There’s been a lot of grumbling from the hospital industry over the years about SB 1953 (1994) and regulations issued in the early 2000s mandating the state’s acute care facilities meet certain seismic standards between 2013 and 2030 or shut down.           

Although SB 1953 is an unfunded mandate that could cost California’s hospitals more than $90 billion, there have been some silver linings. Many hospitals that would be otherwise kept operating with glue and baling wire have been reborn. El Camino Hospital, Valley Presbyterian Medical Center and the Ronald Reagan UCLA Medical Center immediately come to mind. There are dozens of other examples throughout the state.          

The other silver lining is jobs. In a state where the unemployment rate is more than 12% and the building industry has been beaten into a virtual standstill by the housing market crash, building a hospital can generate hundreds, if not thousands, of great paying construction jobs. And since it can take a year or more to build a hospital, it’s the type of job that’s relatively secure. Moreover, shepherding a hospital through the design and approval process can take years more, guaranteeing many white collar jobs as well.  

So why is the state of California – which was responsible for SB 1953 in the first place – stymieing such a dynamic job-creation engine?

This is not a wide-ranging governmental conspiracy, but rather the fault of the Office of Statewide Health Planning and Development, the single most important agency in guaranteeing hospitals in California are built, and funded entirely by fees levied on the hospital sector Like many other governmental organizations. OSHPD accomplishes its tasks informed by clock or calendar intermittently at best. As with most public agencies in California, its efficiency has been further hobbled by cuts in staffing and personnel furloughs.

It currently takes an average 15 months worth of reviews by OSHPD before a hospital construction project reaches groundbreaking, a time frame that does not even include the reviews required on the federal and local levels. And recent anecdotal evidence shows that the time frames are stretching even further into the future.

Working with OSHPD has become so challenging that it’s ill-advised for architectural firms and building contractors that have never worked with the agency before to take on a new project. A recent example of this was Palmdale Regional Medical Center, whose doors opened more than a year behind schedule because its Pennsylvania-based parent company primarily used out-of-state firms, making final construction approvals from OSHPD maddeningly elusive.

Of course, the demand on the relatively limited number of firms with extensive experience in California can delay projects even further. California law also requires architects and engineers involved in such projects be expert in state building standards, particularly the Hospital Facilities Seismic Safety Act.            

The Los Angeles County Economic Development Corp. recently estimated that OSHPD’s lengthy deliberations is holding back hospital construction projects worth an estimated $23 billion. These projects would generate about 232,000 jobs, pay $15.6 billion in wages and generate nearly $2 billion in state and local tax revenue. Meanwhile, demand for healthcare services only rises as the population continues to both grow and age.           

OSHPD is taking some steps toward improving the approval process, by putting a fast-track approval system into place to review projects valued at less than $100,000, and installing Web-based software that will allow it to track ongoing projects more efficiently. Of course, it would be helpful as well if the agency could stop furloughing its employees and hire new ones as well.
           
Although these are commendable steps, it remains to be seen how they will affect the largest projects that create the most jobs. The slowness in approving and completing these projects is a drag on California’s economic revitalization. More aggressive steps must be taken to get through its growing backlog of projects.