[Congressional Record Volume 147, Number 57 (Tuesday, May 1, 2001)]
[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

                                 ______
                                 

                            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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