Liability

Nursing Home Downfalls: What Happens When Evacuations Are Delayed

For facilities entrusted with the lives of vulnerable populations, emergency preparedness plans are complex documents that never stop evolving.
By: | December 14, 2017 • 9 min read

A nightmarish scene unfolded in Port Arthur, Texas, after Hurricane Harvey. Law enforcement and volunteer teams forcibly evacuated a flooded nursing home that waited too long past the window of opportunity to launch a safe evacuation.

Advertisement




Not even two weeks later, amid the chaos of Hurricane Irma, another crisis was brewing at a nursing home in Hollywood Hills, Fla. This time though, help didn’t arrive in time. Eight vulnerable residents died after a few days in the sweltering facility with no power. Six more died of related complications in the weeks that followed.

The latter facility has since been shut down, and the operators of both facilities are facing serious scrutiny from law enforcement as well as regulatory agencies. It’s no surprise multiple lawsuits are already in process.

Yet neither of these incidents is entirely isolated. There are long-term care facilities across the country that, in the event of a disaster, could be one questionable decision or one poorly executed procedure away from finding themselves publicly pilloried.

Crisis management in skilled nursing facilities and long-term care facilities is an incredibly complex endeavor that takes the cooperation of risk management, the executive suite, vendors, suppliers and community partnerships.

Fortunately, there are a great many resources available to help nursing and long-term care facilities ensure their ability to protect patients and residents as well as staff members.

The Plan’s the Thing

The Centers for Medicare & Medicaid Services (CMS) published an updated rule in 2016, “Emergency Preparedness Requirements for Medicare and Medicaid Participating Providers and Suppliers.” Health care providers, including nursing and long-term care facilities, were required to be in compliance with the new rule as of Nov. 15 of this year.

Diane Doherty, senior vice president, Chubb Healthcare

So while facilities already had disaster plans in place, CMS set the bar a notch higher and formalized certain aspects of emergency preparedness planning for the health care industry.

“Without a doubt the rule represents new challenges to long-term care organizations due to the sheer amount of work related to complying with the regulation and the preparation involved,” said Diane Doherty, senior vice president, Chubb Healthcare. But Doherty said she feels confident that most facilities were able to meet the Nov. 15 deadline.

Still, there can be a significant gap between a facility that’s meeting minimum compliance requirements and a facility that’s genuinely ready to weather a storm or a sudden fire.

The foundation of a strong preparedness plan, experts agree, is a comprehensive hazard vulnerability assessment, or HVA, which looks at every type of emergency or disaster a facility might face and carefully addresses how each scenario might impact a location’s ability to keep its residents and employees safe, both during an emergency and in the days and weeks that follow.

The assessment helps pinpoint the services a facility will need by “identifying residents who require additional assistance — the wheelchair-bound, the bed-bound, the residents on ventilators,” said Doherty. This includes residents with dementia as well as those who simply need assistance ambulating.

“If you didn’t ask the right questions and don’t have the right information, it is hard to make a decision about the patient lives that are in your building.” — Scott Aronson, Director, Strategy & Business Development – Healthcare, RPA

Assessment best practices should include the help of community partners such as law enforcement and local emergency management and health department officials, said Scott Aronson, Director, Strategy & Business Development – Healthcare for RPA, a JENSEN HUGHES Company. RPA is an emergency management firm and technology provider serving the health care industry.

By engaging community resources, said Aronson, “you will at least know what they feel the threat is to your buildings and to your patients and to your infrastructure — of either getting resources in to you or getting you out of there — or whether your building will be able to stand up to the hazards.”

The quality of the assessment is key, said Aronson, because that information will help prioritize planning and support how decisions will be made during a crisis.

“If you didn’t ask the right questions and don’t have the right information, it is hard to make a decision about the patient lives that are in your building.”

Advertisement




For the same reason, said Aronson, organizations can’t expect their state or local government to tell them what to do in a crisis. Municipalities aren’t typically inclined to order an evacuation except in extreme situations. It’s up to each facility’s incident command team to make decisions based on the information directly in hand.

Whether the decision in the moment is to shelter-in-place or evacuate, an organization’s vendor and supplier network is a significant piece of the emergency planning puzzle.

Transportation arrangements and sheltering agreements with receiving facilities must be in place in the event of an evacuation. Fuel, water and other supplies may be needed in other circumstances. Getting it right often means having a plan B — or even a plan C.

Risk managers need to look at the larger picture — their primary and contingency vendors as well as their vendors’ contingency arrangements.

