Long Term Living - When Mother Nature Strikes


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When Mother Nature Strikes: Maximize coverage and limit financial exposure.

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Long Term Living - When Mother Nature Strikes

  1. 1. J, But tornadoes are not the only disaster preparedness target. In early 2013 , February's Wimer Storm Nemo dumped 40 inches of snow on Connecticut, leaving 700,000 customers without power and causing 18 deaths. And, in October 2012, Superstorm Sandy devastated the MidAtlantic and New England regions, killing 285 people and causing more than $75 billion in damages. The examples of natural disasters are endless, and what is most concerning is that many of the most devastating U.S. disasters struck unsuspecting regions where such weather is uncommon. While Mother Nature may be unpredictable, all of us are at risk for at leasF-one type of natural disaster or another. We cannot prevent natural disasters, but we can prepare. staff, distractions from strategic work plans, and interruptions in the claims process. Finally, organizations need to strongly consider their General and Professional Liability exposures relative to the evacuation of residents. What happens if a resident is injured or killed during an evacuation? Are you protected? The considerations seem endless, but the most important question is: "How do I maximize insurance coverage and limit my financial exposure? And, how do I plan for evacuations and ensure that my liability policies will protect my residents-even if we must evacuate the facility?" From preparedness to recovery, the following information can serve as a primer for preparednessfrom critical business considerations predisaster to best practices post-disaster. A COSTLY EXPERIENCE BEFORE THE EVENT: For long-term care (LTC) facilities, the risk is even greater because so many lives are cared for under a single roof. A single-site facility may spend several hundred thousand dollars in extra expense, expediting expense, and emergency evacuation expenses. This number increases with each additional site. In addition to the actual evacuation expenses (hotels, transportation, food), a facility could potentially incur hundreds of thousands of dollars in expenses for generators, additional linens, facility protection and myriad other items, all resulting in a substantial loss of revenue for each day that business is inoperative. An LTC organization also must consider the value of the "soft costs" during and after a natural disaster, in terms of distress to the Form a recovery team. The first step is to establish a cross-functional onsite disaster recovery team that will meet at least every trimester. This team should be responsible for evacuation planning and execution, as well as the organization's speedy recovery thereafter. First, identify a strong team leader and provide explicit responsibilities, similar to a job description. This is a time-intensive role, requiring commitment throughout the year-not just in the aftermath of a disaster. The team leader must have the time and flexibility throughout the year for opportunities to continue to examine, hone, and refine the disaster recovery plan. Clearly define how the CEO or other executives will interact with the team leader, as this can be a source of contention if not properly defined before a disaster occurs. The best leaders will have a solid team supporting them, so choose the team members carefully. They should come from a cross-section of all levels and functions within the organization. Rather than treating the disaster recovery team as an "added responsibility," engage team members on the basis that the team is part of their professional development and the organization's succession planning. Develop an evacuation plan. A welldefined plan will address the following elements and considerations: The team leader must have the time and flexibility throughout the year for opportunities to continue to examine, hone, and refine the disaster recovery plan. 26 • AUGUST 2013 • RESOURCE GUIDE • Command Center. This should be your central hub of planning, communication, decision making, adjusting as the disaster evolves, etc. Where will it be located? Who will run it? • Food. Who is your food vendor? Do you have a backup food vendor? What are your residents' dietary considerations? How will you supply the vendor with patients' dietary needs? • Medication. How will you safely transport and maintain medications, including oxygen, injectables and ingestibles? What medications do your residents need? How will their needs be communicated to a receiving facility? • Shelter. Are there established arrangements with nearby receiving facilities? Are the arrangements reciprocal? Do you have prenegotiated hotel rates at hotels? • Transportation: Ambulatory residents. Does your have enough vehicles to transport residents, or do you need arrangements for group transportation? Other transport considerations-ALS, BLS, and wheelchair lifts/ramps, etc. What route will the vehicle will take from the site to the hotel? If that route is no longer available, what is Plan B? • Transportation: Nonambulatory residents. Are vehicles equipped to transport nonambulatory residents? If not, do you have relationships and established arrangements with local EMS crews? Do you have nonambulatory residents on the second floor or higher? If so, do you plan to carry immobile patients, or do you own chairlifts? • Patient identification. What "tagging" system will be used to identify every patient? What information does a tag need? (i.e., name, medications, diet, name of evacuated facility, name of receiving facility, other medical/behavioral considerations). • Communication tools. What if phone lines are down? What if cellular signals are disrupted? • Communication plan. Who is responsible for writing, approving, and sending notification to residents, families and employees? How will communication be sent? Will you use social networks like Facebook and Twitter to WWW. LTLMAGAZINE .COM
