Time element loss considerations for healthcare organizations
One of my colleagues recently posted a very good piece about what coverage is available in the wake of the torrid summer weather the Northeast had from a personal lines perspective. It got me thinking of some of the challenges that healthcare organizations face in the wake of Hurricane Irene or other natural disasters. While there will be much written about “off premises power” extensions and the great value of preparing for the protection of the lives and well-being of a providers patients (all critical issues, to be sure), I began to think about some of the nuances that non-hospital providers may be faced with in the wake of such a storm.
Most good property policies will cover losses resulting from a Hurricane Irene situation. Flood coverage, property damage and the inevitable Business Income (BI) and Extra Expense (EE) claims would certainly be forthcoming. For some non-traditional providers, such as an outpatient care facilities, ACOs and other relatively new types of healthcare organizations, traditional coverage may leave them wanting and with serious financial impact.
One such example has to do with the valuation ambulatory care centers face when looking for coverage under the BI/EE portion of a property policy. Many providers loss adjustment language requires a “time element” deductible before coverage is initiated. This is typically in the range of 72 hours of “normal business hours”. But this raises the question, what are normal business hours in the healthcare field?
For some renal care providers, this is a poor benchmark for this important coverage. For patients needing certain types of care, such as dialysis, there is no normal business hours when staring down a potential natural disaster. One such renal care provider that I work with has been faced with the reality of being open as a major Atlantic Ocean hurricane approached. The centers in then projected path of the storm were open non-stop for several days prior the storm making landfall. For this facility and it’s patients, this was “normal business hours”.
Locations facing less predictable events will need to take extraordinary measures to reopen or accommodate patients with life-preserving medical care. In each case, the need for tailored property coverage terms and conditions is heightened. For other types of BI/EE coverage terms, it is imperative that those responsible for the risk management needs of the facility to be aware of and plan for these unique needs for their healthcare providers. It is common place for the healthcare risk management community to focus the majority of it’s time and attention on professional liability risks. A failure, however, to pay close attention to the “brick and mortar” needs of such providers could be costly to both facility and patients alike.
About the Author
Pete Reilly is the Healthcare Practice Leader at WGA with extensive knowledge in healthcare systems, including hospitals, long-term care facilities, and medical practice groups of all sizes.