<br><font size=2 face="sans-serif">Joe,</font>
<br>
<br><font size=2 face="sans-serif"> Due to your efforts with
Seth Stein, the building code in Memphis now allows for non-essential 10-story
buildings to be built to a force level 45% lower than that stipulated in
the Standard Building Code that was used in Memphis up through 2005. This
newly allowed design level is substantially lower than the median ground
motions expected for a repeat of the 1811-12 earthquakes and lower than
the intensities reported in Memphis for the 1843 Marked Tree, Arkansas
earthquake (magnitude 6). </font>
<br>
<br><font size=2 face="sans-serif"> So you succeeded in lowering
seismic building codes in Memphis. Perhaps you would like to
make this fact clear to the people living in Memphis and see what their
views on this are. </font>
<br>
<br><font size=2 face="sans-serif">-Art</font>
<br>
<br>
<br><font size=2 face="sans-serif">Art Frankel<br>
U.S. Geological Survey<br>
MS 966, Box 25046<br>
DFC<br>
Denver, CO 80225<br>
phone: 303-273-8556<br>
fax: 303-273-8600<br>
email: afrankel@usgs.gov</font>
<br>
<br>
<br>
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<td width=40%><font size=1 face="sans-serif"><b>"Joe Tomasello"
<JT@ReavesFirm.com></b> </font>
<br><font size=1 face="sans-serif">Sent by: ceus-earthquake-hazards-bounces@geohazards.cr.usgs.gov</font>
<p><font size=1 face="sans-serif">01/09/2008 12:51 PM</font>
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<div align=right><font size=1 face="sans-serif">To</font></div>
<td><font size=1 face="sans-serif"><ceus-earthquake-hazards@geohazards.cr.usgs.gov></font>
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<td>
<div align=right><font size=1 face="sans-serif">cc</font></div>
<td><font size=1 face="sans-serif">'Seth Stein' <seth@earth.northwestern.edu></font>
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<td>
<div align=right><font size=1 face="sans-serif">Subject</font></div>
<td><font size=1 face="sans-serif">[CEUS-earthquake-hazards] The balance</font></table>
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<br><font size=2 face="Times New Roman">Buddy:</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">I’d like to offer the following
for your e-mail discussion group:</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">Natural disasters such as earthquakes
create complex situations for policy makers. The difficulty lies in the
balance between the costs of mitigation and the actual risk. Failing this,
policy makers could find themselves dealing with unintended consequences
such as those experienced by the hospital industry in California. If
it’s worth the expense in any one region it would be California; but looking
at the hospital industry in California we don’t see it.</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">Earthquake risks in California
are, to some degree, statistically predictable; being a near certainty
that a moderate to strong earthquake will occur somewhere on the west coast
during a single generation of the built environment. California attempted
to balance public safety with mandated seismic mitigation in a knee jerk
reaction to the 1994 Northridge earthquake California’s Legislature passed
Senate Bill 1953 (SB 1953). The bill was an unfunded mandate to retrofit,
rebuild, or close; a free lunch for California taxpayer. However, over
the past decade the consequences of the mandate caused a once sound hospital
system transform into one of the nation’s foremost financial basket cases.</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">As in California, policy makers
in the New Madrid Seismic Zone are led to believe that earthquake mitigation
costs are small, having little effect on the built environment. California’s
mitigation program entails retrofitting all acute care hospitals or re-building
nearly 70 million square feet. The pace of construction is limited to approximately
1.5 million to 2 million square feet per year due in large part to the
ability of regulatory agencies to keep up. Furthermore it takes upward
of 10 years to design and build a new hospital. “The lengthy process
for review and approval of hospital construction and retrofitting projects
is far too long. Economic growth is being thwarted; jobs are being lost;
and patient safety is being compromised.”</font><a href=#_edn1><font size=2 color=blue face="Times New Roman"><u><sup>[i]</sup></u></font></a><font size=2 face="Times New Roman">
The result is that it will take nearly 30 years to complete all the
construction required by SB 1953. </font><a href=#_edn2><font size=2 color=blue face="Times New Roman"><u><sup>[ii]</sup></u></font></a><font size=2 face="Times New Roman">
The extended deadline is 2013.</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">The size and scope of most of these
projects are very large and expensive. Compliance could cost California
hospitals as much as $110 billion dollars. The original estimate
assumed that the number of patients and the number of beds would generally
remain the same. However, modern design standards are most effective
with facilities 35% to 60% larger</font><a href=#_edn3><font size=2 color=blue face="Times New Roman"><u><sup>[iii]</sup></u></font></a><font size=2 face="Times New Roman">.
