"While hospitals are working to meet these requirements, many will simply not make the 2030 deadline and be forced by state law to close," wrote Carmela Coyle, president and CEO of the California Hospital Association, in a letter to Newsom before he vetoed the CHA bill. A 2019 Rand Corp. study paid for by the CHA pinned the price of meeting the 2030 standards at between $34 billion and $143 billion statewide.
Labor unions representing nurses and other medical workers, however, say the hospitals have had plenty of time to get their buildings into compliance and that most have the money to do so.
"They've had 30 years to do this," Cathy Kennedy, a nurse in Roseville and one of the presidents of the California Nurses Association, said in an interview prior to the governor's action. "We are kicking the can down the road year after year, and unfortunately, lives are going to be lost."
In his veto message on the CHA bill, Newsom wrote that a blanket five-year extension wasn't justified and that any extension "should be limited in scope, granted only on a case-by-case basis to hospitals with demonstrated need and a clear path to compliance, and in combination with strong accountability and enforcement mechanisms."
He also vetoed a bill directed specifically at helping several hospitals operated by Providence, a Catholic hospital chain.
But he signed a third bill, which allows small, rural, and "critical access" hospitals, and some others, to apply for a three-year extension and directs the Department of Health Care Access and Information to offer them "technical assistance" in meeting the deadline.
The state designates 37 hospitals as providing "critical access," while 56 are considered "small," meaning they have fewer than 50 beds, 59 are considered "rural," and 32 are "district" hospitals, meaning special government entities fund them called "health care districts." They can seek a three-year extension as long as they submit a seismic compliance plan and identify milestones for implementing it.
Debi Stebbins, executive director of the Alameda Health Care District, which owns the Alameda Hospital buildings, said small hospitals face a big challenge. Even though Alameda is very close to San Francisco and Oakland, the tunnels, bridges, and ferries that connect it to the mainland could easily be shut in an emergency, making the island's hospital a lifeline.
"It's an unfunded mandate," Stebbins said of the state's 2030 deadline.
The Rand study estimated the average cost of a retrofit at more than $92 million per building, but the amount could vary greatly depending on whether it's a building that houses hospital beds.
Small and rural hospitals can get some aid from the state via grants financed by the California Electronic Cigarette Excise Tax, but HCAI spokesperson Andrew DiLuccia said it would yield just $2-3 million total annually. He added that the Small and Rural Hospital Relief Program has also received a one-time infusion of $50 million from a tax on health insurers to help with the seismic work.
Labor unions and critics of the extensions often point to the large profits that some hospitals reap: A California Health Care Foundation report published in August found that California's hospitals made $3.2 billion in profit during the first quarter of 2024. The study notes that there "continues to be wide variation in financial performance among hospitals, with the bottom quartile showing a net income margin of -5%, compared to +13% for the top quartile."
Stebbins has had to help her district figure out a plan.
After Newsom vetoed a bill in 2022 that would have granted an extension on the seismic retrofit deadline specifically for Alameda Hospital, the hospital system and its partner health care district used parcel tax money to help back a loan.
The cost to retrofit will be about $25 million, and the system is also investing millions more into other projects, such as a new skilled nursing facility. The construction work is set to be completed in 2027.
"No one wants things crashing in an earthquake or anything else, but at the same time, it's a burden," Mahler, the Alameda Health System associate chief medical officer, said. "How do we make sure that they get what they need to stay open?"