Climate impact: Health systems need to shore up facilities against costly storms

NYU Langone
When Hurricane Sandy caused destructive flooding along the East Coast in 2012, New York University Langone Medical Center not only renovated and weatherproofed existing buildings but ensured that their planned construction wouldn't allow the campus to be impacted by flooding that way ever again. (NYU Langone)

Perhaps no impact of climate change has exposed health system vulnerabilities more than strengthening storms.

NYU Langone saw an estimated $400 million in lost margins after Superstorm Sandy in October 2012. Failed levees in New Orleans during Hurricane Katrina led to 11 hospitals getting hit with floodwaters, resulting in lost power, communications, and water/sewage service and inability to restock essential supplies at many of them.

“We’ve seen a recurring theme over the years, with Hurricane Katrina to Harvey and Hurricane Michael, that healthcare is one of the key issues that emerge during those catastrophic events where hospitals are particularly vulnerable," said Emilie Mazzacurati, the CEO of climate-data firm Four Twenty Seven, which was acquired by Moody's Investors Service over the summer. "Hospitals’ ability to treat those patients is at risk, and yet, they are much more needed during those events.”

The Fourth National Climate Assessment projects "more frequent and intense extreme weather" is expected to damage essential infrastructure. Weather-related risks are rising throughout the U.S., with the yearly average for U.S. extreme weather events costing over $1 billion jumping from 6.3 on average between 1980 and 2012 to 12.6 in the last five years, according to data from the National Oceanic and Atmospheric Administration.

RELATED: PwC: The financial risks of hurricanes hospitals might not be prepared for

A checklist of actions hospitals can take

There are plenty of financial threats hospitals may not consider in their preparations. Extreme weather events can significantly impact a health system’s margin, according to a report (PDF) from Health Care Without Harm and PricewaterhouseCoopers Advisory Services. 

In advance of Hurricane Dorian, a record-setting storm in the Atlantic in August which decimated parts of the Bahamas before hitting the U.S., Evercore ISI analysts warned that Tenet Health Care faced some of the most exposure of U.S. hospital systems with 22% of its beds in coastal counties in Florida, Georgia, South Carolina and North Carolina. HCA Healthcare had 15% of its beds in coastal areas. 

Hospitals can "face closures, chaotic revenue cycle operations, disrupted supply chains, possible credit downgrades, destroyed and damaged physical assets, and displaced workforces and patients," PwC wrote in another report released in August. "Partner institutions, such as long-term care facilities and retail pharmacies, may temporarily or permanently operate at diminished capacities."

For instance, they wrote, Massachusetts General Hospital and Brigham and Women’s Hospital saw $1.3 million and $700,000, respectively, in overtime costs during a historic winter storm in Boston in 2015. Brigham and Women’s Hospital lost millions of dollars due to reduced admissions and canceled surgeries.

Other costs can come after the storm when damaged health system buildings or other assets become targets of theft. Health systems can face the threat of lawsuits, such as what happened after Hurricane Katrina when more than 200 lawsuits were filed against providers alleging liability for patients’ deaths and suffering, PwC wrote.

“There are a lot of moving components in the regulatory environment, in general, around healthcare. So it can be difficult to prioritize something that can feel like a long-term consideration when it comes to some of those slow-moving risks, again, when they’re looking at new regulations, changes in funding and just running the hospital day-to-day," Mazzacurati said. "It's, of course, easier to do this planning when you’re well resourced. We’ve seen hospitals like Partners Health, for example, that have invested a tremendous amount in understanding the risks to a great level of detail.” 

But, she said, smaller and rural hospitals don't have the bandwidth to dedicate someone to understanding the problem, let alone put resources into planning.

Heather Landi contributed to this report.

Climate impact: Health systems need to shore up facilities against costly storms

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