California Health Care Construction Basics

(Compiled by Daniel F. McLennon and Elaine Bulawin of McLennon Law Corporation, October 2009)

• Overarching question:  What does a contractor need to do to become qualified to do health care construction work?

Under state law, there are no special qualifications required for a contractor to perform this work.  However, health care construction requires specialized knowledge of regulations and construction practices, and general contractors will hire only “qualified” subcontractors who have this specialized knowledge.  Moreover, this work is fraught with hidden costs, and only “qualified” subcontractors can make a profit performing it.  It is the goal of this paper to help subcontractors become “qualified”.

• Are there any certificates required?  

No.  All you need is your state contractors’ license.

• What insurance requirements, if any, are particular to this work?

Of course, a contractor needs to be aware of the provisions which require every employer to be insured against liability for Worker’s Compensation or to undertake self insurance in accordance with the provisions, and Contractor affirms to comply with such provisions before commencing the performance of the work. (Labor Code Section 3700).  Further, contractors should obtain review of peculiar indemnity/hold harmless, insurance, and performance requirements by a qualified attorney and insurance broker to ensure that appropriate coverage is obtained and non covered risks may be assessed.  The California Subcontractor Healthcare Construction Network (CACSHN) website ( http://cashcn.org/index.php?contentID=2817) provides extensive information about insurance requirments for this work, including a specially-tailored insurance program underwritten by  Zurich Insurance member company.

• What bond requirements, if any, are particular to this work, if any?

No special bond is required for this work.  However, owners and general contractors often require performance and payment bonds.  If you have never been bonded before, not to worry.  The California Subcontractor Healthcare Construction Network (CACSHN) website ( http://cashcn.org/index.php?contentID=2818) will provide you all the tools you need to become bonded for this work.

• What is special about hospital construction? 
  Understanding the Hospital Construction Oversight Process
  • Hospital Performance Objective
    “It is the intent of the Legislature that hospital buildings that house patients who have less than the capacity of normally healthy persons to protect themselves, and that must be reasonably capable of providing services to the public after a disaster, shall be designed and constructed to resist, insofar as practical, the forces generated by earthquakes, gravity, and winds.” ALFRED E. ALQUIST HOSPITAL FACILITIES SEISMIC SAFETY ACT, 1983
  • How are Hospital Construction Projects Different?
    
    • Comprehensive, state-of-the-art building codes
    • Rigorous plan review
    • Focus on construction quality
    • Continuous Inspection by inspectors of record
    • Periodic site visits by OSHPD field staff
    • Projects are complex
    • Building systems in healthcare facilities are more complex than in commercial buildings
    • HVAC systems
    • Filtration, air balance
    • Electrical systems
    • Emergency power, nurse call
    • Fire/life safety
    • Defend in place
    • Sprinklers, fire and smoke detection, damper
      
  • Process Controls
    • Projects must be constructed in accordance with the approved drawings
    • Changes in construction cannot proceed “at risk”
    • Changes that materially alter the approved design must be reviewed and approved by OSHPD prior to construction
    • Premium on advanced planning

• What is an inspector of record (IOR)?

IORs are independent hospital inspectors who are certified by OSHPD’s Facilities Development Division (FDD). Their job is to continuously inspect all phases of the hospital construction process to assure that the work is being done in accordance with OSHPD approved plans and applicable codes.

• What is the role of the IOR, and what is his or her authority?

The role of the IOR is to provide for competent and continuous inspection of the construction project allowing Office of Statewide Health Planning and Development (OSHPD) staff to efficiently monitor the construction process. While they are hired by the hospital, the IOR must also be approved by the architect and OSHPD.

An IOR must record all construction activities that occur on site. They are responsible for verifying that items such as the seismic anchorage of equipment, the bracing of all mechanical, plumbing, and electrical piping and conduits are installed in accordance with the approved documents and installation procedures.

The IOR oversees all inspections and witnesses all tests performed by outside inspectors. As part of the inspection team and as the liaison between the owner, the architect and OSHPD, the IOR observes and reports the results of each inspection to all responsible parties.

While the IOR works collaboratively with OSHPD, the contractor, and the architect on the project, OSHPD is the legal permitting authority and has expert staff, including Area Compliance Officers, Fire Life Safety Officers and Structural Engineers, in the field that monitor the process.

• What background does an inspector have to have to be a part of the OSHPD staff?

First, an individual must be certified by OSHPD to perform the duties of an IOR. Once certified, the hospital is responsible for hiring the IOR. The architect and OSHPD must also approve the hospital’s selection.

• How should a subcontractor anticipate that the Inspector’s inspections will affect the job’s schedule?

