L.A. Hospitals Rocked By 'Big One'.

A seismic shock is slamming into L.A.-area hospitals, resulting in billions of dollars in expenses and threatening several facilities with closure.

It's not an actual earthquake that's causing all the damage, it's SB 1953.

The law, passed in the wake of the 1994 Northridge quake, required hospitals to submit by Jan. 1 reports assessing the seismic status of their campuses.

The findings of those reports are just now filtering out, and the news is causing widespread alarm among health care officials.

Hospitals will be forced to undertake seismic upgrades costing $24 billion statewide and $8 billion regionally to comply with new legal standards.

"What we are concerned about is that there will be more hospitals out of service prior to any (new) earthquake than there would have been because of an earthquake," said Roger Richter, senior vice president of professional services for the California Healthcare Association, an industry trade group.

The toll is already more than theoretical.

Just this month, Henry Mayo Newhall Memorial Hospital in Valencia shut down four units, including its cardiac rehabilitation unit, laying off 70 employees, citing seismic upgrade costs.

The move follows an earlier announcement by St. Joseph Hospital in Orange that it would lay off 130 employees, citing falling revenues and the state seismic mandate.

Other hospitals, while not yet instituting layoffs, are stunned by the cost of seismic compliance and grappling with how to pay for it.

Childrens Hospital Los Angeles, for example, found that retrofitting won't do. Instead, it must build a new hospital at a cost of up to $300 million, which will require a massive capital campaign.

"The existing hospital is fine. We wouldn't even be talking about this if it weren't for the law," said hospital spokesman Steve Rutledge.

Kaiser Permanente, meanwhile, plans to replace its Los Angeles Medical Center and its Panorama City hospital with new facilities. It is estimating a statewide cost of $3 billion to retrofit or rebuild 28 of its hospitals, which it hopes to fund out of operations.

"We will pay for it over time and with careful diligence, but everything about payments right now is pure speculation," said Jim Anderson, a Kaiser spokesman.

Catholic Healthcare West estimates its bill will be well over $2 billion statewide, including $233 million for Robert F. Kennedy Medical Center in Hawthorn, Glendale Memorial Hospital, California Hospital Medical Center in downtown L.A. and Northridge Hospital Medical Center.

California Hospital was forced to tear down its original 76-year-old tower, which was damaged in the Northridge earthquake, after officials decided it would be too costly to retrofit under the new state law.

"We are very saddened. It was beautiful old architecture, but it was too expensive to retrofit," said Sylvia Robledo, a hospital spokeswoman.

The hospital is now considering replacing it with a $20.8 million women's pavilion that would be partially funded by a $11.4 million grant from the Federal Emergency Management Agency, funds not available to all hospitals.

The L.A. County Department of Health Services must spend $247 million to retrofit five of its hospitals, on top of the $818 million it will spend to build a replacement for the quake-damaged County/USC Medical Center. Funding has not been identified for $174 million of the costs.

Law's provisions

Senate Bill 1953 requires hospitals to ensure that any building with patient beds be able to withstand a major earthquake by 2008, or be taken out of service. A second, stiffer requirement mandates that by 2030 hospitals must be able to operate after a major earthquake.

The staged requirements are intended to give hospitals some financial breathing room. But hospital industry officials say that in reality it doesn't make financial sense for most hospitals to retrofit to meet the first standard, only to have to rebuild later to meet the second.

"It's a general rule of thumb that if you are spending half the cost of replacement (on retrofitting), then you are not being wise," said Buzz Gaines, whose Pasadena structural engineering firm Taylor & Gaines has worked on 28 hospital campuses, mostly in the Los Angeles Basin.

State building codes for hospitals were substantially tightened in 1973, two years after the Sylmar earthquake caused the collapse of the Veterans Administration Hospital in Sylmar. It's hospitals that were built prior to the standards that need the most work, Gaines said.

The hospital association successfully sponsored legislation last year that is intended to assist hospitals by allowing them to bypass the 2008 standard if they agree to meet the 2030 requirements by 2013.

But industry officials say that only about 15 percent of hospitals statewide could qualify for the extension, since it requires that certain critical services be moved to other buildings that meet the tough new earthquake standards by 2008.

"The configuration of the campuses really don't allow enough hospitals to qualify for the five-year extension," said Richter.

Seeking state aid

That has prompted the hospital association to go back to the Legislature, this time to seek state aid. The industry is contemplating a general obligation bond issue that would provide nonprofit hospitals with direct grants or guarantees for low-interest loans. For-profit hospitals might be assisted through tax credits, he said.

Sen. Joseph Dunn, D-Orange County, has agreed to carry the legislation.

"It is a multi-, multi-, multibillion-dollar problem," said Rick Battson, Dunn's chief of staff. "We are exploring all options, so we really can't be sure what angle we will take. But we want to help the hospitals and the public on this issue."

Even though some hospitals have developed some concrete costs, facilities are not required to submit a detailed report on how they plan to comply with the law until next January.

As a result, the hospital industry is hoping their case will be strengthened by a Rand Corp. study on compliance costs that the California HealthCare Foundation decided this month to commission.

The nonprofit independent foundation is concerned that the staggering costs of the seismic program could result in various unintended consequences, from hospital closures to a rise in the number of uninsured residents.

"I think the primary concern is that the cost of the retrofit requirement could have a significant impact on hospitals and others downstream in the health care system," said Dr. Elaine Batchlor, the foundation's vice president in charge of health care finance, organization and operation. "If hospitals are successful in pushing back against cost controls by HMOs, it could raise the cost of insurance and thus the number of people who don't have insurance."

Not all hospitals are in dire straits. Southern California Healthcare Systems is close to the end of a $200 million-plus retrofit and reconstruction program at Huntington Memorial Hospital in Pasadena and Methodist Hospital of Southern California in Arcadia.

The program was funded by a combination of fund-raising, accumulated capital and borrowing, said Stephen A. Ralph, Huntington's president and CEO.

"We are ahead of the curve. We think we are pretty well positioned," he said. "But I think the long and short of this is that there are going to be community hospitals that decide they can't afford to do this."