It seemed odd to use their living room as an office, but it was the only way J.J. Hill Brace and Limb could continue treating their patients — those who were still alive. Although a sense of unity remained intact after Hurricane Katrina landed, their O&P practice was leveled and scattered in pieces along the coast.
“The roof was ripped off; our patients were killed,” Lawrence Hill, CP, CPed, co-owner of J.J. Hill Brace and Limb told O&P Business News. “It is hard to describe if you have never been through it…but it was complete hell.”
Natural disasters are inescapable and have destroyed countless businesses across the country. For small practices, preparation is vital and could mean the difference in surviving or closing the doors for good.
Preparation and impact
Time is a luxury in the face of disaster. Communications are weakened, suppliers are disabled and public resources are scant or absent.
“The potential for those hazards to have large impacts cannot be underestimated,” Keith Tidball, PhD, director of the Disaster Education Network at Cornell University, told O&P Business News.
Developing a disaster plan will highlight critical business activities and gather the resources needed to support them during a crisis, he said.
Since many risks cannot be insured, the preparation process should consider all hazards.
“The first thing that any business is going to need to do is identify the hazards most likely to become a problem…to understand what the vulnerabilities are,” Tidball said. “Then start looking at some of the best management practices.”
Tidball suggested taking measures to protect the structure of a facility before the storm. Overhanging trees should be trimmed, vents covered, property cleared of loose items and storm shutters installed over doors and windows.
“In many cases the best insurance policy is preparedness,” he said. “When the fire alarm is ringing or the tornado alarms are sounding, it is too late to think about a plan. It is happening.”
In May 2011, in Joplin Mo., it happened to Frank Ikerd, CPO, owner of Advanced Orthotics and Prosthetics.
“It was Sunday evening and I was at home, listening to weather reports on the radio,” Ikerd said. “Initially I thought it had gone north of our office. My office manager called and said: ‘You don’t know, do you? The office is gone.”
An EF-5 level tornado had just roared through the south side of the city, touching down with 300 miles-per-hour wind. The town was swept into tunnel of dust and debris, and Ikerd’s business was devastated.
After the winds subsided, he and his wife immediately headed into town to assess the facility.
“Everything was completely wiped out,” he said. “We had to go all the way through Kansas and come back on the west side of Joplin to see the office.”
The Hills had a similar experience.
In August 2005, Katrina landed along the Gulf Coast, leveling the business and 70% of the town where they lived.
“When we got there…sheet rock from the attic looked like it had been thrown against the wall,” Dawn Hill, BOCO, CPed and co-owner of J.J. Hill Brace and Limb located in Gulfport, Miss. said. “The roof had been torn off, floors were collapsed, walls and inventory were everywhere. It was terrible.
“There was not a single person that was not affected in some way,” she said.
“People did not have food, they did not have power, they did not have homes…they didn’t have anything,” Lawrence Hill added. “These were tough times. Our business was destroyed.”
While the perfect business plan cannot shield a building from heavy winds or high water, insurance could, Tidball said. Adequate coverage can reduce the financial impact to a damaged facility, and sustain economic activity during interruption.
There are many insurance options, but fully understanding the policy is essential. Level and type of coverage should appropriately match the risks.
The hurricane destroyed J.J. Hill Brace and Limb, and a tornado flattened Advanced Orthotics and Prosthetics. Both companies had insurance that covered their losses. However, not all weather catastrophes are covered by insurance.
Hail, fire, and wind damage are generally covered in commercial policies. Losses caused by pollution, earthquake and flood are not.
Flood insurance is sold independently, and policyholders must wait 30 days before it can take effect. Coverage for the structure and contents of a building are separate, and inventory located in the basement is only partly compensated.
“Make sure insurance not only covers the property, but also the equipment inside,” Dawn Hill said. “When those things are gone, you have to replace them.”
Standard building coverage will compensate up to the insured amount of damaged property, and endorsements can be added to cover expedited delivery of replacement machinery.
For O&P practices, it is a good idea to keep an inventory of prosthetic equipment in the facility. Accurate documentation will aid in the claim filing process following a storm.
Supplier, insurance and patient information should be duplicated and secured off-site. Other important documents such as payroll, billing and medical records should also be accounted for.
