Earthquake Law Could Financially Strain California Hospitals

By 2020, hospitals must reduce the risk of collapse. By 2030, they must be able to remain in operation after a major earthquake. That could cost hospitals $34 billion-$143 billion, according to a new Rand Corp. report.

by Andrew Sheeler, The Tribune (San Luis Obispo, Calif.) / April 1, 2019

(TNS) — California’s hospitals are scrambling to retrofit their buildings before “The Big One” hits, an effort that will cost tens of billions dollars and could jeopardize health-care access, according to a newly released study.

The state’s 418 hospitals have a deadline from the state, too. They’re racing to meet seismic safety standards set by a California law that was inspired by the deadly 1994 Northridge earthquake, which damaged 11 hospitals and forced evacuations at eight of them.

By 2020, hospitals must reduce the risk of collapse. By 2030, they must be able to remain in operation after a major earthquake.

That could cost hospitals between $34 billion and $143 billion, according to a new report from Rand Corp.

The report, funded by the California Hospital Association, examined whether the state’s hospitals will be able to comply with the law, particularly the 2030 deadline.

About a third of the hospitals in the state are in financial distress, and that number could rise to more than 50 percent as hospitals seek seismic compliance, the study found.

Public health-care district hospitals, hospitals that serve large numbers of Medi-Cal patients, rural hospitals and privately owned hospitals are especially vulnerable.

“The trend toward greater reliance on outpatient services and facilities, when combined with the implications of retrofitting existing buildings or replacing those buildings, could result in a net reduction in hospital capacity in California by 2030,” the study concluded.

The report questioned whether the state could help hospitals meet the safety standards without putting health-care providers at risk of financial distress. That could mean providing “public subsidies to share the costs of compliance or reduce financing costs, providing 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.”

The full study can be viewed here.

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