HOSPITALS—Sides Give on Quake Legislation

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Hospitals Win Reprieve on Seismic Upgrade Deadline

There’s nothing like the threat of a hospital closure to get lawmakers’ attention.

That threat carried the day last week when, after months of sparring over hospital earthquake safety, the industry scored a decisive victory though it had to pay a price.

Squaring off against the influential labor lobby, the powerful hospital industry managed to buy itself five more years to renovate its facilities beyond a deadline imposed by a Northridge earthquake-era law.

That 1994 legislation requires hospital operators to renovate their buildings by 2008 so they will withstand a major earthquake. A second 2030 deadline requires them to remain operational, and failure to meet either mandates closure.

But in a Houdini-like feat the industry turned the closure requirement into a veritable ace up its sleeve.

Labor, led by the Service Employees International Union, the largest health care union in the state with 250,000 members, had wanted to keep the deadline in place. But the progressive union is concerned about health access, and, more so, about the jobs of its members. No hospitals equals no jobs.

The industry also insisted that hospitals are financially weak across the state a position studies at least partially place. But the progressive union is concerned about health access, and, more so, about the jobs of its members. No hospitals equals no jobs.

The industry also insisted that hospitals are financially weak across the state a position studies at least partially support and unprepared to meet the high cost of the law, which it pegs at $24 billion.


Decision to compromise

So, while the SEIU says it had the political muscle to stop a bill last Wednesday that extended the 2008 deadline, it instead decided to compromise on legislation it could live with.

“We want safe hospital buildings, but there are real problems the industry faced,” said Beth Capell, the SEIU’s health care lobbyist. “We wanted to find a way for the hospitals to move forward and comply.”

The compromise, contained in a bill authored by Sen. Jackie Speier, D-San Francisco, gives hospitals two separate five-year breaks.

Those willing to rebuild to the 2030 standard earlier have until 2013 to do so without having to meet the interim 2008 deadline.

A second option for financially weaker hospitals allows them to ask the state Office of Statewide Health Planning and Development to simply put off the 2008 retrofit work for up to five years.

But the industry did not get all it wanted.

The original language in Speier’s bill called for allowing hospitals to simply build to tougher earthquake standards in the course of their regular construction schedule, as long it was completed by 2030.

Speier’s position is that with a financially weak industry, the seismic work would be taking too big a bite out of capital that could go for other priorities, such as reducing medication errors that have led to patient deaths.

But three decades is a long time for nervous legislators in a state that has seen at least one major earthquake every decade over the last 30 years.

“That (the original language) was probably really the more rational way to go,” said Jan Emerson, vice president of external affairs for the California Healthcare Association, the hospital industry trade association. “But in terms of the political environment everyone is quite nervous about what happens if an earthquake strikes.”

Now, the industry will have to spend by its own estimate $14 billion to meet the 2008/2013 deadline, though a Rand Corp. report concludes that factoring out the cost of regular modernization likely drops that total well under $5 billion.


Meeting milestones

Moreover, hospitals that take advantage of the new deadlines instead of getting the work done early will have to file strict work plans with the state, and then meet milestones at agreed upon times.

If they don’t, they could be fined as much as $100,000 per missed milestone, such as missing a date to demolish a building or start construction.

Labor contends this was critical, since the industry fully intended to push back the original deadlines when the time came. “When the original bill was passed in 1994, there were no annual updates or milestones. It was far away nobody believed it was real. Now there are real penalties,” Capell said.

Now that the issue of the deadlines appears headed for final passage, debate is now shifting in Sacramento to how much help the industry may need to get the job done.

Two legislators introduced bond measures earlier this year, but the bills were put over while the more fundamental issue of the deadlines gathered all the attention.

But at the request of Speaker Robert Hertzberg, D-Van Nuys, final passage of the Speier bill was made temporarily dependent on the passage of a bond measure.

However, it appears unlikely that labor and the industry can reach an agreement on the form or size of any bond in such a short time. (Hertzberg has agreed to de-link the Speier bill and let it move forward if that is the case.)

They differ on not only the actual cost of retrofitting and rebuilding, but how financially precarious a state the industry is in.

The industry maintains that a majority of its member hospitals are operating in the red, but labor says those numbers are misleading because they include many smaller hospitals. Labor says that hospitals serving 80 percent of the state’s population are doing just fine.

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