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Hospital Bond Fuels Projects

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Times Staff Writer

Fueled by the passage of a $750-million bond measure, children’s hospitals across California hope to move forward on several long-term construction projects as well as expand medical services for young patients.

Thirteen children’s hospitals -- eight private and five public -- will share the proceeds from Proposition 61, which won 58% of the vote Nov. 2. It authorizes the state to issue tax-exempt bonds to build and expand children’s hospitals and purchase medical equipment.

The eight private hospitals spent a combined $4.68 million in campaign contributions to help pass the proposition, according to California secretary of state databases. Most of the money went to television ads starring actress Jamie Lee Curtis, who spoke about the progress being made in treating children with serious illnesses.

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Those hospitals will receive about $74 million each. Five University of California-affiliated children’s hospitals will share $150 million.

The measure’s passage came despite concerns from some watchdog groups that the proposition did not establish regular audits of the spending, which they believe could lead to waste.

Some critics see the measure as a clever attempt by the private hospitals to get the state to help underwrite their existing expansion plans.

“There were certainly some well-financed special interests that will do quite well off Prop. 61,” said Jon Coupal, president of the Howard Jarvis Taxpayers Assn. “Like most bond expenditures, people in five to 10 years will find out the money was not well spent, with 80% going to private institutions, not public institutions.”

Proposition 61 supporters reject those claims, saying the measure gives general oversight on how the money is spent to the California Health Facilities Financing Authority. Although no specific audits are required, they said, the Bureau of State Audits is free to conduct spending reviews whenever it wants.

“There’s a lot of accountability,” said Charity Bracy, vice president of the California Children’s Hospital Assn., the industry group that sponsored Proposition 61. “It’s not like they’re going to get a big check and they can spend the money how they want. They have to report back within a certain amount of time on how the money was spent.”

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Some hospital officials said they considered the financial contributions they made to the campaign to be wise investments, aimed at helping cover the costs of expanding medical services that they could not provide through fundraising and insurance reimbursements alone.

“Expansion and new technologies ... require significant capital resources,” said Zareh Sarrafian, children’s hospital administrator at Loma Linda University Medical Center. “Private resources we didn’t think was going to be enough.

“We felt a sensible means of providing for the ongoing healthcare needs of our children was making sure this bond passes. That’s why we felt it was worth the investment to get word out to people.”

The hospital serves children from four counties -- San Bernardino, Riverside, Inyo and Mono -- that make up almost 25% of California geographically, Sarrafian said. Loma Linda does not have specific plans for how it will spend the bond money but probably will expand its number of patient beds.

For other hospitals, the bond money will be pooled into their capital improvement budgets, speeding up long-sought remodeling and expansion projects. In some cases, it will help pay for state-mandated earthquake retrofitting of medical buildings.

At Childrens Hospital Los Angeles, the windfall will go toward replacing its aging home on Vermont Avenue in Hollywood with a new structure. The old building does not meet earthquake safety guidelines.

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The hospital has already begun work on the project, which is expected to cost at least $300 million, said Gail Margolis, vice president for government and public policy.

A new visitor parking lot is under construction so the old one can be torn down, providing more space for the new medical center. The new hospital will have all private rooms and space for parents to sleep.

At Miller Children’s Hospital in Long Beach, the money will help fund a long-planned $250-million expansion that will upgrade the 372-bed center’s neonatal care, pediatric intensive care and general pediatric units. Hospital officials also want to build larger patient rooms, including a place for family members to rest and sleep, and a work area where parents can use their computers.

At UCSD Medical Center in San Diego, officials want to increase the number of surgical suites and build a new children’s convalescent center.

And at Children’s Hospital of Orange County, plans are in the works for a $249-million capital expansion, said Kerri Ruppert, the hospital’s senior vice president and chief financial officer. The hospital recently borrowed $85 million to begin the project, which includes a new parking structure, adding 30 beds to the intensive care unit and expanding and modernizing outpatient clinics.

Proposition 61 money will help offset the loan, Ruppert said. By 2012, the hospital hopes to add another tower and bring the total number of beds to 278, compared with the 202 it currently has.

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“If we don’t expand and we don’t make this investment, we are not going to be able to take care of the children in the community,” Ruppert said.

In Northern California, at Children’s Hospital and Research Center at Oakland, the money will help pay for a new hospital building to meet earthquake standards, said Mary Dean, senior vice president for external affairs. The new, 170-bed tower will include private rooms for patients and sleeping accommodations for their parents.

The money from Proposition 61 can be spent only on “capital improvements,” defined as such things as construction, furnishing or acquiring a children’s hospital.

It cannot be spent on hiring more medical personnel to treat children.

The money will be distributed by the California Health Facilities Financing Authority, a panel that already exists and administers other health-related grants. The authority will be in charge of developing an application process for awarding grants, and the money will be doled out based on grant applications submitted by the hospitals.

The authority will base its decision on three factors: the extent to which the grant will contribute toward the improvement of child healthcare, the importance and level of services that will be generated, and demonstration by the applicant that the project is feasible.

Projects are supposed to be completed within a “reasonable” period of time, to be determined by the financing authority. If not, the hospital could be forced to return all or a portion of the money.

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The other facilities eligible for Proposition 61 funds are Mattel Children’s Hospital at UCLA, University Children’s Hospital at UC Irvine, UC Davis Children’s Hospital, UC San Francisco Children’s Hospital, Children’s Hospital and Health Center San Diego, Lucile Salter Packard Children’s Hospital at Stanford University and Children’s Hospital Central California in Madera.

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Times staff writers Janet Wilson and Kimi Yoshino contributed to this report.

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