Hiring limits on building inspectors put the squeeze on hospital projects. (Up Front).

What amounts to the largest boom of hospital construction California has ever seen is on a collision course with one of the state's worst fiscal crises.

The result is a freeze on hiring new building inspectors and plan reviewers who monitor hospital construction -- part of an overall clampdown by Gov. Gray Davis on the state's 200,000-employee executive branch payroll.

The lack of manpower has the potential to cost millions of dollars by slowing down scores of projects mandated by the state after the 1994 Northridge earthquake that require hospitals to seismically retrofit or build new facilities.

Yet it's the hospital industry that pays for plan checkers and field inspectors through permit fees.

"It's just crazy they can't hire people," said Roger Richter, a senior vice president with the California Healthcare Association, a hospital industry trade group. "It's millions of dollars (on the line)."

Last month, for example, state approval was needed to alter the design of a 40-foot deep pillar that is part of the foundation of L.A. County's new 600-bed flagship hospital in Boyle Heights. This would normally be handled by a state building inspector in the field, but this time the busy inspector sent the altered plans back to the office.

What could have taken hours stretched on for days, and nearly caused a halt in construction -- which would have cost the county $105,000 per day.

"He specifically said. 'I don't have enough time.' He had to move on to the next project," said Brad Bolger, project director of the $820 million hospital.

State mandate

The problem has prompted the hospital industry to sponsor a bill being carried by Assembly Dario Frommer, D-Glendale, that would exempt from the freeze the Facilities Development Division, part of the office of Statewide Health Planning and Development, the agency responsible for monitoring hospital construction. The bill passed out of the Assembly last week and is before the Senate.

"This is a (division) that is not supported by the general fund. It makes no sense," said Frommer. "Obviously we are running the bill to make a point with the governor."

Russell Lopez, a spokesman for Davis, said he was not aware of the problem and the governor had not taken any position on the bill.

"I am not going to say it's not on his radar, but he is focusing on the budget right now," he said. 'That is his No. I priority."

Davis has been criticized recently by Republicans and others for allowing too many exemptions to the freeze since it was imposed in October 2001.

"The administration doesn't want to be looking like they are adding to the state payroll," said Jim Lott, executive vice president of the Healthcare Association of Southern California, a regional hospital trade group. "It makes little sense, but nothing going on in California makes any sense."

Locally, major building projects are planned or underway at UCLA Medical Center, St. John's Health Center, Providence St. Joseph Medical Center and elsewhere.

Due to the size, complexity and special requirements of hospital construction, projects often take two years from initial planning to the start of construction and then three or more years for completion. Along the way, there can be hundreds of design changes.

"It's very difficult to foresee and address every detail that will be required in the construction process," said Steve Mynesberge, senior vice president for healthcare services at McCarthy Building Companies Inc., a general contractor involved in the county project.

While the number of state employees devoted to hospital construction is frozen at 160-50 inspectors, the rest in plan check and administrative positions -- permit fees assessed at 1.64 percent of the value of the project are going up.

Normally, the state facility development division receives up to $20 million annually in such fees, but as of the end of April, two months before the end of the current fiscal year, it had received over $43 million, said Kurt Schaefer, who heads the division.

"We have more than doubled the work load that has come in," he said.

There are already $4 billion worth of construction projects under way throughout the state, including the county hospital and the UCLA Medical Center replacement project, which is nearly as large. That is at least twice as much as $1 billion to $2 billion worth of projects normally under construction at any given time, Schaefer said.

And more than half of the state's hospitals have yet to submit their building plans, Richter said.

State officials knew they would need more bodies, and planned to hire them, but the budget crisis intervened. A consulting firm concluded the division would need to add 30 new permanent employees and 11 outside contractors to handle the workload, Schaefer said.

Fiscal crisis

In the past two years the division has lost positions, due to the hiring freeze imposed by the governor.

Last October, the division, which had an authorized strength of 178 positions, was not allowed to fill 18 vacancies and now its authorization level is down to 160, Schaefer said.

Since then, the division has had six more vacancies, and the state Department of Finance, which reviews all requests for exemptions under the freeze, has authorized the division to fill them. It also has authorized $2 million for outside consultants. That will help, Schaefer said, but it is not enough.

Bob Eisenman, director of strategic planning for Kaiser Permanente, which is planning to reconstruct 13 hospitals statewide at a cost of more than $4 billion, said the manpower shortage is starting to be felt up front.

In the past, it has taken the division about 12 months to complete the plan check process, but now that is stretching out to about 18 months, he said.

With construction inflation running at 2.5 percent to 4 percent annually, that can mean millions in cost increases as hospitals race to get their projects going.

"If there are delays, at the conservative amount of 2.5 percent annually, that is going to be close to $100 million annually," Eisenman said.

Schaefer acknowledged that inspectors often don't have time to approve design changes in the field. "A lot of things we used to do right on the site we just don't have time to do anymore," he said.

A project like the county's should have a state structural engineer on site one day a week, said Bolger, the project director. "We are lucky to get him a couple of hours every two weeks," he said.