While medical office space is being constructed across the county, it’s far from the only kind of health care facility sprouting up.
From the Westside to the San Gabriel Valley to Santa Clarita, an even bigger construction boom is under way: replacing older hospitals that do not meet new earthquake standards.
Just this spring, UCLA opened up its new $1 billion medical center, and in a few months another billion-dollar hospital will debut: the Los Angeles County-USC Medical Center in East L.A.
And those are just the highest-profile projects.
Other new hospitals that have opened buildings in recent years include Valley Presbyterian Hospital in Van Nuys, Huntington Hospital in Pasadena and Kaiser Medical Center-West L.A.
Among the projects under way are ones at Henry Mayo Newhall Memorial Hospital in Valencia, UCLA Santa Monica Medical Center and Kaiser’s Los Angeles Medical Center in East Hollywood.
The construction boom was prompted by a state law passed in the wake of the 1994 Northridge Earthquake, which caused billions of dollars in damage to local hospitals, shutting several of them down.
The law originally gave the most vulnerable hospitals until 2008, later extended to 2013, to retrofit existing facilities. Other hospitals were given until 2030 to rebuild to the new standards. The law recently was relaxed to allow some hospitals to skip the retrofit stage and rebuild instead. At least 94 institutions in the county have at least one building that falls under the mandate.
was later made more flexible by allowing hospitals that needed replacement to skip the retrofit stage.
Still, many hospitals have not moved forward with construction and a Rand Corp. study last year estimated that it would cost $110 billion just to bring 40 percent of the state’s hospitals in compliance with the law over the next several years.
“Seismic is driving hospitals who can afford it to build 10 to15 years sooner than their replacement plans would have required them to do,” said Jim Lott, executive vice president and spokesman for the Hospital Association of Southern California trade group. “The state deadlines are causing all this construction to take place around the same time, which is causing a lot of challenges.”
Indeed, the state mandate couldn’t have come at a worse time for the health care industry, particularly in Los Angeles County, where dozens of hospitals still have not begun their projects which have grown costlier as time has passed.
Hurricane Katrina siphoned off many of the state’s skilled construction workers to rebuild the Gulf Coast’s infrastructure. Competition from China and India, as well as the struggling U.S. dollar, has driven construction material costs through the roof.
The cost of rebuilding hospitals to the state’s new seismic standard has even prompted many facilities to move lab, radiology and other units formerly housed in their main buildings to nearby medical offices another big reason for the boom in medical office construction. (See main story, page 17.)
Providence St. Joseph Medical Center in Burbank was one of a handful of L.A.-area hospitals relatively ahead of the game, spending $151 million for a new building that opened in 2005.
Yet Providence Health & Services of California, which operates the Burbank hospital and three others in the county, did not have an easy time of it. (Providence is adding a fifth facility with its recent acquisition of Tarzana Hospital Medical Center from Tenet Healthcare Corp.)
Providence CEO Arnie Shaffer said the hospital chain, currently in the midst of its latest seismic project at Providence Holy Cross Medical Center in Mission Hills, has found it difficult to stay within budget and to attract top-notch contractors.
“If you’re not part of a huge project, or have the potential to give them more business opportunities down the road, nobody wants to deal with you,” said Schaffer. “We’re somewhat fortunate to be part of a multistate organization, but when they look at something like the $180 million budget we had for Providence Holy Cross Medical Center, it’s not a big deal for them.”
Even the state’s biggest customers for hospital construction expertise haven’t had an easy time. Kaiser Permanente, which expects to spend more than $20 billion between 2005 and 2015 on seismic- or growth-related construction, around half of it in Southern California, has seen estimated construction material and labor costs increase between 60 percent to 90 percent over the last five years.
“Constructing a specialty care facility is not like building a tract home you have to have people overseeing these projects who are used to working with the state regulators,” said Richard Ginley, Kaiser’s national director of public policies, who oversees the HMO’s facility services.
“On top of what it costs for steel, concrete, and drywall these days, with all these projects taking place at roughly the same time there just aren’t the people to handle it. That just drives up costs all around,” he said.
Steps are being taken on the state level to at least address the labor issue. Kaiser is among the health care and construction industry representatives on a California Department of Labor task force considering workforce training initiatives that could retool everyone from idle residential construction workers to returning Iraq war veterans to work on hospital-related construction.
