By Molly Tanenbaum
Financing a new, quake-safe facility to meet stricter state standards is proving to be more expensive for El Camino Hospital than originally expected.
The total cost of the project — which would replace the current 395-bed hospital with a seismically upgraded one of equal size — was estimated at $339 million, but recent bids came in closer to $450 million, 26 percent more than originally planned. The findings were presented at a public facilities meeting on Feb. 9.
“We were really, really taken by surprise,” said Ken King, vice president of facilities services for El Camino.
Because the total cost is much higher than anticipated, El Camino must postpone its mid-March groundbreaking date until the board can consider all its financing options on the final budget — one of which may be to scale back the new hospital, King said.
But no decisions have been made yet about how to handle the cost increase.
“We’re in the process of sorting out all the options we can think of,” King said. “We really need a little bit of time to go through the details of what’s been proposed.”
El Camino isn’t the only hospital facing increased construction costs. According to a January 2006 report by the California Hospital Association, hospital construction costs have nearly tripled in the past decade, to almost $600 per square foot.
To abide by a 1994 state law, SB 1953, all California hospitals must be up to seismic safety standards by the year 2013, which has created a high demand for a small number of qualified contractors.
“You have this confluence of events, a perfect storm if you will, of many hospitals trying to chase very few contractors,” said hospital spokesman Jon Friedenberg.
Also, material costs have risen recently due to hurricanes Katrina and Rita, and hospital construction takes longer because of all the strict state regulations throughout the process, whereas most construction projects must meet local city standards without going through state inspection.
“It takes them almost twice as long to do the same amount of work in a hospital project,” King said.
But the rising cost of construction isn’t the only thing troubling El Camino’s new hospital project right now. Saratoga lawyer Aaron Katz’s suit against the hospital protesting the $148 million construction bond measure has forced the hospital to hold off selling bonds to finance the project. The cost of the delay has been estimated at $2 million per month, according to Friedenberg.
At this point, there is no word as to when that case will resolve itself — El Camino is still waiting to hear back about the case’s appeal — and in the upcoming months, hospital officials may have to take steps to secure interim financing.
In the meantime, other construction not affected by these cost increases has been finishing up at El Camino, including a new medical office building, parking structure, and a new dialysis building. All are expected to be completed by summer.
E-mail Molly Tanenbaum at mtanenbaum
