Minimizing the Impact of Medical Equipment Losses: LWG Consulting

Doctors and nurses need to make quick, educated decisions to minimize the impact of difficult situations. These decisions are based on the practitioner�s years of experience, their education, the science and technology available, and with the assistance of critical analytical and diagnostic equipment. The hope is that emotion will be left out during the decision-making process. The effects of these decisions can be noticed for years to come by the hospital staff, the community, and individuals responsible for those decisions.The decision-making process and the corresponding actions following a medical facility fire loss must be much of the same. Time is of the essence, as administrators and claims personnel must make quick decisions based on their years of experience, education, and the science and technology available. They, too, should remove emotion from the equation, as the effects of their actions can have a significant impact on the resumption of operations and on patient care.

As with many commercial losses in this technology-driven age, medical facility losses can contain significant amounts of equipment. However, it is important to understand the unique attributes of medical equipment losses. For example, there can be significant business interruption costs associated with hospital losses. It is not uncommon for business interruption costs to exceed $100,000 per surgery in a single surgical suite (Top 31 Elective Inpatient Hospital DRGs , 2007). Further, medical equipment in a hospital is typically under some type of warranty or maintenance contract. As a result, nearly every manufacturer associated with the hospital may attempt to sell new equipment, citing that the warranties or maintenance contracts are now “null and void.” Given the amount of highly sophisticated equipment located in hospitals, property damage costs can escalate quickly if replacement equipment is required.

According to the U.S. Fire Administration, approximately 2,500 fires occur each year in medical facilities (U.S. Fire Administration, 2002), with an overwhelming majority of those occurring in hospitals. However, it is understood that many medical facility fires tend to be small in nature. In fact, medical facility fires are typically so small that the sprinkler systems activate in only 6% of them (U.S. Fire Administration, 2002). Based on this information, it can be assumed that much of the equipment located in a medical facility would not be heavily damaged and would thus not require replacement following most fire losses.

Given the above issues, one can see the importance of moving quickly when dealing with medical equipment losses. As such, one of the first steps when handling these situations is to solicit the opinions of the individuals that know the equipment better than anyone � the maintenance staff and on site biomedical engineers. It is also important to facilitate an experienced outside equipment loss consultant knowledgeable of the nuances associated with medical equipment claims. Someone familiar with the Joint Commission (formerly JCAHO) standards and FDA (Food and Drug Administration) standards is preferable. Joint inspections help to build consensus on the appropriate “path forward” for the equipment, which can greatly reduce uncertainty or disagreements in the process.

Once the facility has been environmentally stabilized through dehumidification, air conditioning, and erection of appropriate containment, a room by room inspection of affected areas should be completed jointly by the staff engineers and the outside loss consultant. Through this inspection, initial recommendations can be provided for the business-critical equipment affected by the loss event, whereby equipment can be segregated into appropriate categories: those that definitely require replacement, those that may require decontamination, repair, and testing and those that can be used immediately. If possible, move usable equipment to an alternate, temporary location within the facility to limit the business interruption and extra expense costs. Additionally, it is imperative that the facility and equipment receive equal priority in assessment, remediation and triage. Without equipment, the surgical suites are useless and vice versa. Therefore, coordination between the facility restoration contractors, staff biomedical engineers, maintenance staff, manufacturers, equipment loss consultants and equipment restoration specialists is vital.

As previously mentioned, based on the information received by the U.S. Fire Administration, many of the fires are relatively small in nature. This suggests that the equipment does not typically require replacement if it has only been affected by smoke and soot and in these cases equipment restoration and decontamination is certainly an option. In many instances, equipment restoration is cost-effective, extremely reliable, and can save valuable time returning the equipment to operation, especially when considering lead times of replacement pieces with such specialized equipment.

While it is true after a disaster from fire that the chemicals deposited on equipment can adversely affect medical equipment, the effects of this contamination can vary widely based on several factors, including the composition and type of contaminants present, the amount or concentration of each respective contaminant, the environmental conditions present at the loss location, the equipment type and the materials used in the construction of the equipment. In addition, the type of contamination deposited on the equipment is dependent upon the materials combusted. According to the U.S. Fire Administration study, plastic is the most common combustible in medical facility fires.

