California hospitals may have to spend billions to comply with earthquake safety rules

California hospitals face a potential cost totaling tens of billions of dollars to comply with state seismic safety standards by 2030, according to a new Rand Corp. report.

The 1994 Northridge earthquake led to California adopting Senate Bill 1953, which, according to the report, requires hospitals to upgrade buildings to reduce their risk of collapse during earthquakes by 2020 and to remain operational after an earthquake occurs by 2030.

Researchers at the nonprofit think tank focused on the 2030 deadline as they assessed the costs of upgrading or rebuilding noncompliant buildings for 418 California general acute care hospitals. They also examined the affordability of compliance based on recent hospital financial data. 

Overall, quantitative and qualitative analyses found that hospitals would need $34 billion to $143 billion statewide to meet 2030 California seismic safety standards. 

Per state law, hospitals are responsible for the cost of the upgrades, which is likely to exacerbate financial stress that many hospitals are already seeing, researchers said. They estimate that 34 percent of all California hospitals are already experiencing some form of financial distress and that the number could reach more than 50 percent as organizations comply with the law. The study says public healthcare district hospitals, independent private hospitals, critical access hospitals and hospitals that serve a large share of Medicaid patients are likely to be most financially stressed.

The report, funded by the California Hospital Association, outlines recommendations that could help hospitals hit the earthquake standards. These include more-detailed reporting by hospitals to the state's Office of Statewide Health Planning and Development regarding seismic projects, combined with independent validation of project costs, which would give OSHPD and others more authority to estimate costs and monitor capital investments in seismic construction projects over time.

 Editor's note: This story was updated on March 29 to distinguish the 2020 and 2030 deadlines.

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