.
Majarah recounted in the letter how hospital employees have had to evacuate babies through darkened hallways in the aftermath of major earthquakes. She asked that lawmakers remain laser-focused on ensuring that patient and hospital employee safety are top priorities.
"Allowing all hospitals to delay seismic compliance for an additional eight years risks the safety and lives of patients, as well as the nurses and other healthcare workers who care for them in the aftermath of an earthquake," Majarah wrote.
A spokeswoman for the state nurses' association noted, however, that the bills have been amended since they first lodged their opposition.
Though it would seem counterintuitive, given three decades have elapsed since the Northridge earthquake, that hospitals would have come into compliance long ago, the laws regarding seismic standards have evolved over time. According to a
The original enabling regulations for the law passed in the wake of the 1994 earthquake did not come out until 2000, six years after it was originally signed by the governor, and it was another two years before the hospitals had something they could design changes from, Emerson-Shea said.
During the two years at the height of the pandemic, hospital construction was put on hold in California, and now that it has resumed, inflation has driven up the cost and there is a lot of competition for the specialized architects, engineers and construction workers qualified to build hospitals, Emerson-Shea said.
"Like hospitals nationwide, Providence encountered a number of obstacles related to the three-year pandemic — construction delays, supply chain issues and significant financial losses among them," said Rachel Selleck, chief government affairs officer for Providence's south division/California.
Faced with financial penalties and potential revocation of hospital licensure at the three affected Providence hospitals in Fullerton, Tarzana and Eureka, should 2025 compliance deadlines not be met, the hospital system sponsored SB 1119 with the leadership of Sen. Newman and his co-authors, Selleck said.
"Providence needs these time-specific extensions to ensure we can continue to provide access to care in these communities," Selleck said. "Work is underway to ensure compliance at all three campuses."
Nationally, the resumption of capital programs is reflected in the jump in bond issuance for hospital projects.
Healthcare issuance has nearly tripled year-over-year through May, rising to $11.47 billion through the first four months of 2024 from $2.98 billion over the same period in 2023, according to LSEG data.
The increase in issuance comes after several years of declining volume due to "the combination of federal stimulus funding, strong investment returns, deferred capital plans, and rising rates led to a sharp decline in issuance in the subsequent years," Vikram Rai, head of municipals market strategy at Wells Fargo, told the Bond Buyer
Hospital issuance totaled $14 billion last year, the lowest figure in at least a decade, he said.
Helping this year's jump were two billion-dollar-plus deals: $3 billion from CommonSpirit Health and $1.9 billion from Novant Health.
Hospitals are playing catch-up on capital plans after focusing on just righting their balance sheets during the pandemic, and in the years immediately following the pandemic, Rai confirmed Thursday.
"They are hovering around 1-2% capital margins," Rai said. "They want the issuance out of the way before the elections so they don't have policy and rate volatility."
Given all the requirements and approvals, including zoning, it generally takes eight to 10 years to complete hospital construction, Emerson-Shea said. "There is a limited pool of workers who can do this work," she said.
It's not like building houses or a shopping mall, because the contractors have to take patient safety and infection control into consideration at every step of the process, she said.
"Retrofitting buildings is a very complex process," Emerson-Shea said. "You can't retrofit and provide patient care at the same time, because many hospitals are land-locked; you have to do it in staging. Many hospitals have built annexes just for this purpose."
