SB1953 and the Challenge of Hospital Seismic Safety in California

Funded by the California Healthcare Foundation, RAND has updated its analysis of the costs and policy issues surrounding implementation of California SB1953, the state law governing seismic safety for all acute care hospitals. Under the law's requirements, approximately 50% of California hospital buildings must be replaced or substantially strengthened by 2030. For this analysis, we have collected updated construction cost data, and comprehensive information on the status of hospital construction projects. We have also discussed the hospital construction planning process with a number of stakeholders in California, and we have reviewed new design trends for California healthcare facilities. Based on the above, we conclude that approximately half of the required hospitals will not be compliant with the initial deadlines for SB1953 in 2008 and 2013, and many may not meet the final deadline in 2030. Because of recent construction cost inflation and changes in the design for modern healthcare facilities, we estimate total construction costs for SB1953 that are significantly higher than our previous report. Depending on future inflation trends and construction planning decisions by individual hospitals, the total costs could range between $45-$110 billion in 2006 dollars, compared to our previous estimate of $41.7 billon in 2002. Our current estimate does not include the contributions from financing costs, which could increase the total by as much as a factor of 2, depending on the financing arrangements. At these levels, construction for SB1953 compliance could translate to significant increases in health care costs, though there are large uncertainties in the absolute magnitudes and the ultimate bearer of these costs. Considering these results, we conclude that a key questions for the SB1953 policy debate will focus on the appropriate time scales to achieve California's seismic safety goals.