Tulare County’s largest hospital is developing plans to build a nine-story, 240-room tower adjacent to replace its original tower before it is deemed out of compliance with seismic standards
VISALIA – When the Mineral King wing of the Kaweah Delta Hospital opened in 1969 it was considered state-of-the-art. Private hospital rooms were out of the ordinary and considered a luxury in the 1960s, helping to earn the hospital a reputation for quality patient care.
Now, more than 50 years later, the wing’s 206 patient rooms, at just 145 square feet, do not meet the space requirements to accommodate modern equipment which has to be wheeled into the “pie-piece” shaped rooms. It’s also difficult for staff to be on both sides of the patient and there is little room for visiting families. It will also be illegal after 2030, the deadline for hospitals to bring all acute patient care rooms up to new seismic standards set following the Northridge earthquake in 1994.
In order to replace those rooms and add rooms to meet the needs of a population that has grown five times larger in the last 50 years, Kaweah Health plans to build a new nine-story tower adjacent to the Mineral King wing. On Dec. 20, 2021, the Kaweah Health Board of Directors authorized management to proceed with plans for a replacement tower with 240 new beds, a new pharmacy, and a new dietary services and cafeteria area, accompanied by a necessary 500-space parking structure. Kaweah Health CEO Gary Herbst said their decision was just to continue planning for a new tower but that they have not given the greenlight to go out to bid for the project or made any decisions on how it will be financed at this time.
“We are definitely still in the planning phase,” Herbst said.
Bonding with the Community
The total cost is projected at $550 million. The proposed new patient rooms would be consistent with current best practices in modern hospital design, and would be larger at 254 square feet (allowing family members to stay overnight), with proper-sized bathrooms, and room for vital medical equipment to provide a safer, overall experience.
Any plan to fund construction of a new tower will include a bond measure, but Herbst said the district will not know the size of the bond until the rest of the financing is worked out. Kaweah Health will use a three-pronged approach to funding the tower’s construction including the use of existing district revenues, borrowing against its current assets, a fundraising campaign and passing a bond measure to bridge the gap.
“We’re gonna do everything we can to keep the [general obligation] bond as small as possible but it’s still gonna be a big number,” Herbst said. “There’s just no way of getting around that at $500 million.”
Kaweah Health’s last attempt to pass a bond was in 2016. Measure H was a $327 million bond to build a new tower but was denied by the voters after failing to garner the two-thirds supermajority that general obligation bonds require to pass. One of the biggest obstacles facing hospital bonds like Measure H is that many residents living outside of its boundaries rely on the hospital’s services but do not pay property taxes for the hospital, a key component in the opposition to Measure H.
In the last few years, the hospital district has taken steps to address that by asking to merge with surrounding hospital districts in Dinuba, Exeter and Lindsay which no longer have their own hospitals. In 2019, Kaweah reached out to those districts to see if they were interested in merging but all three had other plans. Exeter’s former hospital district supports Exeter District Ambulance, the only tax funded ambulance district in Tulare County, Alta HealthCare District in Dinuba supports its local ambulance and public health programs and Lindsay Local Hospital District funds the city’s Wellness Center, a smaller version of Kaweah’s Lifestyles Center in Visalia.
“Our primary reason is to help raise more property tax funding to help build this new tower, because 90% of the Exeter community uses Kaweah,” Herbst said.
Herbst also pointed out that expanding into those districts could mean a more difficult path to passing a two-thirds bond and would only save Visalia taxpayers a few dollars per year in taxes because the assessed property value in the three smaller districts pales in comparison to the properties within Kaweah’s district, which encompasses all of Visaila, Goshen, Ivanhoe and parts of Farmersville. Herbst also pointed out that those living outside the district still spend money at the hospital through insurance and Medi-Cal reimbursements for Emergency Department visits, extended hospital stays, outpatient procedures and elective surgeries.
A future bond measure would be the fourth bond measure proposed by the hospital district in its near 55-year history. The first was passed in 1965 to build the original 150-bed hospital and the second was in 2003, a $51 million bond needed to build the $143 million Acequia Wing. The 220,000-square foot, six-story tower opened in 2009. Herbst said the earliest a new bond would appear on the ballot would be in November 2024.
“We’ve done a lot of communication with our community and have been really engaging with them from the very beginning,” Herbst said. “I want them to be able to experience our transparency, communicating to them in clear, understandable ways all the way through the end.”
Pandemic Weakened Finances
Even if Kaweah Health passed a bond in 2024, it would still be a tight schedule to complete the tower by the 2030 deadline, but not for a lack of trying. Kaweah Delta began planning to replace the Mineral King wing beds in 1999 when it hired a consultant. The firm suggested the hospital district build eight, six-story towers to not only replace the 206 outdated patient rooms but also to accommodate future growth.
