SACRAMENTO, CA – With the deadline approaching for a state law requiring seismic retrofitting in California hospitals, facilities are expecting aftershocks that could affect healthcare IT implementations.

The law, which has been on the books since the mid-1990s, sets deadlines for retrofitting or rebuilding facilities so they can withstand earthquakes.

The law is expected to put a heavy capital burden on healthcare organizations. As many as 30 percent of the state's 10,000 hospital structures will need to be replaced or decommissioned by 2008, at a total cost of as much as $85 billion, said Wanda Jones, president of New Century Healthcare Institute, a not-for-profit healthcare foundation that conducts research.

With funding for reconstruction uncertain in the cash-strapped state, there's rising concern that building projects will drain away investment and energy from information technology projects.

"This is going to be a replacement wave unlike anything this country has ever seen," said Jones, predicting that in some urban areas, 60 percent of hospital beds will have to be replaced. "Everyone is doing the planning and moving forward as if these projects will be funded and done."

A recent study by the RAND Corp. estimated structure replacement and retrofitting costs at about $41 billion, but Jones says associated costs, such as relocation costs, expenses for purchasing new land in urban areas and borrowing costs, could push the total bill to as much as $85 billion.

The state, while considering four bills to fund the cost, isn't in a strong position to help, Jones said. Help from the federal government is also unlikely. California hospitals already are struggling to cope with a state law mandating minimum staffing levels and other rules limiting how much they can increase rates.

The looming construction costs create competition in hospital budgets for healthcare IT projects, Jones said. Expenses for IT projects typically must be paid over shorter time frames, such as five years, compared with 30 years for building costs funded through bond issues.

But the building trend also could work to the advantage of IT financing, said Ravi Nemana, senior advisor on information technology and director of IT research for Health Technology Center, a San Francisco-based consulting firm.

"Building ‘new' can allow you to capitalize IT expenses and fund them through ways that you normally would not do," he said. "Spreading out IT costs over long period of time is actually a little favorable."

Healthcare IT programs are feeling pressure in other ways, as many try to catch up with demand to implement applications.

Getting programs to "go live" is complex, said John Hummel, senior vice president of information systems and CIO of Sacramento-based Sutter Health, an integrated delivery system.

For example, the organization plans to have a new medical center open in Sacramento in 2009, and it's expected to be "all digital," Hummel said.

"It will have all modalities of PACS digital, EMRs, CPOE and a few dozen other integrated systems," he said. "This means that I have to build up the capacity of the current campuses, extend EMR, CPOE to the medical office buildings, get PACS integrated and have it done in the next three years, because you can't expect to move into a new building while you're also bringing up major processes."

CIOs also have to formulate interim IT strategies in buildings that will undergo retrofitting or be decommissioned. And they'll have to work with architects so that new buildings will be able to accommodate new technologies.

"Between ‘normal' IT operations, bringing in new applications, major upgrades, new hardware and anticipating new construction, the time lines seem awfully short, not to mention there's almost a zero tolerance for being wrong with a technology, applications or vendor," Hummel said.

"With whatever technology you're going to put in place, the question is whether it's going to be ready when you're bringing a facility up," Nemana said. "A lot of people are opting to over-engineer the infrastructure to retain flexibility for IT."