Sustainable Procurement in Healthcare: A Path to Responsible Purchasing

Healthcare organizations are facing growing pressure to address the impact of supply chain on the environment. Research shows the healthcare sector has a significant carbon footprint, accounting for approximately 8.5% of greenhouse gas emissions in the U.S. 

Adopting sustainable practices is essential for addressing climate change and building a healthier future for all communities. But it is also a key business imperative: by sourcing eco-friendly products and services, healthcare organizations can reduce operational costs, mitigate supply chain risks, and enhance their reputation. 

Many health systems are rising to the challenge by signing the voluntary Health Sector Climate Pledge, which is a commitment to cut greenhouse gas emissions by 50% by 2030. 

Despite enthusiasm about sustainable procurement, organizations face challenges in finding reliable sources for sustainable products. Large systems in particular struggle to keep sustainability at the forefront while managing numerous suppliers across different locations with distinct procurement needs. 

Integrating sustainability principles into procurement processes through digital tools is an effective solution. By using automation and analytics to guide more responsible spending habits, organizations can achieve critical procurement efficiencies while advancing progress toward broader environmental, social and governance (ESG) objectives.

Supplier consolidation and diversity spending

A strong, sustainable procurement strategy begins with identifying procurement inefficiencies and opportunities for smarter spending. This was the starting point for Pacifica Senior Living when it sought to realize procurement sustainability and efficiencies in its 96 communities across 13 states. 

After leveraging its partnership with Amazon Business to conduct a supplier analysis, Pacifica determined that its many individual communities were using a burdensome number of different suppliers, thus making consolidation a priority.

“Amazon Business helped us replace about 95% of our vendors across the organization by centralizing them. This has also allowed us the ability to scale when we acquire new properties and has brought significant efficiency to our purchasing program,” said Jack McCarty, Senior Vice President of Sales and Marketing for Pacifica Senior Living. 

Centralizing the number of suppliers also put Pacifica on a path to more effectively leverage its buying power, particularly for routinely purchased products such as maintenance and janitorial supplies and nursing care items. Because Amazon Business uses transparent pricing across various competitors and products, Pacifica was able to select high-quality products at the lowest price, leading to cost savings. 

This transparency also empowered Pacifica to easily buy from small, diverse, and local businesses, fulfilling its social responsibility without compounding administrative burden. 

“I don’t have to go out and do the research myself. It’s all right there provided by Amazon Business,” said McCarty. “If I find a vendor that is the same price as a big conglomerate company, we will make the choice to buy from the smaller vendor. That’s definitely important to our organization, and we fully embrace that ability to support small and diverse suppliers.”

Adhering to guidelines for sustainability and safety

Even amid diversification, strict purchasing guidelines can become a significant pain point for healthcare organizations. This challenge arises due to the stringent quality, safety, and regulatory standards that healthcare supplies must meet to ensure patient well-being – not to mention more recent sustainability standards that have come into play. 

Through streamlined procurement and a reduced supplier pool, Pacifica is better equipped to ensure its communities are purchasing products that meet internal guidelines for sustainability and safety while remaining within budget. 

Prior to introducing analytics insights with Amazon Business Analytics, Pacifica experienced challenges with items being purchased and delivered before compliance checks and approvals were complete. With Buying Policies and Approvals for business orders, the organization now has an optimized view of how each community’s teams are spending. This enables proactive curtailment of spending outside of set policies and budgets, avoiding the need for later reconciliation. 

“Our ordering can be quite diverse between communities,” said Lindsay Watson, Purchasing Manager at Pacifica Senior Living. “One month, a community has an office supply order, and the next month, a property needs two washing machines. It's really nice to not have to go back and forth finding the appropriate vendor, price, delivery, etc., and you know the item is going to arrive as promised.”

Despite such different spending needs among communities, Guided Buying (a Business Prime feature) makes procurement rules easy to follow by identifying which product categories are “Preferred,” “Restricted,” or “Blocked.” For instance, organizations can explore product options with sustainability certifications. They can also set their purchasing preferences and guidelines, and enable proactive reporting to manage and scale responsible purchasing programs.

Such guidance improves spend management and boosts compliance, without requiring additional time to research products and ensure alignment with overarching organizational objectives. This kind of capability will enable teams with limited resources to keep up as healthcare’s ESG requirements evolve, necessitating more strategic purchasing decisions. 

Responsible purchasing: A realistic path 

The future of healthcare procurement lies in responsible practices. By embracing digital solutions and data-driven insights, organizations can create a more sustainable and efficient future for both their businesses and the communities they serve.

Pacifica Senior Living's experience demonstrates the tangible benefits of this approach, including reduced costs, improved efficiency, and enhanced sustainability. 

“We're excited to see what the future holds in our relationship with Amazon Business,” said McCarty. “We are doing everything from a procurement efficiency perspective that our organization wanted to do, and we are looking forward to expanding on that.”

Healthcare is complex. Buying shouldn’t be. Amazon Business is improving the way healthcare organizations source and purchase products, making supply chains more efficient, streamlining contract administration, and bringing comparison-shopping to healthcare.