  2. 2. must fully understand an organization's communicate with families? If so, who that may not be that common in your geographic region. is responsible and what information are financial exposure in the wake of a disaster Sublimits. A sublimit is part and be equipped to leverage various areas you authorized to share? o£ rather than in addition to, of the policies to maximize recovery. Ex• Individual patient arrangethe limit that would otherwise ments. The more patients you penses need to be appropriately "bucketed" into the .various sublimits available. Were apply to the loss. In other can readily return to family, words, it places a maximum the less professional liability the costs related to civil authority, business on the amount available to pay interruption, evacuation expense, real/peryou have during an evacuthat type of loss. For example, ation period. Are patients' sonal property damage, expediting expense, under a commercial property or others? The most important post-disaster families willing and able to policy with a $200 million . step is the initial reporting of the claim. It's pick up and care for the resiblanket limit applicable to loss dent in the event of a natural not what is said, but how it is said. from all other causes, there may disaster? Have you documentIn the face of disaster, brokers should Timothy E.J. Folk be a $100,000 sublimit on operate in an onsite project management ed patients' status/preference? coverage for loss from flood, capacity so that all the remediation and Do you have updated family a $500,000 sublimit on loss contact information to make restoration processes of your vendors are funneled through them. The broker should arrangements? from earthquake and a debris • Labor pool. What employees removal sublimit of 25 percent work in concert with forensic accountants to help the organization limit financial will likely be able to come of the direct-damage loss exposure. Maintaining a central, onsite risk to work during a regional amount. management role, the broker and the supevacuation? To make it easier It is critical to understand for employees to work during porting claims managers can ensure that what the sublimit is for the claims strategies are executed in the the evacuation, will you offer evacuation response expenses, best way for your organization. employees and their families Chris Keith business interruption, and (and pets) lodging at the same hotel or remediation. Also, know what event will SUMMARY other facility that houses your resiofficially trigger an evacuation-dependdents? ing on your insurance policy structure, The trend toward more violent and desublimits may only apply at the insured's structive weather patterns unfortunately discretion (i.e., evacuation when safety of shows no signs of abating. It is more imDevelop a shelter-in-place plan. While patients is at risk) or at the discretion of an an evacuation plan is critical, there may be portant than ever for owners and financial official governing body (i.e., the state, the officers at assisted living and LTC facilities many situations such as a tornado, flood county or the National Weather Service). warning or air contamination warning, to consider consulting with a professional broker well versed in disaster planning and Be aware of your insurance policy's when it is best to stay inside to avoid any exclusions-including the breadth of those uncertainty outside. In these situations, recovery. A professional broker can help exclusions. A "flood" exclusion is narrower a Shelter-in-Place Plan is essential. This you stress-test a disaster plan and then than a "water" exclusion, and those differplan is different than the evacuation plan. improve it, or can help implement a plan ences can change your recovery costs by if one is not currently in place. Mother For example, determine what areas of the dramatic amounts. Consider the following: Nature has proven too many times that building will serve as "shelters." Keep in disaster can strike anywhere, anytime-the mind that a tornado will require shelter on • Are you eligible for National Flood recent May 2013 devastating tornadoes in the ground floor or below ground, while Insurance Program (NFIP) coverage? If Oklahoma City are just the most recent a flood warning would require a different so, do you have it specifically for each proof. And, organizations will only be as shelter location. building? strong and resilient as the preparation and Next, develop a warning system for the • Is your "extra expense limit" part of the recovery plans in place. Ln facility, as well as a system that accounts for blanket limit or part of the stand-alone who is in the building during an emerTimothy E.J. Folk is vice president and producer at limit? gency. With regularity, test the warning The Graham Company, a large property and casualty • Does your policy make you subject system, practice the in-shelter plan, and and employee benefits brokerages in the Midto proportional spending of the extra check the stock of emergency supply kits. Atlantic region. Contact him at tfolk@grahamco.com expense limit over specified time perior call (215) 701-5231. ods, or do you have access to the whole Chris Keith is a producer at The Graham ComCONSIDER YOUR INSURANCE pany. His primary focus is on the health and human amount up front? Covered Perils. A professional broker can services industry and has a particular expertise determine Covered Perils and assess your in the area of Captive formations. Contact him at AFTER THE EVENT: RECOVERY level of coverage for wind, storm, and ckeith@grahamco.com or call (215)701-5297. An insurance broker's response to a disaster flood. Consider expanding the policy to is just as critical as preparing for it. Brokers include some level of coverage for perils WWW.LTLMAGAZINE.COM RESOURCE GUIDE • LONG-TERM LIVING • 27