Upon plan approval, a building permit is issued and construction begins. The facility owner hires a FDD-certified Building Inspector, who throughout the construction phase, reports to FDD field personnel and the owners on the progress of the construction. He/she notifies FDD of discrepancies between approved plans/specifications and work in progress, and assures their resolution by the hospital design team, with FDD approval. In addition, FDD field personnel make periodic visits to the construction site to assure that the seismic, fire and life safety, and other requirements of the building code are being met. The OSHPD/FDD Regional Compliance Officer supervises the field staff who include District Structural Engineers, Fire and Life Safety Officers, and Area Compliance Officers. The Area Compliance Officer typically is the person to contact initially to resolve field issues as they can coordinate as required with other field staff. Once construction is completed, FDD issues a certificate of occupancy which allows the owner to then apply to the Department of Health Services for a license to operate the health facility.

Before submitting a bid, a subcontractor should thoroughly interview the general contractor about the general contractor’s experience in performing the type of work for which the bid is solicited.  How many mobilizations will be expected?  How many weeks of down time may be anticipated?  The subcontractor should write these expectations into its subcontract, so that additional stops and restarts and delays may be treated as extras.

• Are any special safety procedures required?

Yes.  Much of this work is performed in working hospitals and health care facilities.  Patient and staff safety must be considered as well as worker safety.  Further, often work is performed in the presence of pure oxygen and other gasses.  These must be taken into account.

• Is there any special equipment that the contractor will need to have?

Yes, as needed for safety and workspace containment.  Dust and debris cannot be allowed to escape the work area.  Further, sometimes sterile areas must be protected.

• What dispute resolution procedures are available?

To enhance our customer service, OSHPD’s Facilities Development Division (FDD) has implemented a Comment and Process Review, a dispute resolution process designed to promptly resolve issues between our clients and the Department. The Comment and Process Review provides a clear path to resolve problems whether they occur during our plan review services in the office or out on a construction site in the field.

How to initiate the resolution process:

1. Discuss the issue with the staff member assigned to the project, generally your primary contact at OSHPD. If staff doesn’t respond within 24 hours or the issue is not being resolved at this level, go to the next step.

2. Elevate issue to the appropriate supervisor. (See link below for phone directory) Again, if staff doesn’t respond within 24 hours or the issue is not being resolved at this level, go to the next step.

3. Request that the Deputy Division Chief mediate the issue. If there is still a dispute go to next step.

4. Appeal the issue to the Hospital Building Safety Board.

For a problem concerning plan review contact the following staff:

1. Plan Review Staff member

2. Regional Supervisor

3. Deputy Division Chief

For a problem concerning construction contact:

1. Field Staff member

2. Regional Compliance Officer

3. Deputy Division Chief

For a problem concerning the seismic retrofit program contact:

1. Seismic retrofit staff member

2. Program Supervisor

3. Manager, Operations Support Section, Sacramento office

Contact OSHPD to learn more about the Comment and Process Review:

Any supervisor, either plan review or field staff, can help you with the process. Follow this link to the OSHPD staff phone directory http://www.oshpd.ca.gov/FDD/About_Us/Contact_Us/FDDPhoneList.PDF or call the OSHPD Ombudsman 916-326-3608 for more assistance.

• Are any construction projects for hospitals and skilled nursing facilities exempt from the OSHPD plan review process?  

Recent legislation has been passed which provides that, under specific circumstances, a hospital or skilled nursing facility project may be exempt from the OSHPD plan review process.

Assembly Bill 2632 (Chapter 453, Statutes of 2004) and Senate Bill 224 (Chapter 494, Statutes of 2005), both allow certain maintenance and repair work projects for hospitals and skilled nursing facilities to be exempt from plan review, if specific criteria is met. AB 2632 provisions apply to such projects in “single-story” buildings and SB 224 provisions apply to “multi-story” buildings. For information regarding AB 2632 requirements please refer to: www.oshpd.ca.gov/FDD/Plan_Review/AB2632.html

Although projects that meet the criteria for AB 2632, SB 224 or SB 1838 are exempt from the OSHPD plan review process, they are not exempt from issuance of a building permit and construction observation by OSHPD.

• Where can I find more information about rules and regulations affecting health care construction in California?

Here are a few helpful sites:

• www.oshpd.ca.gov
• ombudsman@oshpd.ca.gov
• www.cashcn.org (CA Healthcare Construction Network)
• What resources are available for my business needs, such as resources in the areas of financial management, accounting, legal, worker safety, etc.

Contractors should, if they don’t already, belong to the American Subcontractors Association – Bay Area Chapter.  It provides seminars that address financial management, accounting, legal and worker safety issues.  Further, a wealth of resources may be found at its California Subcontractor Healthcare Construction Network (CACSHN) website: http://cachsn.org.

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