It’s been seven years since the Northridge Earthquake rocked the Valley off its foundation. At least one local hospital is still feeling the reverberations in its bottom line in the form of costly seismic upgrades. And, says one industry expert, seismic upgrade costs, coupled with the rising cost of care, pose a serious threat to all the roughly 400 licensed hospitals across the state. The Henry Mayo Newhall Memorial Hospital came dangerously close to shuttering the doors to its Adult Day Health Care Center last Thursday and laying off seven workers. At the last minute, however, Burbank-based Partners In Care Foundation, a nonprofit charity providing direct patient care programs to the community, agreed to take over the center, said Lisa Foust, Newhall’s vice president of human resources. Although the clinic received a last-minute reprieve, 70 employees from various departments did lose their jobs. In addition, the Cardiac Rehabilitation, Outpatient Physical Therapy, Outpatient Hand Therapy and Outpatient Pediatric Physical Therapy units were shut down due to cuts stemming from seismic upgrade costs, Foust said. The Federal Emergency Management Agency (FEMA) gave Newhall roughly $16 million for initial repairs following the earthquake. But Foust said subsequent state-mandated seismic upgrade requirements for all of California’s in-patient care facilities have forced the hospital into an aggressive restructuring mode and the layoffs were necessary. “The hospital’s FEMA reimbursement couldn’t come anywhere near covering the cost of repairs because, not only were the repairs needed, but state requirements later forced all patient-care facilities to do upgrades,” Foust said. Senate Bill 1953, introduced in 1995, mandated all acute care in-patient facilities across the state to submit plans for seismic upgrades by last month. The state then imposed a 2008 deadline for completing the work. That deadline has been pushed back to 2011. Foust said her facility’s upgrades have already been completed. To date, the hospital has spent $20 million to bring the facility up to code, $15 million of which went for upgrades. All hospitals built prior to 1973 are eligible to receive more funding to help offset upgrade costs through FEMA’s Seismic Hazard Mitigation Program for hospitals. But the grants do not pay for everything. Newhall received approval from FEMA for $14 million, but it still needs an additional $1.5 million to cover repairs for the medical office buildings, which did not qualify for FEMA funds. According to Jim Lott, executive vice president for the Health Care Association of Southern California, the region’s licensed care facilities are facing at least a $10 billion price tag for seismic upgrades. And those costs, said Lott, are expected to go hand in hand with a projected 26-percent reduction in hospital capacity. “What Henry Mayo is doing right now is signaling to the rest of the world what is going to happen down the line,” Lott said. Lott said 64 percent of the licensed facilities across the state are operating in the red. In Los Angeles, where there are higher numbers of uninsured patients, the number is closer to 75 percent. “There is going to have to be some sort of government support or we are going to see closures throughout the state,” Lott said. “This issue cannot be understated. The cost for rebuilding is too great for the hospitals to pay out on their own.” Granada Hills Community Hospital is feeling Newhall’s pain. The facility had to implement a $400,000 cost-reduction program in 2000 to offset anticipated expenditures for seismic upgrades and shifting revenue sources, according to president and CEO Tom Wallace. That resulted in roughly 100 layoffs, he said. Granada Hills received approximately $1 million from FEMA for initial repairs, according to the contribution report. It has also received approval for a grant for $16.3 million for upgrades. But Wallace said it will cost his facility $30 million to comply with SB 1953 requirements. The hospital is now fervently seeking outside financial support and is taking another hard look at existing programs and the possibility of more layoffs. “We were fortunate in that we received a grant from FEMA to upgrade to SB 1953 requirements,” said Wallace. “But this grant only covers about half of what we need to complete the upgrades.” Representatives from several other Valley facilities said they have so far managed to budget for repair and upgrade costs with little changes in existing programs or layoffs. “We’ve had absolutely no program closures or layoffs as a result of our seismic upgrade plans,” said Kellye Pitts, director of marketing and public relations for Valley Presbyterian Hospital, which received $4.4 million for FEMA for initial repairs. Valley Presbyterian plans to partially demolish its seven-story patient tower and build a new one at a cost of roughly $70 million, $56.6 million of which will come through FEMA funding, Pitts said. Glendale Adventist Medical Center, which received $1.3 million for initial repairs, is also getting an additional $51.5 million from FEMA for upgrades. Mike Swanson, director of support services for Adventist, said, his facility is aware other hospitals in the Valley are struggling to cope with upgrade costs. Ron Yukelson, spokesman for the Encino/Tarzana Regional Medical Center, part of Santa Barbara-based Tenet Healthcare, said his facility is also looking to expand.
