Foundational

By Tom Dennis

It’s simple: A patient rolls into the emergency room at Essentia Health-Fargo, and if time is of the essence and the injuries seem dire, ER staffers will cut off the patient’s clothes.

Now it’s hours or days later, and the patient is ready to go home.

But wearing what?

The answer is, wearing clothes – clothes drawn out of a supply locker that the Essentia Health Regional Foundation keeps stocked.

“We heard about this need from the staff, we asked some businesses to partner with us, and now we keep a closet full of clothing in the ER,” said Susan Omdalen, the foundation’s development director.

“It’s the kind of thing a hospital can’t charge an insurance company for, but that provides that little extra warmth to our patients – because they’re not wearing paper shorts home.”

The clothes operation is just one of hundreds or thousands of similar efforts by hospital foundations around the region, efforts that add up to millions of dollars in value.

Or even billions, considering the region’s leading health-care philanthropist, T. Denny Sanford, is approaching that milestone on his own. “To date, Mr. Sanford has entrusted Sanford Health with nearly $1 billion in gifts to advance bold research and patient care initiatives,” notes the Sanford Health Foundation’s 2017 annual report.

And while no other regional hospital’s foundation can approach Sanford’s worldwide reach, all of them are making dramatic – and generally unsung – contributions to the region’s health care and quality of life.

Filling the gaps

In Grand Forks, N.D., the Altru Health Foundation supports Camp Good Mourning, North Dakota’s only grief camp and a chance for children who’ve lost a loved one to experience both high ropes and low adventures such as canoeing, wall climbing, campfires and crafts.

In Fargo, parents of babies in Essentia’s expanded Neonatal Intensive Care Ward will be able to sleep in their child’s room, thanks to pull-out couches being provided by the Essentia foundation.

And in Minot, N.D., the Trinity Health Foundation offers 10 $3,000 nursing scholarships a year. Do the nurses have to commit to working at the Trinity hospital in return? No, they do not, said Al Evon, foundation director.

“It’s a true scholarship program; it doesn’t matter what school people go to or where they’re going to go to work,” Evon said.

“The fact is, there’s a shortage of nurses, and that could have a dramatic effect on the health and well-being of people across the state. We just thought, ‘Let’s attack this head-on.’”

Around the country, philanthropy plays a significant role in the health care revenue stream. For example, donations to American and Canadian nonprofit hospitals and health care systems totaled nearly $11.7 billion during the 2016 fiscal year, a $63 million increase over 2015, the Association for Healthcare Philanthropy reported.

And those numbers are going to keep going up, because philanthropy’s importance is certain to rise, said Jon Green, Altru Health Foundation director.

”There are a couple of reasons for this,” Green said.

“First, health care reimbursements from Medicare, Medicaid and insurance companies keep shrinking. That’s not a complaint; it’s just reality. So reliance on donors is going to keep growing.”

Just as important, the term “health care” now refers to a great many things that bring little reimbursement at all – notably, prevention.

“How do we spend our dollars keeping people healthy instead of after they’ve gotten sick? That’s a real focus here at Altru,” Green said.

“But we haven’t quite graduated in the reimbursement world to paying well for prevention.”

That’s why the Altru foundation offers free mammograms, free colonoscopies, and free diabetes-related foot and vision exams for financially eligible patients.

“So a doctor says to a patient, ‘You’re 62 with a family history of colon cancer, but you’ve never had a colonoscopy,’” Green said.

“The patient says, ‘I know, Doc, but I can’t afford it.’ And the doctor says, ‘We have a program that can help.’”

Travel and housing

Another area where hospital foundations pitch in is with expenses related to long-term stays.

Some time ago, a Minot-area family traveled to Washington state to visit a loved one in a hospital, and stayed in the hospital’s guest house. “They said, ‘That’s such a great idea, let’s bring it back to Minot’,” Evon said.

So they did. And this year, the Trinity Guest House is celebrating its 10th anniversary.

The 12-bedroom guest house has hosted 19,000 people from 46 states over the years, Evon said.

Then there’s the Trinity CancerCare Cottage, which is for cancer patients. “We have people coming from several hours away, and often they have to go through four to six weeks of treatment,” Evon said.

“The cottage is available to them so they don’t have to drive back and forth every day. It minimizes their travel and it helps them relax, and that means it helps them recover a little faster every day.”