Thus, the scope of each construction project will increase as will the
overall cost; perhaps as much as 20%. </font><a href=#_edn4><font size=2 color=blue face="Times New Roman"><u><sup>[iv]</sup></u></font></a><font size=2 face="Times New Roman">
In California construction costs are rising at an annual rate of more than
14 percent above the Consumer Price Index resulting in construction costs
more than 40 percent higher for comparable facilities in other states.</font><a href=#_edn5><font size=2 color=blue face="Times New Roman"><u><sup>[v]</sup></u></font></a><font size=2 face="Times New Roman">
In my view this increase is likely to continue do to regulatory oversight,
the limited number of qualified contractors, as well as the annual inflation
of material costs. In California, a fully furnished and equipped acute
care facility (labor and materials) costs $1,000 per square foot. Since
the SB 1953 mandates affect for-profit, non-profit and publicly owned organizations
most all projects will be financed. Depending on the terms of the
loan the cost in current dollars for an acute care facility the square
foot cost can exceed $2,800; comparatively normal office construction in
Tennessee is roughly a third the cost per square foot.</font><font size=3 face="Times New Roman">
</font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">Looking at FEMA’s annualized earthquake
losses</font><a href=#_edn6><font size=2 color=blue face="Times New Roman"><u><sup>[vi]</sup></u></font></a><font size=2 face="Times New Roman">
we find the relationship of Cost vs. Benefit even more lopsided. FEMA reports
that California will experience a loss of approximately $3,167.5/$Million
of infrastructure each year as a result of earthquakes. Looking at the
same 50 year period, California can expect to lose approximately 15.8%
of the present value of hospitals. Thus, California’s acute care infrastructure,
worth approximately $48 Billion [my estimate - C. Duane Dauner, President
and Chief Executive Officer, California Healthcare Association, Statement
“Heath Care Scene in California,” May 10, 2001, suggested 24 Billion.],
should expect a loss of approximately $7.6 Billion due to earthquake. We
find that California is spending $110 Billion to offset a loss of $7.6
Billion; a cost benefit relationship greater than 14. </font><font size=3 face="Times New Roman">Over
the past 10 years, we’ve asked FEMA for a </font><font size=2 face="Times New Roman">Cost
vs. Benefit analysis for the New Madrid Seismic Zone. So far we haven’t
seen anything that would come close to suggesting that the public would
benefit spending limited resources. </font>
<br><font size=3 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">There are a more subtle negative
consequences resulting from forcing acute care facilities to close because
they don’t meet mandated requirements. California is experiencing
a critical closure of hospitals with the closure of over 50 hospitals in
the 10 year period between 1995 and 2005. More than 3,000 acute care beds
have been removed from service between 2001 and 2005. In the five year
period prior (1995 to 1999) 23 hospitals closed. Unfunded mandated seismic
requirements are creating a stampede for funding, usually in the form of
bonds. The median credit ratio of California hospitals had nosed
dived to the junk-bond status. The money needed to retro fit California
hospitals is drying up. </font><a href=#_edn7><font size=2 color=blue face="Times New Roman"><u><sup>[vii]</sup></u></font></a><font size=2 face="Times New Roman">
“Nobody can bear the burden [of SB 1953 unfunded mandate]”</font><a href=#_edn8><font size=2 color=blue face="Times New Roman"><u><sup>[viii]</sup></u></font></a><font size=2 face="Times New Roman">
Here in the New Madrid Seismic Zone we’re told that the cost is
minimal. </font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">“Seismic upgrades are important.
