Alameda Hospital is among those scrambling to meet an earthquake retrofit deadline

However, labor unions representing nurses and other medical workers say hospitals have had plenty of time to bring their buildings into compliance, and that most have the money to do so.

“They've had 30 years to do this,” Kathy Kennedy, a Roseville nurse and one of the presidents of the California Nurses Association, said in an interview before the governor made his decision. He added: “We postpone things year after year, and unfortunately, we will lose lives.”

In his letter against the CHA bill, Newsom wrote that a blanket five-year extension was not justified and that any extension “should be limited in scope, granted only on a case-by-case basis to hospitals with a clear need and a clear path to compliance, and in conjunction with mechanisms for compliance.” Strong accountability and enforcement.

He also vetoed a bill specifically directed to help several hospitals run by Providence, a Catholic hospital chain.

But he signed a third bill, allowing small, rural and “acute access” hospitals, and some others, to apply for a three-year extension and directing the Department of Healthcare Access and Information to provide “technical assistance” to them in meeting the deadline.

The state identifies 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 “regional,” meaning they are funded by private government entities. They are called “health care zones.” They can request a three-year extension as long as they submit a seismic compliance plan and identify milestones for its implementation.

Small hospitals face a major challenge, said Debbie Stebbins, CEO of Alameda Healthcare District, which owns the Alameda Hospital buildings. Although Alameda is very close to San Francisco and Oakland, the tunnels, bridges and ferries that connect it to the mainland can easily be closed in the event of 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 retrofitting at more than $92 million per building, but the amount can vary widely depending on whether the building houses hospital beds.

Small and rural hospitals could get some help from the state via grants funded by California's e-cigarette tax, but HCAI spokesman Andrew DeLucia said it would only generate $2-3 million annually. The Small and Rural Hospital Relief Program also received a one-time infusion of $50 million from a tax on health insurance companies to help with seismic survey work, he added.

Labor unions and critics of the extensions often point to the large profits some hospitals are making: A California HealthCare Foundation report published in August found that California hospitals made $3.2 billion in profits during the first quarter of 2024. The study notes that there is “continuity” “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 had to help her district come up with a plan.

A view of Alameda Hospital, which serves the city of Alameda, on Jan. 3, 2023. Alameda Hospital sought a two-year extension for seismic retrofits in 2022, but Gov. Gavin Newsom vetoed it. (Martin Do Nascimento for CalMatters)

After Newsom vetoed a bill in 2022 that would have given an extension to the seismic retrofit deadline specifically for Alameda Hospital, the hospital system and its partner health care district used parcel tax money to help pay off the loan.

The upgrade will cost about $25 million, and the system is investing millions more in other projects, such as a new skilled nursing facility. Construction work is scheduled to be completed in 2027.

“Nobody wants things to break in an earthquake or anything, but at the same time, it's a burden,” said Mahler, associate chief medical officer at Alameda Health System. “How do we make sure they get what they need to stay open?”

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