Thanks to its annual Cancer Center golf tournament, the Altru foundation also offers lodging for cancer patients, Green said. “That started because we literally saw cancer patients sleeping in their cars in the parking lot in front of the cancer center.”

Then there were patients who skipped treatment sessions because “they couldn’t afford to put gas in their car,” Green said.

So for patients who qualify financially, the Altru Foundation will pay for gas, lodging and nutritional supplements for patients who can’t tolerate solid food.

“You ask, what does the foundation spend its money on?” Green said.

“Literally, we are spending $10,000 a month in gas cards, and $4,000 to $5,000 a month on hotel stays. … We have an arrangement with a hotel in Rochester, Minn. They direct-bill us, when our patients have to go down to the Mayo Clinic.”

Why give?

These and other programs directly benefit patients. Some foundations directly support their hospital, too. The Trinity Health Foundation, for example, has promised to raise $10 million to support Trinity Health’s new $275 million hospital in Minot, construction of which will start this spring.

But how about donors? What motivates them?

Simple: The desire to make a difference, said Bobbie Tibbetts, vice president of the Sanford Health Foundation in Sioux Falls, S.D.

During its 2017 fiscal year, the Sanford foundation raised $40 million from a total of nearly 20,000 donors, Tibbetts said.

Some donors bestowed gifts in memory of a loved one. Others gave through the Guardian Angel program, which lets people honor a Sanford patient-care staffer.

“It’s such a joy hearing those stories as they come in,” Tibbetts said. “It may have been a doctor who stood out, or it may have been the nurse who every single time during cancer treatments, greeted patients with a smile.”

Other times, fundraisers either solicit donations for a specific need, or help donors find the area where their money will do the most good.

In all of this, that word “donors” is the one to remember, Altru Foundation’s Green said.

“When I hear people say, ‘Gosh, the foundation does such good work,’ I say, ‘We’re just the pipeline. We’re the conduit.’

“It’s the donors – our wonderful donors who understand our mission, and are willing to help.

“They get the credit. Not us.” PB

Tom Dennis EDITOR, PRAIRIE BUSINESS 701.780.1276

By Tom Dennis INSURANCE

GRAND FORKS, N.D. – In the history of fire insurance, the Great Chicago Fire stands as a milestone.

The 1871 fire destroyed some 3½ square miles of the city and bankrupted 68 of Chicago’s 200 fire insurance companies. But the city and the insurance industry not only recovered, they did so while pioneering dramatic improvements in fire protection, firefighting and fire insurance practices.

Today, businesses and homeowners routinely carry fire insurance. And they need it blessedly seldom, because thanks to prevention, catastrophic fires now are rare.

Here’s hoping the recent ransomware attacks in Atlanta and Baltimore help speed a similar evolution. Because right now, too many “cyber structures” in America are rickety and made of figurative wood – and as we’re learning, it doesn’t take much to make the structures go up in virtual flames.

Cybersecurity is a big part of fixing that situation.

So is cyber insurance, and that’s what this story is about.

Cyber insurance helps protect companies financially against hacking, ransomware and other internet-based risks. It’s one of the fastest-growing areas of insurance; premium totals will triple in the next few years, jumping from $2.5 billion in 2017 to $7.5 billion in 2020, PWC Global predicts.

The growth is understandable. “Cyber crime is the greatest threat to every company in the world,” Ginni Rometty, IBM’s chairman, president and CEO, said in 2015.

Rometty had a point, as Atlanta and Baltimore’s experiences in March showed. “Hackers launched cyberattacks in both cities,” reported Governing magazine, “hobbling the 911 emergency response system in Baltimore, crippling a wide swath of city services in Atlanta, knocking out Wi-Fi at the nation’s busiest airport and forcing city workers to keep records with pen and paper.”

Such attacks get people’s attention, coming as they do on the heels of infamous breaches of Target, Equifax and other large firms.

But Prairie Business readers, take note: It can happen here. That’s because these days, small and mid-sized businesses in the upper Midwest and elsewhere are at serious risk, said Adam Hamm, former North Dakota insurance commissioner and past chairman of the cybersecurity task force for the National Association of Insurance Commissioners.

“Cyber attackers are looking for soft targets,” Hamm said. Small businesses often qualify because they lack strong cybersecurity protections.

