How does a Hold Harmless clause in a POA protect the POA?

It means that as long as the POA acted only to protect the patient and exercised due diligence with NO self-compensation, they are protected. This is often a subject of debate in court.

Windy's right. The clause can also extend to other decisions made on behalf of the grantor.

However, there are qualifications - the proxy must be acting on behalf of the grantor, conducting legal and authorized business, and carrying out the terms of the DPOA.

I would assume it protects the POA from any liability due to the signer's finances etc., but without seeing the exact language that's just a guess.