Data and inventory that cannot be transported should be stored in a water resistant container and elevated to the highest level in the case of flood, or the lowest level in heavy winds.
In Joplin, Ikerd and his wife recovered any patient files that were salvageable, and stored them at his home about 5 miles outside of town.
Retrieving essential records will paint a clear picture of financial position. However, businesses must contact their insurance company before cleaning or removing items, as some policies require photographed confirmation of damage. Unauthorized repairs may not be covered, Tidball said.
Before returning to the facility, business owners should be certain that emergency services have declared it safe, as many dangers may still exist.
“Wait until the all-clear is given to start doing that kind of documentation,” Tidball said. “There are situations where there are potentially power lines or other immediate hazards to health and lives.”
As Dawn, Frank and Amber Hill, co-owner of J.J. Hill Brace and Limb, began documenting what was left of their facility, an immediate hazard took shape. Three weeks after Katrina landed, hurricane Rita was forecast to hit the same area.
“There was a pit in my stomach…a feeling that cannot be described,” Lawrence Hill said. “The rain came and everything that we had just uncovered and salvaged got ruined,” Dawn Hill added. “We lost hundreds of thousands of dollars and inventory and office machines.”
Some of those office machines included computer equipment and telephones. Tidball suggests taking rational steps to minimize loss after the area is declared safe, such as placing a tarp over a broken roof and moving undamaged items to a secure place.
Tidball added that businesses should establish alternate communication plans before a storm hits. Reaching out to employees and distributors quickly will be essential to recovering normal business operations.
Patients also may have been severely affected, so information about where and when the business will resume operations should be communicated.
“Have communications in place…know and have rehearsed procedures of how to stay connected, accountable and continue operations if possible,” Tidball said. There should be multiple people who know how to access important business documents and medical records.
Locating alternative equipment, suppliers and facilities should also be an immediate priority.
Ikerd had all office calls forwarded to his cell phone while the business was shut down, and began reaching out to employees, patients and physicians.
The local hospital allowed Ikerd to use its facility to address his patients’ prosthetic needs, but J.J. Hill Brace and Limb had a different experience.
“We were literally seeing people in gas station parking lots,” Dawn Hill said. “There was one gentleman who was staying in a dog kennel because his house had been taken away. It was sad.”
Although Ikerd was able to see patients in the hospital, his business lost income and suffered financial loss during the interruption. It was a long process of sorting through insurance and finding a temporary facility to treat patients, he said.
“Since there were so many businesses affected by the storm, everybody was scrambling for space to move things into. There was just not a lot of viable space available.”
Lawrence Hill was forced to open up his home as a short-term facility in order to fabricate and repair his patients’ prostheses.
“Some people found out where I lived, my home out in the country,” he said. “They would sit in my living room while I went out to the guesthouse and worked on their prosthetic limbs.”
J.J. Hill Brace and Limb no longer had a physical address, and the insurance company revoked their Medicare certification.
“People would come to us and there was nothing we could do,” Dawn Hill said. “They had to go to other places, which hurt our business.”
If the building is completely destroyed or uninhabitable following a storm, business interruption insurance will compensate some of the losses. Supplier failure, certain continuing expenses and temporary relocation will be reimbursed.
“Business interruption insurance is important,” Dawn Hill said. “If you cannot keep up with loss of paychecks, inventory and time [during interruption], it will compensate that.”
Their business could not keep up, and fell deeper into debt. They had no choice but to rebuild and restart, and began the construction process themselves.
Hill said it is important to check contractor credentials through a claims adjuster, the Better Business Bureau or local Chamber of Commerce before signing a contract. Some contractors are inexperienced or not reputable.
“We did a lot of demolition and moving things out of the building ourselves because our insurance would not reimburse us,” she said. “The contractors, the roofers, the painters, the electricians…they were taking the opportunity to the fullest. It was crazy what things cost.
“We were not able to reopen our doors for more than a year,” she said. “It was the toughest times of our lives.”
A natural catastrophe will make full recovery difficult; without insurance, it can be nearly impossible, Tidball said.
“The statistic right now is that 40% to 60% of small businesses never reopen if they experience a disaster. When floodwater is rising or the tornado is bearing down, it is too late to get a policy.”