The first of those eight towers is the Acequia wing, built in 2009, and the second would be the new wing being proposed west of the new hospital, facing West Street. The projected cost of the expansion was $1.5 billion and would have meant demolishing a significant portion of its current campus and other medical buildings. Instead, Herbst said the hospital district moved on from that consulting group to hire RBB Architects in 2018. In the fall of 2021, the two replacement tower options were presented to Kaweah employees, medical staff, and the public, as well as 20 diverse stakeholder groups for input to determine which would best serve the community’s needs now and for generations to come. The consulting firm presented two options to the board, building two towers, a four-story and five-story towers or a single 9-story tower. The single tower option saves the district about $135 million.
While the hospital has been attempting to implement its strategic plan developed nearly two decades ago, there is an urgency to expand the hospital soon to meet a looming state mandated deadline. Beds at California general acute-care hospitals must be in structures that meet the state’s new seismic standards by 2030 to be in compliance with a 1994 law [Senate Bill 1953] requiring hospitals to withstand a major shake following the Northridge earthquake. The California Hospital Association estimates it will cost $100 billion for hospitals throughout the state to meet the deadline at a time when most are financially struggling.
“There is no funding coming from the federal or state government [to comply with SB 1953],” Herbst said. “Every hospital is on their own.”
For the first time in recent history, more than half of California’s hospitals are losing money. California hospitals have collectively lost more than $20 billion in 2020 and 2021; even after accounting for the more than $8 billion in federal relief, hospitals saw a $12 billion loss. Mertz said Kaweah Health lost $85 million between March 2020 and March 2022 as higher costs for supplies and the increased need for personal protective equipment came at a time when hospitals had to shut down its primary sources of revenue including elective surgeries and outpatient services. Compounding the financial ailments were operating the hospital at or near capacity during a statewide and national shortage of nurses quarantining, taking sick and mental health days and leaving the industry. Kaweah Health spent $15 million on travel nurses in 2018-19, long before the pandemic began.
“We spent a huge amount of money to fill vacancies,” said Marc Mertz, chief strategy officer for Kaweah Health.
Even before the pandemic, public hospitals like Kaweah Health, which are located in medically underserved areas, struggled with low reimbursement rates for low income Medi-Cal patients and uninsured patients in the Emergency Department. These reimbursement rates have not increased in 10 years, and the pace of inflation, paired with the COVID-19-driven losses and expense increases, mean that the communities of color (two-thirds of Medi-Cal beneficiaries are non-white) hit hardest by the pandemic need even more relief, according to the CHA. About 54.6% of Tulare County residents are enrolled in Medi-Cal, the highest in the state, according to the U.S. Census Bureau’s annual American Community Survey.
Herbst said the CHA continues to lobby the state to push back the deadline seven to 10 years down the road to give hospitals more time to financially recover from the pandemic and to strategize how they will either retrofit or replace beds in non-compliant buildings.
“Even if [Senate Bill] 1953 goes away, I still think this remains a priority for us,” Herbst said. “But again, it is more about continuing to modernize and enhance our facilities because that’s what we’re hearing from the community.”
Parking and Repurposing
Once a new tower opens, Kaweah Health is not sure what will happen to the original patient beds in the Mineral King wing. Herbst said the building’s “got good bones” and is bordered by a 30-bed Intensive care unit (ICU) built in the 1990s and a 20-bed immediate cardiac care unit (ICCU) built in the 1980s, both of which already meet the state’s new seismic standards.
“Downtown space is always highly valuable, so I don’t see us demolishing it,” Herbst said. “I see us maybe using it for a different purpose.”
The original, four-story Mineral King wing houses 206 patient beds, dietary kitchen, pharmacy, and several operating recovery rooms. None of the acute care rooms can be used after the 2030 deadline but Herbst did say the structure could continue to be used for outpatient care, skilled nursing and administrative support beyond 2030.
Mertz said Kaweah Health is planning to build life-scale models of the new rooms and the old rooms so staff and taxpayers can see the difference in the size, space and accommodations. The models should be ready sometime this summer or fall but the hospital has not settled on a location where they can be accessed by the public.
“We belong to the public and so we take that very seriously,” Mertz said. “We want to provide our community with the best facilities from a clinical standpoint and we want it to be efficient and safe.”
Even before the tower is built, Mertz said Kawaeh will likely build the accompanying parking structure first. The $500 million price tag will include a 500-space parking structure, likely on West Avenue across from the new tower. Kaweah has worked well with the city to rent out portions of existing parking structures and build some of its own in order to alleviate the burden of having thousands of staff and patients coming in and out of the hospital every day. Mertz said existing parking will also likely be affected during the construction of the tower, making a new parking structure even more important.
“We will lose some public parking, so we’ll want to create that extra capacity,” Mertz said.