The response of any business should be twofold: First, strengthen cyber defenses; and second, consider cyber insurance.

Basically, “it doesn’t matter what size business you are, whether you’re a multinational or on Main Street,” Hamm said.

“A cyber liability insurance policy is likely a prudent course of action.”

The region’s organizations now are learning this first-hand, said Gregg Schaefer, senior producer and vice president of sales at Vaaler Insurance in Grand Forks.

“I spoke with one fellow, he bought a policy and a week later, he got hacked,” Schaefer said.

“That claim probably was in the $20,000 range. We also had an $85,000 claim; we had written it for a client, and 10 days later, he got hacked, too.”

These days, about half of all cyber attacks target small businesses, Schaefer said.

“Before it was, ‘This will never happen to me,’” he said.

“Now, it’s happening a lot, and people are hearing about it.” n “The first question is, ‘What kind of coverage does your business need?’” Hamm said.

Organizations that are thinking about buying cyber insurance should engage in a four-step process, said Hamm, who’s now in Chicago as a managing director and cyber insurance expert for Protiviti, a consulting firm.

For example, first-party policies cover the company’s direct costs in the event of a breach. These may include notifying customers, buying credit monitoring for those customers, recovering blocked data and mounting a PR campaign to restore the company’s reputation.

Third-party policies protect against lawsuits, such as from individuals whose credit-card numbers were accessed during the breach.

“In your first conversation with an insurance agent, you want them to understand what you do in your business, and what kind of data you have that a breach could expose,” Hamm said.

“Then you work backwards to decide what kind of coverage you need. That’s Step 1.” n Step 2 calls for figuring out the company’s maximum liability. Is the business a small shop where an attack might cost thousands of dollars? Or does the firm’s extensive data and Internet presence potentially expose it to a multi-million dollar expense? n In Step 3, the company simply balances how much risk it wants to transfer to the insurer, with how much premium the company is willing to pay. n “And the fourth question is really the difference between the companies that make this purchase with their eyes open, vs. those that may be in for a rude awakening,” Hamm said.

Remember, even a business with seemingly little exposure probably keeps employee data – including Social Security numbers – on its computers.

Also remember “supply side attacks.” Like the 9/11 terrorists who leveraged box cutters into destroying the World Trade Center, cyber crooks used the stolen credentials of a single HVAC vendor – not Target itself – to penetrate Target’s defenses and steal 40 million credit and debit card numbers in 2013.

So, if your company links with other organizations’ systems, then mind your cybersecurity, lest you be used as a backdoor.

That question is this: What will the policy not cover?

“Because this type of insurance is developing so fast, there’s very little consistency between products regarding what’s covered, what’s not covered and how much the policies cost,” Hamm said.

For one thing, not enough actuarial data has been gathered to bring about industry-wide consistency. For another, cyber crooks keep launching new and unexpected attacks – and that keeps saddling American industry with new and unexpected risks.

There is good news in all of this, and one piece is the fact that cyber insurance doesn’t have to break the bank. The field’s growth means companies are fighting for market share, and consumers can benefit from the prices that result.

For example, consider a policy offering $100,000 in coverage. It might cover notifying customers, recovering data, paying the ransom in a ransomware case, lost-income expenses and a list of other firstand third-party costs of an attack

Depending on the type of business and other factors, the premiums for such a policy might start at less than $100 a year, said Desiree Khoury, vice-president for specialty reinsurance at NAS Insurance Services in California. (North Star Mutual Insurance Co. in Cottonwood, Minn., is among those that offer NAS’s cyber insurance plans.)

With higher limits will come higher premiums. At Vaaler, for example, a construction company’s annual premium for a Travelers cyber insurance policy with a $1 million limit likely will be in the neighborhood of $5,000, Schaefer said.

But in all cases, the focus on insurance mustn’t blind executives to the need for good cybersecurity. To protect against the potential devastation of a fire, today’s business owners have smoke detectors, sprinkler systems and fire insurance, Khoury said.

That’s the way owners can lower their cyber risk, too.

“So, when you get that reminder to do a security update on your computers, don’t just click out of it,” she said.

“Make sure you make the update.” The whole process starts with sweating such details, because businesses first should make their systems as hacker-proof as they can be. PB

– Ginni Rometty CHAIRMAN, PRESIDENT AND CEO IBM

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