HealthLeaders-InterStudy, the leading provider of managed care market intelligence, reports that the race to meet new state mandated seismic standards for healthcare facilities has produced a massive hospital building boom in the Los Angeles healthcare market. According to the latest Los Angeles Market Overview, meeting these state mandates is an expensive proposition that some facilities cannot afford amid above-average financial losses from operations.
"The good news is that upgraded services and increased medical technologies will be available across the market," states Margaret Dick, senior market analyst for HealthLeaders-InterStudy and author of the report. "The bad news -- some local hospitals will be unable to meet the financial requirements of the costly mandate and will close."
Local hospitals continue to post above-average losses from operations, and with total margins averaging less than 1 percent, it's evident that many hospitals are struggling.
Rolling deadlines begin in 2008 for the new stringent seismic standards to be completed by 2013. The state legislature has extended this deadline to 2015 if construction is under way but cannot be completed by the earlier deadline. A potential reprieve could be in the making as state regulators agreed in late June 2007 to consider a new methodology in assessing hospital structures and could reduce the number of hospitals that are out of compliance.
While deep-pocketed Kaiser Permanente expects to have all of its local hospitals in compliance by 2008, the Los Angeles public health system is struggling with cost estimates that have increased from $100 million in 2005 to $767 million in 2007.
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