Building with care

How can you best manage the complex risks that accompany healthcare construction projects? HRMR reports on a new advisory from ACE Group that has plenty of answers.

To keep pace with the advances in medical technology and the advent of healthcare reform, many healthcare organizations have begun to upgrade their facilities or build new ones to better serve their patients.

A new advisory from the ACE Group, Healthcare Construction: Managing the Environmental Risks, discusses the potential risks and considerations healthcare organizations should identify during new construction or renovation projects.

The advisory also examines opportunities to help mitigate the risks of potential pollutant exposures and describes how healthcare organizations can meet higher standards of care and take a proactive approach to risk management to help minimize the potentially harmful effects of pollutants during construction.

“During new healthcare construction or renovation projects, environmental risks can be a challenge because of the hazards the work poses to patients, staff and visitors,” says Craig Richardson, senior vice president, ACE Environmental Risk. “ACE’s Environmental Risk Practice understands these risks and has developed this advisory to provide useful information to help healthcare facilities better mitigate future pollution risks.”

Alleviating exposures

The ACE Environmental Advisory was authored by Gerry Rojewski, vice president and North America product line manager for the ACE Environmental Contractor Program. The advisory is part of a larger series of papers that ACE produces, which are designed to provide useful information on current industry topics faced by risk managers.

Rojewski highlights the fact that the environmental risks associated with construction projects are amplified for healthcare facilities such as hospitals, outpatient centers, clinics and assisted living centers because of the health issues patients may be facing. For instance, indoor air quality problems linked to a construction project may pose a modest risk for a healthy person, but for a patient with a compromised immune system, the reaction could be life-threatening.

“To prevent those kinds of problems, healthcare organizations need to make sure that building projects are conducted in an environmentally sound manner that mitigates the potential environmental exposures,” states Rojewski.

“In addition, healthcare organizations need to consider the possibility of significant financial costs and reputational damage of an environmental incident and make sure that their risk management program includes the appropriate insurance for environmental exposures.”

A frequent misconception is that general liability policies will provide coverage for environmental risks—yet such exposures have typically been excluded from general liability policies for more than two decades. For example, most general liability policies will have an absolute or total pollution exclusion and in some cases general liability policies may exclude manganese (associated with welding fumes) and silica (associated with concrete or block).

Even when general liability policies do provide some limited liability coverage for bodily injury or property damage, they typically will not cover the costs of remediation, which can be very expensive.

“To protect themselves from environmental claims, healthcare facilities can purchase a pollution liability policy that specifically covers those same liability risks along with the costs of remediation, decontamination costs and other expenses associated with an environmental incident, including expert help in crisis and reputational management,” states Rojewski.

Remediation costs can be substantial; for example, to address a mold problem arising from tainted ductwork may require shutting down a large area of the building or even the entire facility. On top of that, healthcare facilities that need to have a problem addressed right away can expect to pay premium prices for emergency response from environmental experts. Additional costs can be incurred by having to re-house patients elsewhere while works are underway.

It is also important to have environmental experts on board when dealing with federal, state or local environmental agencies. In addition, it may be wise to hire crisis management professionals to protect against the negative publicity that can arise if an environmental incident is not managed properly.

Construction projects bring a host of environmental risks resulting from the work itself, from fuel leaks and spills that impact on indoor air quality. “To guard against environmental exposures during construction, healthcare facilities need to take a proactive approach,” states Rojewski. “Before any renovation, repair or new construction project begins, it is crucial to assess the potential risks. For instance, construction may disturb existing building material that may have been subject to moldgrowth. Without proper containment measures, mold spores may be spread through the facility via the ventilation system.

“New technology can help identify areas where mold might be present before work begins, making it possible to mitigate the exposure first. Potential bacterial risks (eg, Legionella pneumophila), which are often linked to water systems, should be identified before any work begins and a hazard control plan developed and implemented.”

Experts and protection

Other contingency steps may include back-up power systems to ensure that containment measures for dust are not disrupted by power outages or natural disasters. Rojewski recommends that any containment systems be tested before and during construction to ensure they are operating correctly.

He also recommends that healthcare organizations contemplating construction projects should consider bringing in outside experts at the beginning to develop strategies to identify and lessen the environmental exposures throughout the project.

To make sure they have adequate protection, healthcare organizations may want to consider an owner-controlled insurance program that provides pollution coverage for all construction activities at a particular facility, or at a group of facilities, as well as for the transportation and disposal of construction materials and waste, says Rojewski.

He adds, “When seeking the right environmental coverage, contractors should purchase a policy that can be tailored to suit their needs. More specifically, they should consider an owner-controlled insurance program (OCIP), which provides pollution coverage for all construction activities at a particular facility or group of facilities.

“ACE has launched a contractor pollution liability (CPL) healthcare-specific OCIP program for this very reason. Our program helps both healthcare facility owners and contractors prevent coverage gaps resulting from a wide variety of environmental risks during construction projects by using a single policy form.”

Owner-controlled policies can provide coverage that is specifically targeted for construction and renovation projects at hospitals, outpatient facilities, clinics, laboratories and assisted living operations. Such policies can help facility owners and contractors prevent potentially expensive coverage gaps resulting from varying pollution-related exclusions in standard policies.

Rojewski recommends that healthcare organizations seek a policy that includes not only bodily injury and property damage but also coverage for emergency response, catastrophe management and decontamination for a wide variety of environmental exposures, including mold and bacteria.

“Because incidents at healthcare facilities are very likely to draw media attention, catastrophe management coverage normally covers expert public relations advice and services to prevent lasting damage to the reputation of the facility or the entire organization,” he says.

He also emphasises the importance of forward planning. Before work begins, healthcare facilities should develop a plan to identify and alleviate the environmental exposures, and then make sure those robust measures are put into practice throughout the project, he suggests.

“Today, healthcare organizations can take advantage of specialized expertise to help with training, planning and managing projects to minimize risk,” he concludes. “In addition, the appropriate insurance coverage can ensure they are covered for a wide variety of environmental risks during construction projects, and provide access to expert assistance in the event of an incident. That strategy provides protection for patients and for the entire organization.”