The byproduct of burning plastic is typically chloride ions. When the chloride ions interact with moisture in the air, hydrochloric acid can form on the equipment and cause corrosion on the metal surfaces and electronics. Within electronics, this change in chemical properties also results in a change in the conductivity of the metal. These conductivity changes can result in spurious operation of the equipment as the corroded devices may not pass electrical and data impulses properly.

However, if action is taken quickly to remove the contamination as a result of the fire, the medical equipment can be returned to pre-loss condition using scientifically proven decontamination and restoration techniques. In an effort to understand not only the effects of combustion byproducts on electrical and electronic equipment, but also the likelihood of failure from this contamination, the US Department of Energy undertook a study, which in part determined the probability of failure of equipment at various contamination levels. The results of their study, published in the DOE Fire Protection Handbook Volume II “Fire Effects on Electrical and Electronic Equipment,” showed that the probability of failure of equipment increases exponentially with increasing contamination levels. The study provided scientific data regarding the contamination level below which the probability of failure is zero and also levels above which restoration is typically not cost effective. A graphical representation of their study is shown below.

The DOE study provides some useful information in relation to equipment restoration. First, equipment restoration is typically not cost-effect above 500 mg/in2 (micrograms per square inch) of chloride equivalent contamination. Factors affecting whether the equipment can be restored if contaminants are above this level include the type of equipment and the cost and availability of replacements. Another important result of the study is that the probability of failure is zero at contamination levels of 20 mg/in2 or less. As such, in order for restoration to be reliable, the contamination level must be reduced to 20 mg/in2 or less chloride equivalent (Hughes Associates, Inc., 1996).

Other standards can also be implemented, including the IPC Standards. The IPC is an association of companies associated with the manufacture of printed circuit boards and electronic assemblies, including those installed in medical equipment. This association sets standards that include the electrical clearances and cleanliness of electronic assemblies. The cleanliness standard for newly manufactured boards is set at 10.06 mg/in2 (1.56 mg/cm2) chloride equivalent (IPC – Association Connecting Electronics Industries, 2005). Please note that chemical wipe samples can be analyzed by independent laboratories to provide accurate chloride equivalent contamination results.

Even with above references providing a scientific basis for decontamination it is common for healthcare organizations, risk managers, maintenance staff, and manufacturers to object to equipment decontamination, mainly because there is the public perception and opinion that the equipment will never be reliable. Through the educational process and scientific studies, it is reasonable to assume that the insured healthcare organization will understand the issues and work with an insurance company to handle the warranty situation equitably and sensibly. Further, with the insured�s cooperation, there are steps that can be taken to ease every party�s concerns, including the manufacturer and service provider.

For example, a common objection is that the manufacturer is voiding all warranties or the maintenance vendor is canceling all maintenance contracts with respect to the equipment. The first step is to discuss the science behind the recommendations with the manufacturer or service vendor. What studies have been completed that show reliability issues with fire contaminated equipment other than the Department of Energy study listed above? If they do not have any additional studies (which is likely), then request their cleanliness standards for newly manufactured pieces of equipment. These should be available by someone on their technical staff. An IPC Certified equipment restoration company or other reputable contractor will likely be able to meet those standards.

If the scientific studies have still failed to sway the skeptical manufacturers and service providers, it is recommended that the service provider or manufacturer be included in any clearance testing or burn-in testing. In this situation, the vendors are able to conduct their full testing, receive compensation for their testing and repairs, while still having the ability to retain their customer. In the current market, very few vendors are willing to lose a customer over a potential warranty issue.

However, if they still object, there are highly reputable third party warranty and maintenance contract providers in the market that will be able to match the language of the maintenance contracts for a fee. While this is not always the most cost-effective option, it is one that removes the argument of lack of service on equipment. When dealing with fire losses in medical facilities, the above actions may assist in coming to a quick, equitable, and satisfactory settlement for all involved. Using education, science, and experience can reduce the effects of such a loss and smooth the road to recovery.

About LWG Consulting

The entire LWG Consulting team is focused on providing the best possible service to the insurance and legal communities, and those companies that suddenly find themselves facing the challenges of recovering from a disaster. With its history of service, vast experience, convenient locations and commitment to quality, LWG Consulting has become “The Trusted Advisor” to nearly every major property and casualty insurance carrier and other major corporations. For more information visit