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Incoming hurricanes could mean a flood of problems for health systems

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Trine K. Tsouderos HRI Regulatory Center Leader, PwC US August 30, 2019

Months and even years after the winds subside and the floodwaters recede, hospitals and health systems in regions battered by a hurricane will still be grappling with the financial, physical and reputational wreckage such storms cause.

Hospitals face closure, chaotic revenue cycle operations, disrupted supply chains, possible credit downgrades, destroyed and damaged physical assets, and displaced workforces and patients. Partner institutions, such as long-term care facilities and retail pharmacies, may temporarily or permanently operate at diminished capacities.

Effective disaster recovery starts well before a hurricane begins cycling over Atlantic waters. To recover from such an event as quickly as possible, hospitals and health systems can take tactical actions to handle the complex challenges left in the wake of a hurricane or other natural disaster

The consequences

  • Damaged buildings and assets can become targets for theft
  • Natural disasters can disrupt financial operations by delaying revenue cycle activities
  • After Hurricane Katrina, over 200 lawsuits were filed against providers alleging liability for patients’ deaths and suffering
  • Pharmaceutical supply chains can be disrupted by offline manufacturing operations, leading to product shortages, labor shortages and lab testing issues
  • Facilities may be abandoned because they’re destroyed

The initiatives

Health systems can protect against significant damage by shoring up physical resources.

  • After Tropical Storm Allison caused significant damage to Texas Medical Center in Houston, the system built a network of submarine-style floodgates to protect physical assets
  • The CHRISTUS Health Southwest Louisiana system was able to avoid significant disruption because it had moved back-office functions out of state
  • After Hurricane Sandy caused a drop in patient volume, NYU Langone Medical Center underwent a credit review. Thanks to planning, the system was able to quickly resume services, and its credit rating was maintained

The data

Natural disasters create devastation that lasts long after the event passes
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An abbreviated checklist for action

In the wake of a storm, hospitals and health systems will have to take many actions to help themselves and their communities recover.

Restore and expand care delivery

  • Take steps to rapidly expand staffing
  • Identify and reach out to patients with pre-existing conditions likely to be exacerbated or made acute in a disaster
  • Reach out to vulnerable populations in the community, with considerations for language barriers, financial constraints, and concerns about immigration enforcement

Help employees and their families

  • Mobilize human resources staff to identify employee needs to prevent undesired attrition during and after the disaster
  • Activate support and counseling services for employees and their families
  • Enlist foundation resources

Restore key patient safety and regulatory controls

  • Identify and resolve cybersecurity gaps
  • Identify and rectify patient safety issues
  • Understand regulatory status of HIPAA and other rules, many of which temporarily change when a public health emergency is declared
  • Identify financial control issues that may have been compromised    

Mitigate adverse financial impacts

  • Mitigate effects on revenue cycle
  • Maximize one-time tax benefits that come with storm damage
  • Take steps to ensure claims are valued and maximized
  • Provider-sponsored health plans should adjust accruals for spike in storm-related claims and rapidly ramp up claims processing
  • Contact FEMA to begin process of requesting assistance for disaster expenses

Restore key supporting operations

  • Prioritize operational restarts
  • Take steps to return business office to normal operations
  • Restore supply chain through creative use of new channels
  • Keep public, vendors, partners informed of recovery status
  • Monitor social media to combat disinformation and rumors

HRI impact analysis

Health systems with strategies at the ready can increase the pace of recovery and avoid making premature decisions that could do harm in the long term.

  • Consider taking extra measures to protect physical assets and keep care going, such as placing power generators and other critical systems in an underground concrete location or placing backup systems in non-vulnerable regions.
  • Have a virtual backup to traditional services, understanding that virtual care can provide medical assistance in the event of damaged facilities.
  • Evaluate any insurance policies, including coverage, period of indemnity, limitations and deductible to ensure they meet the consequences of a major event.
  • Hospitals should aim for ample days of cash on hand to remain financially stable during and after a disaster.
  • Form a plan to handle the disaster’s aftermath with patients, employees, insurers, vendors, credit rating agencies, and investors and creditors as critical audiences.
  • Study the complex FEMA claims process, and in the case of a disaster, connect with the agency quickly. Also find out which types of claims, under which conditions, are eligible for FEMA funding.
  • Form a plan to combat bad information on social media and other communication platforms during and after a disaster. Patients and employees may be scared off by such information.

For more information on how to prepare a health system for natural disasters, please download HRI's full report, Hospitals and health systems feel the impact of hurricanes long after the floodwaters recede

Contact us

Trine K. Tsouderos

Trine K. Tsouderos

Business Insights, Sectors Leader and Health Research Institute Leader, PwC US

Tel: +1 (312) 241 3824

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