Claims can be filed under income protection and loans are available through the Small Business Administration.
Ikerd, who also lost a considerable amount of business, said regaining stability was a long-term process, and businesses need to have resolve.
Advanced Orthotics and Prosthetics and J.J. Hill Brace and Limb had resolve. They rebuilt in the same locations.
“It is kind of a symbolic thing to come back and be in the same location,” Ikerd said. “Anytime a new structure is built after a disaster, I believe it helps psychologically in the recovery process. We hope our rebuilding effort will be an inspiration to the community.”
Businesses should confer with their insurance provider before renovating or rebuilding because major alterations or significant purchases will reflect an increased property value and increased premiums. Building construction should meet applicable building codes and comply with local laws and regulations.
Some good came from the disaster, Dawn Hill said. When J.J. Hill Brace and Limb renovated their facility, they included features to benefit their patients.
“We were able to redesign some things…take the opportunity to update our building and bring it up to code for patient accessibility,” Dawn Hill said.
The new office is wheelchair accessible, has a larger reception area and bigger waiting rooms. It has fitting rooms and sliding doors for patient privacy, and is now better equipped to handle a major storm.
She said if the storm taught them anything, it is how to protect the things most important to them, including their patients.
Ikerd used green materials to rebuild his facility.
“I think we have a responsibility to take care of the environment and lessen the impact we make on it,” he said. “It was an opportunity with a clean slate to build back green.”
After the tornado, GreenTown Joplin — a nonprofit organization that developed with the support from Greensburg GreenTown — a result of the Greensburg, Kan. tornado in May 2007 — offered an opportunity to transform the devastated town into an energy-efficient community.
Many of the residential homes in Joplin that were affected by the storm incorporated green technology in the rebuilding process. Advanced Orthotics and Prosthetics, however, was one of the only commercial buildings in the town that took that approach.
“We had the wiring [in the building] preinstalled to accept solar panels,” Ikerd said. “The durability of the walls and energy efficiency of the insulated concrete is much greater than standard construction.”
The exterior construction uses an R-40 to R-50 insulation factor, which is 6 inches of concrete insulated by a combined 5 inches of foam.
This system forgoes traditional rebar, or steel-reinforcing rods spaced out throughout the concrete surface of the walls. Instead, it uses helix, which mixes tiny coil metal shavings into the concrete that interlock through the entire structure of the building.
This lessens the chance of cracking and increases wall strength by about 30% to 40%, allowing the building to withstand winds in excess of 200 miles per hour.
The dual flush toilets conserve overall water usage, the smart heater only warms water during business hours and the variable refrigerant flow system is nearly 40% more efficient than standard heat and air systems.
Ikerd said although the green technology may be more expensive up front, it will pay off in short order.
“We were looking at something that might be a slightly higher cost of initial construction, but would be financially beneficial in addition to helping the environment. We project to recoup additional cost that we have over a traditional method within 5 to 10 years.”
As a member of the Extension Disaster Education Network, Tidball has been researching how nature and green materials can benefit the recovery of a community such as Joplin.
“There are a number of reasons green infrastructure should be considered in rebuilding and recovery,” he said. “When people have been demoralized by a disaster, the things they hold most sacred are their family and the iconic natural symbols around them.
“If we are going to rebuild, let’s do in ways that include the importance of restoring that green infrastructure,” Tidball said. “It saves lives, property, anguish and grief if we rebuild in ways in which our loved ones and most important belongings are secure if another storm is coming.”
A look ahead
More storms are coming. The Natural Resources Defense Council and Rocky Mountain Climate Organization reports that heavy rain linked to flooding is increasing in the Midwest, and catastrophes along the coast are expected double over a short time, according to the Insurance Information Institute.
Natural disasters are becoming more frequent, more intense and are threatening to bring devastation across the globe, these reports warn.
While it is not an easy process, the storms could also bring a chance to prepare, protect and rebuild stronger than before, Ikerd said.
“It is not something you snap back from immediately…there are a lot of bumps in the road,” Ikerd said. “But if you are prepared…and resilient, it can be an opportunity to grow and improve as a practice.” — by Shawn M. Carter
Disclosure: The Hills, Ikerd and Tidball had no relevant financial disclosures.