Estimating the Compliance Costs for California SB1953

To meet the requirements of California state law, hospitals are considering large construction programs to increase the seismic strength of their facilities. Researchers from the RAND Corporation analyzed the costs and decision making for these activities, which will produce dramatic changes in the California hospital infrastructure. The research found that approximately 50 percent of California's hospital buildings will be retrofitted, reconstructed, or closed over the next 28 years to meet the requirements of California Senate Bill 1953 (SB 1953), the state's legislative framework for hospital seismic safety. Over the same period, approximately 75 percent of the buildings will undergo nonstructural renovations to improve operational capabilities following a large earthquake. Viewed in its entirety, the scale of this construction program will be unprecedented for California hospitals, and the costs will be correspondingly large. The researchers estimate that the total expenditures by hospitals may be as large as $41.7 billion. To inform the current policy debate on hospital seismic safety, this report identifies SB 1953 compliance costs, which are a subset of the total construction expenditures. Although SB 1953 pertains to seismic safety, it should trigger health policy and business questions because the law will bring significant changes to California's hospitals. Viewed from another perspective, SB 1953 has motivated the first large-scale examination of California's hospital infrastructure.