5 takeaways from Modern Healthcare's ESG summit
BY ALEX KACIK
Tackling environmental, social and governance issues in the healthcare industry requires a long-term view that can often be overshadowed by daily operations.
Health system executives at this week's Modern Healthcare’s ESG: The Implementation Imperative Summit addressed strategies to reduce carbon emissions, vet suppliers based on their carbon footprints and incorporate sustainable governance structures, among other topics.
Here are five takeaways.
1. Health systems need a long-term focus.
Many healthcare leaders are having a difficult time justifying environmentally conscious expenditures to their boards and finance executives, particularly as the industry continues to grapple with high labor and supply costs.
Nevertheless, climate change and social inequity pose immediate threats to patient safety, said Michael Dowling, president and CEO of New Hyde Park, New York-based Northwell Health, noting the recent Canadian wildfires that cast a blanket of smoke over New York City and other parts of the region.
As health systems pursue long-term goals to reduce their carbon footprint, organizations must be accountable and transparent on their progress and process, Dowling said.
“Healthcare is a major contributor to climate change, which means we have an obligation to reduce our contribution,” he said. “For us to be successful, this has to be engrained in the fundamental DNA of our organizations, long-term. It can’t be the flavor of the year or month—you need to stay the course.”
2. Plucking low-hanging fruit can generate return on investment.
To decrease energy costs, La Crosse, Wisconsin-based Gundersen Health System spent about $2 million replacing pumps, motors and other parts of their heating and cooling systems, generating about $1.2 million a year in annual savings, said Dr. Jeff Thompson, CEO emeritus and executive adviser of Gundersen.
“We are putting less pollution in the air, we are decreasing the cost of care and we are improving our bottom line,” he said. “We had some early wins on things that you know you could win, then we moved onto pharmaceutical waste and food waste.”
3. HCA Healthcare plans to hire an energy informaticist.
Just as health systems hired clinical informatics specialists to help manage electronic health records, providers plan to carve out similar roles involving energy consumption.
Hospitals, even within the same system, often have different building automation software, which tracks the energy output of heating and cooling infrastructure. HCA Healthcare, the investor-owned hospital chain based in Nashville, Tennessee, will hire an energy informaticist who will oversee energy management information systems, said Andy Draper, chief information officer at HCA and founder of GreenCIO, a nonprofit that looks to help companies reduce their carbon emissions.
“We’re going to hire an energy informaticist because all these decision-support tools don’t have anywhere to go,” he said.
4. Carbon emission regulations are looming.
The U.S. is not as far ahead as Europe and other parts of the world, where requirements for carbon accounting and managing greenhouse gases are much more stringent, but federal regulations are coming, said Dr. Jonathan Perlin, president and CEO of the Joint Commission and former chief medical officer at HCA.
“It is absolutely clear that there is a trajectory toward a more defined regulatory construct,” he said, adding that the forthcoming regulations for publicly traded companies will filter into nonprofits.
Perlin echoed Dowling's comments that health systems can either set their own carbon-reduction targets or wait for the government to set them. The Joint Commission can help organizations get ahead of the curve with its proposed voluntary environmental sustainability standards, including hospitals designating someone to oversee activities to reduce greenhouse gas emissions; measuring energy use, fleet vehicle gasoline consumption, solid waste disposal and anesthetic gas use; developing action plans; and reviewing those plans to find out what worked and what didn’t, Perlin said.
5. Health systems should work together to get carbon emission data from suppliers.
Pricing still drives most supply chain conversations between providers and manufacturers. But health systems have an opportunity to expand the dialogue with suppliers, said Donna Drummond, chief expense officer and chief sustainability officer at Northwell Health. The system's physicians are interested in manufacturers’ carbon footprints, but they don’t have the data to inform their purchasing decisions, Drummond said.
“We need to find a way to work together to demand this information from suppliers,” she said. Health systems can also lobby manufacturers to use less wasteful packaging, Drummond added.
As the Centers for Medicare and Medicaid Services seeks to invest more resources in disadvantaged populations, providers are concerned the tool it uses to assess social risk misses the mark.
Last year, the system took steps to formalize its green initiatives, starting in the C-suite. Now those initiatives are coming to fruition.