“If your fuel supply is local, for example, then do you have a contingency? Are they part of a national company where they have other resources they can bring in from other locations?” said Rick Maltz, senior director of resident services and risk management at Erickson Living, home to more than 24,000 seniors in 11 states.

Marcia Price, Erickson Living’s vice president of operations and risk management, added, “Sometimes it is necessary to make a judgment call when determining the right contract partner. You may see a vendor and it seems great — maybe the pricing’s a little lower. But if it’s a local vendor, you have to think about [your contingency plan in] an emergency. It may be better to go with a national vendor who can always provide for you.

“However, if you’re going to use a local vendor, have a backup plan or a backup contract so that you give yourself some options.”

The drawback with back-up vendors though, Price cautioned, is if you’re not a high-use client, you may not be at the top of their priority list.

Having the right supplies in the right places is a strength of Erickson’s. As Hurricane Sandy bore down on the Northeast, Erickson trucked fuel in from Florida and kept the truck parked at one of its facilities.

When nobody else in the area had fuel, they were able to keep the facility’s generator topped off and also provided fuel for employees’ cars.

New approaches are being developed that can significantly expand options for facilities and organizations of every size. More than 1,000 southern New England facilities signed on to Mutual Aid, a technology platform developed by RPA. The platform is designed to enable facilities to support each other in the event of a disaster.

Mutual Aid is a powerful tool to amplify the resources of every member facility. “They will actually deploy each other’s vendors to help the other,” explained RPA’s Aronson. “Or they’ll send their own resources and assets to help the other.”

Even for large corporate groups, such a network of support can play a massive role in terms of rapid response. A hurricane enables the advance deployment of resources, but most other disasters don’t.

“A lot of the other things corporate groups may just not be prepared for — tornadoes, earthquakes, wildfires — you can’t just plop resources down in the middle of that,” said Aronson. “You have to rely on existing partnerships in the community, in the region, and in the greater state to help you out.”

Continuous Improvement

Training and testing of the emergency preparedness plan is essential. It’s never enough to just tick off a checklist, experts agree.

“You can check the boxes pretty easily, but did you actually learn anything? And will it benefit you in the future?” said Aronson. “It’s critical that they really do it and not just go through the 10-minute motions. They have to learn from that exercise and improve their plans and training going forward.”

Marcia Price, vice president of operations and risk management, Erickson Living

At Erickson Living, disaster preparedness messages are woven into the company’s broader safety education program, including department-specific safety talks, monthly town hall meetings and annual compliance training.

But it’s the drills that really test both the plan itself and each facility’s ability to execute it successfully.  Drills simulate how each person might react under the pressure of a real-life crisis and help identify opportunities for improvement.

“It really helps [the facilities] train their teams on what is expected. We think that’s an important piece of being able to train people on how you handle an emergency,” said Price.

In addition, she said, it’s a chance to work with local emergency responders and solidify those relationships and expectations long before a crisis occurs.

Both Maltz and Price said that each drill and each actual incident help identify gaps. Any unexpected wrinkle is an opportunity to update the plan in order to be better prepared for the next event. “A couple of the things we learned from Harvey we took to Irma,” noted Maltz.

Price added, “Our program is based on continuous learning; it’s not an annual event because this is a living document, and we keep updating it and we keep making sure that we’re improving on it.”

Free Resources

From a coverage perspective, property and business interruption policies are essential for nursing and long-term care facilities, as are workers’ comp, medical professional liability, general liability and D&O.

But carriers have more to offer their long-term care clients, said Doherty.

Advertisement




“I think it’s important for [long-term care facilities] to partner with a carrier that’s going to help them meet these challenges head on, whether it’s assisting with conducting the risk assessment or providing education to their staff,” she said.

There’s a wealth of other resources out there for organizations to avail themselves of, and much of it is free.

The Nursing Home Incident Command System (NHICS) was developed in California and can be downloaded for free, said Aronson. It’s one of a large trove of free resources found at ASPR TRACIE, a double-whammy acronym for the Assistant Secretary of Preparedness and Response and Technical Resources, Assistance Center and Information Exchange.

Other free materials can be found on the websites of FEMA and the department of Health and Human Services. Numerous professional associations as well as state and federal websites offer free resources to help meet the latest CMS requirements.

“Long-term care facilities are under constant pressure to do more with less,” said Doherty. “Those that prepare and practice and train for that inevitable catastrophe — they really reduce the chances of debilitating losses while strengthening their ability to safely care for this fragile and vulnerable population.” &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

Advertisement




Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

Advertisement




We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

Advertisement




Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

Advertisement




Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

Advertisement




More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]