[CEUS-earthquake-hazards] The balance

[Seth Stein]

Klaus,

I think it's desirable to apply the same level of rigor in policy issues,
where billions of dollars are at stake, that we do in purely scientific
issues. The NIBS report is pretty thin on specifics.

The medical community is way ahead of us, in that they're starting to look
carefully at whether their usual ways of doing business are sensible.
For example, see below.

Cheers,
Seth

Annual Physical Checkup May Be an Empty 
Ritual

By GINA KOLATA NY Times: August 12, 2003

To the growing numbers of medical experts who preach
evidence-based medicine -- the discipline that insists on proof that
time-honored medical practices and procedures are actually effective --
there is no more inviting target than the annual physical.

Checkups for people with no medical complaint remain the single most
common reason for visiting a doctor, according to surveys by the
Centers for Disease Control and Prevention. In 2000, they accounted
for about 64 million office visits, out of 823.5 million visits over
all. At $120 to $150 per visit (and $2,000 or so for the gold-plated
''executive physical'' that many companies offer to top executives),
that adds up to more than $7 billion a year.

Yet in a series of reports that began in 1989 and is still continuing,
an expert committee sponsored by the federal Agency for Healthcare
Research and Quality, an arm of the Department of Health and Human
Services, found little support for many of the tests commonly included
in a typical physical exam for symptomless people.

It found no evidence, for example, that routine pelvic, rectal and
testicular exams made any difference in overall survival rates for those
with no symptoms of illness.


Seth Stein
William Deering Professor 
Department of Earth and Planetary Sciences
1850 Campus Drive
Northwestern University, Evanston, IL 60208
(847) 491-5265 FAX: (847) 491-8060 E-MAIL: seth at earth.northwestern.edu
http://www.earth.northwestern.edu/people/seth

On Wed, 9 Jan 2008 jacob at ldeo.columbia.edu wrote:

> Sure, if you are not counting lifes and livelihoods or other "indirect costs" as
> costs, mitigation is not necessarily cost effective.
> But: I would like the writer of this narrow approach to take note of the
> following:
>
> http://www.nibs.org/MMC/MitigationSavingsReport/natural_hazard_mitigation_saves.htm
>
> Best
> Klaus Jacob
> ====================
>
>
>
> Quoting Joe Tomasello <JT at reavesfirm.com>:
>
>> Buddy:
>>
>>
>>
>> I'd like to offer the following for your e-mail discussion group:
>>
>>
>>
>>
>>
>> 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.
>>
>>
>>
>> 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.
>>
>>
>>
>> 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."[i]  The result is that it will take nearly 30 years to
>> complete all the construction required by SB 1953. [ii] The extended
>> deadline is 2013.
>>
>>
>>
>> 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[iii]. Thus, the scope of
>> each construction project will increase as will the overall cost; perhaps as
>> much as 20%.  [iv] 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.[v] 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.
>>
>>
>>
>> Looking at FEMA's annualized earthquake losses[vi] 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.  Over the past 10 years, we've asked FEMA for
>> a 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.
>>
>>
>>
>> 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. [vii] "Nobody can bear the burden [of SB
>> 1953 unfunded mandate]"[viii]  Here in the New Madrid Seismic Zone we're
>> told that the cost is minimal.
>>
>>
>>
>> "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."[ix] 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?
>>
>>
>>
>> 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?
>>
>>
>>
>>
>>
>> Joseph Tomasello, PE
>>
>> 5880 Ridge Bend Rd.
>>
>> Memphis, TN 38120
>>
>>
>>
>> Phone:
>>
>> (901) 761-2016 office
>>
>> (901) 821-4968 direct
>>
>> (901) 412-8217 mobile
>>
>>
>>
>>
>>   _____
>>
>>
>>
>>
>>   _____
>>
>>
>>   _____
>>
>> [i] 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.
>>
>> [ii] Ibid., 4
>>
>> [iii] Ibid., 41
>>
>> [iv] Ibid., 8
>>
>> [v] Ibid., 30
>>
>> [vi]  FEMA 366  Hazus 99 Estimated Annualized Earthquake Losses for the
>> United States, February 2001, 16
>>
>> [vii] California HealthCare Foundation, The Financial Health of California
>> Hospitals, June 2007, 2-13
>>
>> [viii] Ibid., (interviews with key unnamed health care leaders), B-6
>>
>> [ix] The Press Democrat, Another hospital falls, what killed Sutter Medical
>> Center - and what will it mean to families like mine, January 14, 2007
>>
>>
>
>
>
>
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