The Future of Sustainable Procurement in Healthcare
(This is the third and final blog of a three-part series on upgrading sustainable procurement in the healthcare sector. Here are links to the first and second blogs of this series.)
The numbers speak for themselves.
Consider that the U.S. healthcare sector is responsible for an estimated 8.5% of greenhouse gas emissions correlated to approximately 98,000 deaths each year and the loss of nearly 388,000 disability-adjusted life-years.
Air pollution and multiple natural disasters cost the healthcare sector roughly $820 billion each year, including at least 114 hospital evacuations linked to climate catastrophes.
Over 930,000 staffed hospital beds in the U.S. produce nearly six million tons of waste every year.
And the presence of known toxic chemicals such as bisphenols, perfluorinated compounds, phthalates, polybrominated diphenyl ethers and triclosan are showing up in the environments of healthcare facilities and in a large majority of healthcare workers' bloodstreams — meaning patients and families passing through these facilities are most likely inhaling and ingesting unsafe chemicals.
Problems half-stated are problems half-solved. We can and will do better as a healthcare community.
Sustainable procurement plays a significant role. In our first blog, we learned from a case study how upgrading to data-driven sustainable procurement can help healthcare organizations cleanse their supply chain of unsafe chemicals, as well as monitor for opportunities toward waste reduction that are flexible across any spend category. Our second blog showed how healthcare organizations can support their policies and commitment toward Environmental, Social and Governance (ESG) goals by integrating social and environmental responsibility into everyday purchasing decisions using a “360-degree” approach to value analysis and strategic sourcing. In doing so, hospitals and health systems worldwide can leverage their total purchasing power — projected to be more than $850 billion by 2030 — toward suppliers and vendors that help strengthen commitment toward the “Do No Harm” core value of healthcare.
Suppliers, vendors and investors are watching to see if sustainability will be taken more seriously in the market. Hospitals and health systems upgrading people, process, policy, technology and data will be critical to let all key stakeholders know that sustainable procurement is highly valued — and here to stay.
People
While sustainability is part of everyone's responsibility to ensure a strong and resilient community, it's hard to take an organization's commitment to sustainability seriously if there is not an executive role within the organizational structure dedicated to improving social and environmental responsibility. Establishing permanent positions dedicated to sustainability means that subject matter experts are constantly monitoring for ways to not only improve sustainability performance but also encourage internal and external stakeholders to stay involved in sustainability efforts.
Moreover, this dedicated resource can leverage organizational tools and educate all stakeholders to help them understand their specific role in supporting the organization's commitment to sustainability. Although there may be an upfront cost in establishing formal positions in sustainability, the return on investment is that investigation into sustainability improvements often leads to savings — not only for reduced energy, waste and water, but also in identifying savings opportunities at the supply, capital equipment and/or purchased service levels through conversions to more sustainable options. Healthcare organizations need subject matter experts who can help them navigate solutions that are financially viable and support the journey toward being more socially and environmentally sound.
Process
In addition to permanent positions within the organization dedicated to improving and integrating sustainability into the procurement process, strategic sourcing and value analysis grows easier and more manageable as third-party technology and sustainability data becomes available. By creating a flexible, scalable and data-driven process to evaluate the social and environmental impacts of purchasing decisions using best-in-class technologies and data, organizations can monitor and manage sustainability improvement opportunities more easily from identification through implementation. To provide an example of applying a data-driven 360-degree value analysis process to sustainable procurement, a children's hospital recently converted to a PVC-free and phthalate-free IVF bag –– providing toxin-free and environmentally friendly IV bags for patients. With the contract for the incumbent supplier expiring, the hospital identified an alternate supplier who offered IV bags that did not have chemicals of concern and saved the organization over $267,000. (More details on process can be found in the case study.)
Policy
To make an effective and lasting impact in sustainability, all supplies, equipment and services purchased by healthcare organizations should be scrutinized for social and environmental responsibility. Sustainable procurement should not be siloed nor considered a “special project” by any organization. Instead, it is part of a larger framework that maximizes the impact of every hospital and health system's total purchasing power and their larger role in bettering our world and the communities they serve. Establishing consensus on methodology, identifying the best sources of truth for data, and integrating technology into clear, visualized process flows for all stakeholders will enhance collaboration and make sustainable procurement easier.
Technology and data
Collaboration between all key stakeholders across the community — including hospitals and health systems, suppliers, vendors, governments, for profits and nonprofits — means technology and data must talk to each other. Current challenges in sustainable procurement, such as a lack of transparency into environmentally preferable attributes of supplies, equipment and services, can be resolved through industry-wide standardization and mass collection of product-level sustainability data.
Of course, identifying socially and environmentally responsible supplies, equipment and services that also are cost effective is complex without real-time integration of multiple technology platforms and data streams. Partnership between supply chain and informatics is necessary to create key performance indicator dashboards and/or explore available third-party data and dashboards to help bring sustainable procurement into the digital age.
Third parties such as Vizient, for instance, provide an Environmentally Preferred Purchasing (EPP) dashboard at no cost to members to help them monitor if their purchasing behavior is in alignment with their overall sustainability goals and values. The new EPP dashboard helps hospitals and health systems digitize sustainable procurement to evaluate if their organization's spend lacks transparency or contains harmful chemicals or other undesirable sustainability characteristics. Vizient also can provide hospitals and health systems with the necessary framework to implement and maintain a sustainable procurement program, including access to the largest environmentally preferable purchasing portfolio of supplies, equipment and services in healthcare highlighting more than 600,000 contracted environmentally preferred products. For more information, please visit the Vizient website.
Moving ahead
Data and evidence clearly shows that sustainability saves lives and money. Reducing energy costs, water usage and waste streams saves dollars, as does scrubbing the supply chain of unsafe chemicals. Through a comprehensive and data-driven approach, sustainability can now take a multidisciplinary approach to evaluating the financial, clinical, operational, social and environmental impacts of purchasing decisions.
As other industries improve their sustainable procurement, the time for our healthcare community to lead the charge is now.