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Disaster recovery planning for business continuity

By David A. Anderson, CPA.

Multi-specialty Medical Associates (MMA), a large multi-specialty medical practice, operated out of a single building, which included exam rooms, a laboratory and all back office operations, including the practice’s computer system. The MMA management team was confident that its Disaster Recovery Plan would allow the practice to get its computer systems up and running quickly in the event of a disaster.

In May 2001, a gas main ruptured and the resulting explosion destroyed more than three-quarters of the building. The practice lost 25 percent of its staff, including several of its most senior physicians, as well as the laboratory, the computer system, and most of its paper-based patient records. Although the practice was able to utilize a “hot site” to restore computer operations, it took almost a year to find a new facility, rebuild its patient records, and recruit and train replacements for the lost physicians and staff. By this time, the practice had lost more than two-thirds of its patients, one-half of its physicians and had exhausted its business interruption insurance. By September 2002, MMA dissolved its practice.

Although the above story is only hypothetical, it serves to point out that it takes more than just a Disaster Recovery Plan to successfully survive a disaster. In fact, ensuring the continuity of your practice requires planning that addresses other key aspects of your operation, including facilities and equipment, key employees, communications, and paper-based records.

Let’s look at the implications of each of these.

Facilities and Equipment

Finding a new facility to replace one partially or wholly destroyed by a disaster is likely to require a lot more than just calling a commercial real estate broker after the disaster has occurred. It is important to know up front what your facilities requirements are. These include:

· Square footage – both in total and split between exam rooms, waiting areas, special areas for diagnostic or laboratory, and back office space.

· Special building requirements such as minimum ceiling height, minimum floor load, special shielding (for MRI, X-Ray and other diagnostic equipment), etc.

· Special environmental requirements such as air conditioning, underground tanks, fire suppression systems, etc.

· Special power requirements.

· Special communications requirements.

· Special grounds requirements including parking spaces.

Once you have determined the above requirements, you should review them with your commercial real estate broker on a regular basis to identify available properties that could fulfill your needs. This review will allow you to determine if there are nearby properties that can accommodate your needs in event of a disaster. If not, you will have to modify your business continuity planning to consider either relocating to more distant immediately available properties or completely rebuilding your facility. In either event, your business continuity plan would have to take into account the impact of this on your ability to retain patients and employees and to recover from the disaster.

In addition to facility concerns, you should also determine your equipment requirements. While replacements for some standard equipment may be immediately available, some specialized diagnostic equipment may require additional manufacturing time or may be difficult to immediately locate. In any event, your business continuity plan should identify all required equipment, specifications, any special power or physical facility (ceiling height, load, etc.) requirements, one or more sources for the equipment, and any potential lead time required to replace the equipment.

Key Employees

Employees are the lifeblood of any practice. A few years ago, the MIS Director of one of our clients was hospitalized. Because he was the only employee who knew how to run payroll, the client had to transport the MIS Director by ambulance to its offices in order to run the weekly payroll. Although this may seem like an extreme example, it nevertheless points out the impact of losing a key employee.

Your business continuity plan should identify all key employees (those whose knowledge, contacts, and/or experience is critical to the success of the practice) and contain action plans for continuing operations in the face of temporary (such as due to illness or disability) or permanent (such as due to death, termination or resignation) loss of each key employee. These action plans may contain activities (such as cross training) that you can undertake now instead of waiting for a disaster to occur.

Medical practices must also take a hard look at overall succession planning. Many times, a practice’s success and reputation is tied to one or more specific physicians. This is a subject that can sometimes be difficult and painful to address (such as when several physicians are vying to replace a senior physician who would be retiring in the near future). However, it is better to begin considering these issues ahead of time instead of waiting until after the key physician is temporarily or permanently lost.

Communications

After a disaster strikes, your patients, hospitals, your vendors, your employees, your employees’ family members, the media, government agencies, and others will be trying to reach your practice. Your patients need to know what is happening with their previously scheduled appointments, where they should send payments, and whether you can continue to service their needs. Your vendors need to know what to do about in transit shipments, whether you will be continuing to issue purchase orders, and when you will be paying your bills. Your employees need to know whether to go to work and where, and whether there will be any interruption to their pay. Everyone else needs to know what has happened, whether anyone was injured or worse, and what will be happening with your practice. Planning ahead of time for these communications needs will help ensure the continuity of your practice.

Your business continuity plans must address all of these communications needs. For example, if your employees have personal or practice provided cell phones, the cell phones could be used to notify patients, vendors and other employees (unless, of course, the disaster has knocked out cellular towers). If you have other operating locations, arrangements could be made ahead of time with your communications vendors to forward calls to these locations.

Your business continuity plans must also address your practice’s communication needs at its new facility. This includes how long it will take to get service installed and whether the new facility will need additional communications infrastructure. All of these issues are best addressed before a disaster strikes.

Paper-based Records

Although Electronic Medical Records is a hot topic among medical practices, most practices still use paper-based medical records. Even many of those that have implemented Electronic Medical Records have not converted older patient information to electronic form. Furthermore, many medical practices continue to maintain paper-based appointment scheduling and/or use paper-based billing to certain third-parties.

All of these paper-based records are at risk in the event of a disaster. Your business continuity plans must address how to mitigate these risks. Among the possible solutions are the installation of an electronic imaging system to scan and preserve these records electronically, the use of an outside scanning service to scan and preserve these records electronically, and off-site storage of paper-based records (although in the case of something like Hurricane Katrina with the wide-spread flooding it caused, such off-site storage turned out to be quite ineffective). Whatever solution you choose, it must be implemented now before a disaster occurs in order to minimize your potential losses.

Although having an effective Disaster Recovery Plan is important, your practice needs to address other critical business continuity issues such as facilities and equipment, key personnel, communications and paper-based records in order to ensure that it can effectively recover from a disaster.

David Anderson, CPA, MBA, MSE, CFS is the Director of Management, Strategy & Technology Services at Margolis & Company, located in Bala Cynwyd and Newtown, Pa.

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