Seismic Standards for California’s Hospitals

2023 CalChamber Business Issues and Legislative Guide

Seismic Standards for California’s Hospitals

Modernization Will Make Critical Investments Possible

In response to the 1971 Sylmar earthquake that severely damaged several hospitals, the Legislature in 1973 enacted the Alfred E. Alquist Hospital Seismic Safety Act, which established a seismic safety building standards program for California hospitals built on or after March 7, 1973.

In 1994, in response to the Northridge earthquake that year, SB 1953 was signed into law, which required the Office of Statewide Health Planning and Development (OSHPD) to establish earthquake performance categories for hospitals. Furthermore, the bill required general acute care hospitals to be retrofitted or replaced so that they would not pose a risk of collapse in an earthquake, with a deadline of January 1, 2008. Additionally, it established a deadline of January 1, 2030, for when California’s hospitals had to be capable of remaining operational following an earthquake.

OSHPD categorized, or ranked, all general acute care hospital buildings based upon five structural performance categories (SPCs), which dictated when and how they would be retrofitted. According to the California Department of Health Care Access and Information (HCAI), SPC ratings range from 1 to 5 with SPC 1 assigned to buildings that may be at risk of collapse during a strong earthquake and SPC 5 assigned to buildings reasonably capable of providing services to the public following a strong earthquake. State law required all SPC 1 buildings to be removed from providing general acute care services by 2020 and all SPC 2 buildings to be removed from providing general acute care services by 2030. Therefore, a hospital facility comprising a number of hospital buildings may meet the 2020 requirements if there are no SPC 1 buildings on campus. A hospital facility meets the 2030 requirements if all the buildings on campus are either SPC 3, 4 or 5.

Although the seismic updates and structural categorization system seem straightforward, the policy implementation has been tumultuous and looming cost implications will be prohibitive.

Seismic Update Costs

The seismic updates California’s hospitals are required to implement have a tremendous cost impact. A RAND Corporation study identified a number of general cost categories for hospital construction projects, such as preparatory or make-ready work, construction soft costs, and the construction work itself, which can be broken down further into specific elements.

The study stated that results from quantitative and qualitative analyses indicate that, despite multiple decades of investment in SB 1953 seismic compliance projects, California hospitals still face a significant financial obligation between now and 2030. Depending on assumptions regarding preferred compliance strategy (retrofit versus new construction) and future cost escalation, the statewide price tag for compliance could range from $34 billion to $143 billion. A significant proportion of hospitals already are experiencing some degree of financial stress, and the burden of future compliance is likely to exacerbate this stress.

The RAND study stated there are a variety of options for providing regulatory relief or flexibility to hospitals, including providing public subsidies to share the costs of compliance or reduce financing costs, offering additional flexibility in the timing of compliance deadlines, rethinking what it means for hospitals to remain operational post-event, and streamlining the administrative processes associated with seismic compliance projects. Regardless, decision making regarding future changes, if any, in SB 1953 requirements would be aided by more comprehensive analysis of the benefits of the policy, as well as improved data collection and reporting regarding seismic projects and their costs.

California’s Seismic Evolution

The Alquist Act was passed in 1973 and mandated that new acute care hospitals had to be designed and constructed to remain standing and operational after a major seismic event. OSHPD was tasked with administering the new requirements.

SB 1953 was enacted in 1994 and amended the Alquist Act, establishing structural and nonstructural performance categories. Hospitals with an SPC 2 rating had a deadline of January 1, 2008, for survivability and a deadline of January 1, 2030, for when California’s hospitals had to be capable of remaining operational following an earthquake.

SB 1801 was passed in 2000 to provide a five-year extension on the 2008 deadline to 2013. Subsequently, SB 306 became law in 2007 and provided another extension — this time seven years — on the deadline for city or county hospitals or hospitals that meet strict financial hardship criteria.

In 2007, the Hazus reassessment program of the Federal Emergency Management Agency (FEMA) allowed hospitals that were determined to be at lower seismic risk to be reclassified to SPC 2, thereby giving them until January 1, 2030, to meet other SB 1953 requirements.

SB 90 was passed in 2011 and provided an opportunity for a seven-year extension on the January 1, 2013, deadline (to January 1, 2020) if necessary planning and reporting requirements were met.

AB 2190 was signed into law in 2019 and required all hospitals seeking extensions to the January 1, 2020 compliance deadline for SPC 1 buildings to submit an application to HCAI by April 1, 2019. The law required HCAI to grant an additional extension of time to a hospital that was subject to the January 1, 2020, deadline if certain conditions were met. The law authorized the additional extension until July 1, 2022, if a hospital’s compliance plan was based upon replacement or retrofit, or up to five years until January 1, 2025 if the compliance plan was for a rebuild.

SB 395, The Small and Rural Hospital Relief Program, was signed in 2021 and provides grants to qualifying facilities for the purpose of advancing a hospital’s effort to bring its buildings into compliance. The program is administered by the HCAI Cal-Mortgage Loan Insurance Program with assistance from the Facilities Development Division. The purpose of the Small and Rural Hospital Relief Program is to support and enhance the effort of qualifying facilities to preserve access to general acute care for the communities they serve by providing state grant funding and technical assistance for building seismic safety and resiliency.

CalChamber Position

It is imperative that California’s hospitals remain standing and functional after a catastrophic seismic event. The California Chamber of Commerce supports the modernization of the 2030 seismic safety requirements for hospitals in order to make it possible for them to make critical investments in their communities, prepare for disasters of all kinds, and avoid increased health care costs while implementing these requirements.

January 2023

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Preston YoungPreston Young
Senior Policy Advocate
Health Care, Taxation