[Extensions of Remarks]
[Pages E685-E686]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

SUPPORT THE EARTHQUAKE LOSS REDUCTION ACT OF 2001

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HON. JERRY LEWIS

of california

in the house of representatives

Tuesday, May 1, 2001

Mr. LEWIS of California. Mr. Speaker, when a major earthquake hits
our communities in California, one of the first things firefighters and
police must do is make sure local hospitals are ready to handle
injuries. Falling walls, buckling roads, flaming gas-main breaks--the
aftermath of an earthquake can quickly turn an entire hospital into an
emergency room.
Imagine, then, what a disaster it would be if one of the buildings
destroyed in an earthquake is the only hospital for 100 miles around.
This is the prospect faced by many residents in remote rural areas in
California, like the Mojave Desert in my district. It is a chilling
thought, and it is something that we must not allow to happen.
The California Legislature has mandated that it will not happen. By
2008, all hospitals in the state must be retrofitted or rebuilt to
ensure they will remain standing in a major quake. This is an admirable
goal and an absolute necessity. But it is also so expensive that small
rural hospitals and major urban medical centers are worried they cannot
afford the upgrade.
To help avoid this, my colleague Mike Thompson and I have introduced
the Earthquake Loss Reduction Act of 2001. It would begin the process
of investing in mitigation rather than paying tens of billions of
dollars in disaster relief for every natural disaster that occurs in
this country.
In support of this measure, I would urge my colleagues to consider
the following information provided to me by the California Healthcare
Association:

History of Hospital Seismic Mandate

The state of California in 1994 enacted sweeping
legislation mandating stringent new hospital building seismic
standards (SB 1953, Chapter 740, Statutes of 1994).
The legislation was approved in the wake of the January
1994 Northridge earthquake, which caused 23 hospitals to
suspend some or all of their services and resulted in more
than $3 billion in hospital-related damages.
No patient who was hospitalized during the Northridge
earthquake died as a result of the tremor. No patient in any
California hospital has died as a result of a building's
structural failure due to an earthquake since 1971.
The seismic mandate requires all hospital buildings in the
state to comply with more stringent seismic-safety mandates
by specified deadlines--(1) by 2002, major non-structural
The specific regulations for this statute were not
finalized until 1997, and the cost of the mandate was not
fully understood until engineers thoroughly evaluated all of
the state's hospital buildings as required by Jan. 1, 2001.
Thorough hospital building evaluation reports were
submitted by hospitals throughout the state by Jan. 1, 2001.
These reports were made public by the Office of Statewide
Health Planning and Development (OSHPD) on March 28, 2001.
Based on the evaluation reports, 78 percent of the
hospitals in California have at least one building that is at
risk of collapse during a major earthquake.

Impact of Legislation

There are approximately 2,700 general acute-care inpatient
hospital buildings (at approximately 470 hospitals) that are
required to meet the mandates of the seismic law.
The seismic mandates enacted by the Legislature in 1994 did
not provide any financial assistance to hospitals to help
defray the costs of these upgrades. The state's seismic law
is an ``unfunded mandate'' on hospitals.
The current ``hard construction'' cost estimate to comply
with the requirements of the state's seismic law is $24
billion. This cost is equivalent to the total undepreciated
assets of all of California's hospitals. Additionally,
hospitals will face significant additional costs including
the cost of financing, land acquisition, reconfiguring
parking and revenues lost during seismic retrofitting or
construction.
California hospitals face mounting financial pressures.
More than 60 percent of California's hospital--2 out of every
3--are currently losing money from operations. Nearly a third
of the state's urban hospitals and more than 50 percent of
rural and inner-city hospitals are losing money from all
sources of income.
Many hospitals--especially rural and inner-city
facilities--may not be able to raise the necessary capital to
comply with the state's seismic law. Those that can't will be
forced to close their doors or significantly reduce their
services.
According to a December 2000 Standard & Poor's report,
California's hospitals face ``. . . deteriorating credit
quality and more limited access to capital'' than hospitals
in other parts of the country. ``Given the volatility of the
health care sector, access to capital through bond financing
has been greatly reduced for all but the strongest credits.
Bond insurers have retreated from the sector, limiting
exposure to higher-rated credits and charging significantly
higher fees.''
The seismic mandates do not account for the additional
operating burdens faced by hospitals, including rising costs
for pharmaceuticals and new technologies, and reduced

[[Page E686]]

reimbursement from government and insurance programs.
Construction and retrofitting activities to meet the law's
current deadlines are likely to diminish services to
patients--including the uninsured--exacerbate personnel
shortages, and result in dislocation of medical staff and
employees.
Because of the lengthy five- to six-year approval and
construction processes required for hospital building
projects, the issues surrounding compliance with the seismic
law must be addressed this year.

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