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News from Readiness Associates

Safe & Ready

Disasters – to prepare or not. What are the costs?

By Bruce Brauninger, COO, Readiness Associates

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Data from the National Oceanic and Atmospheric Administration’s National Centers for Environmental Information indicate that since 1980, 203 weather and climate disasters in the U.S. have resulted in $1.1 trillion in total damage costs.

You know the old saying: An ounce of prevention is worth a pound of cure.

When healthcare organizations fail to prepare for natural or man-made disasters, dollars replace weights as units of measure. Sure, there are costs associated with developing an Emergency Preparedness Program, but the costs of recovering without a plan are much worse.

According to the U.S. Federal Emergency Management Agency, 40 percent of businesses never reopen after a disaster. FEMA adds that only 29 percent are operating two years after a disaster. Businesses that lose information technology for nine or more days in a crisis go bankrupt within a year, FEMA says. And one in five companies spends too little time maintaining its business continuity plan.

Business disruption costs money

On its ready.gov website, the U.S. Department of Homeland Security noted: “When business is disrupted, it can cost money. Lost revenues plus extra expenses means reduced profits. Insurance does not cover all costs and cannot replace customers that defect to the competition. A business continuity plan to continue business is essential.”

Disaster losses spiked last year

If we combine natural with man-made disasters, losses continue to climb. In a Dec. 20, 2017, report by CNN Money, natural and man-made disasters in 2017 accounted for $306 billion in losses – up from $188 billion in 2016, according to global reinsurance firm Swiss Re. 

Obviously, the increasing frequency and severity of disasters could threaten every industry, including healthcare, which has the unique responsibility of maintaining continuity of care despite any emergency. For example, in the wake of Hurricane Katrina, losses to five New Orleans metro area hospitals were estimated at $368 million.

Call to action: what to do next

To ensure that facilities are prepared, the U.S. Centers for Medicare & Medicaid Services (CMS) of the U.S. Department of Health and Human Services made it mandatory in November 2017 for 17 types of healthcare organizations to implement Emergency Preparedness Programs

Organizations must perform a risk assessment, develop emergency plans, communications plans, policies and procedures, and train and test staff members to comply with the CMS rule.

Be ready: Get help

Healthcare organizations with limited resources should reach out to emergency preparedness/response professionals to help organizations achieve the greatest value in mandatory emergency preparations.