But mandating them during the worst economic time in the history of California
hospitals is like ordering a homeowner to fix a dilapidated porch on a
house that's on fire. Right idea. Wrong time.”</font><a href=#_edn9><font size=2 color=blue face="Times New Roman"><u><sup>[ix]</sup></u></font></a><font size=2 face="Times New Roman">
How many doctors and nurses could have been hired in lieu of spending the
money on hospital infrastructure? Just how many lives will be saved? How
many lives will be lost because of the loss of acute care facilities? Who
pays, the bottomless pocket of the taxpayer? Each of the 35 million people
in California will need to pay $3,143 (per capita state and local taxes
were roughly $1,600 in 1996). Are the people of California going
to be willing to forfeit three times their current tax burden? </font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman">If the benefits (reduction of earthquake
related economic loss or lives lost) don’t outweigh the costs in California,
how can they be justified in the New Madrid Seismic Zone? </font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=2 face="Times New Roman"> </font>
<br><font size=3 face="Arial"><b>Joseph Tomasello, PE</b></font>
<br><font size=3 face="Arial"><b>5880 Ridge Bend Rd.</b></font>
<br><font size=3 face="Arial"><b>Memphis, TN 38120</b></font>
<br><font size=3 face="Times New Roman"> </font>
<br><font size=3 face="Arial"><b>Phone:</b></font>
<br><font size=3 face="Arial"><b>(901) 761-2016 office</b></font>
<br><font size=3 face="Arial"><b>(901) 821-4968 direct</b></font>
<br><font size=3 face="Arial"><b>(901) 412-8217 mobile</b></font>
<br>
<br>
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<br>
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<br><font size=3><br>
</font>
<hr>
<br><a href=#_ednref1><font size=2 color=blue face="Times New Roman"><u><sup>[i]</sup></u></font></a><font size=2 face="Times New Roman">
California Heathcare Association Statement on the Hospital Construction
Plan Review and Area Compliance Process before the California Performance
Review Commission, U.C. Riverside, August 13, 2004.</font>
<br><a href=#_ednref2><font size=2 color=blue face="Times New Roman"><u><sup>[ii]</sup></u></font></a><font size=2 face="Times New Roman">
Ibid., 4</font>
<br><a href=#_ednref3><font size=2 color=blue face="Times New Roman"><u><sup>[iii]</sup></u></font></a><font size=2 face="Times New Roman">
Ibid., 41</font>
<br><a href=#_ednref4><font size=2 color=blue face="Times New Roman"><u><sup>[iv]</sup></u></font></a><font size=2 face="Times New Roman">
Ibid., 8</font>
<br><a href=#_ednref5><font size=2 color=blue face="Times New Roman"><u><sup>[v]</sup></u></font></a><font size=2 face="Times New Roman">
Ibid., 30</font>
<br><a href=#_ednref6><font size=2 color=blue face="Times New Roman"><u><sup>[vi]</sup></u></font></a><font size=2 face="Times New Roman">
FEMA 366 Hazus 99 Estimated Annualized Earthquake Losses for
the United States, February 2001, 16</font>
<br><a href=#_ednref7><font size=2 color=blue face="Times New Roman"><u><sup>[vii]</sup></u></font></a><font size=2 face="Times New Roman">
California HealthCare Foundation, The Financial Health of California Hospitals,
June 2007, 2-13</font>
<br><a href=#_ednref8><font size=2 color=blue face="Times New Roman"><u><sup>[viii]</sup></u></font></a><font size=2 face="Times New Roman">
Ibid., (interviews with key unnamed health care leaders), B-6</font>
<br><a href=#_ednref9><font size=2 color=blue face="Times New Roman"><u><sup>[ix]</sup></u></font></a><font size=2 face="Times New Roman">
The Press Democrat, Another hospital falls, what killed Sutter Medical
Center – and what will it mean to families like mine, January 14, 2007</font><font size=2><tt>_______________________________________________<br>
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