Sustainability has made serious inroads into mainstream health care, but further progress depends on the industry’s ability to access environmental data related to one area not often considered for this purpose: purchasing. At the recent Wharton conference, “Sustainability & Health Care: Creating & Capturing Value,” sponsored by Johnson & Johnson and Wharton’s Initiative for Environmental Leadership (IGEL), several speakers confirmed that the next step is supplying administrators, purchasing agents and frontline workers with crucial information about the sustainability of the drugs they administer, the food they serve, the medical equipment they use on patients and the supplies that clean the building.
Health care purchasing is a key part of the U.S. economy, with more than $200 billion in annual outlays. Four large group purchasing organizations (GPOs) control the bulk of buying for most U.S. hospitals. Kevin Lewis, national program coordinator for the GreenHealthy division of Premier Inc. (one of the four) said at the conference that more than 95% of health care institutions are linked to GPO purchasing. And the products’ green attributes aren’t generally front and center when decisions are made.
To be truly useful, environmental big data in health care has to be appreciated, available, accessible and actionable. For providers, the financial reasons for appreciating data start with savings, particularly through what is called Environmentally Preferable Purchasing (EPP). Olivier Oullier, head of strategy, global health and health care at the World Economic Forum, said at the Wharton conference that a third of international spending in the category is wasted.
But the financial advantages of sustainability go beyond reducing waste. Applying environmental principles to health care institutions — informed with good data –is usually very good for the bottom line. Energy efficiency improvements, for instance, can put a significant dent in one of the largest line items. Hospitals and other health care institutions annually spend $9 billion on energy in the U.S. (enough to cover the salaries of 130,000 registered nurses, the U.S. Department of Energy reports).
Longer term, it makes good business sense for hospitals and clinics, which spend so much battling environmentally caused illnesses, to reduce, and where possible eliminate, the chemicals and other pollutants that are damaging their patients’ health. That is precisely why Premier’s GreenHealthy program is eager to move beyond price alone and take EPP into consideration. “Price doesn’t give us the whole story,” said Lewis. “Our prime concern is making our patients safer.”
Suppliers, too, appreciate the value of EPP data. Furniture maker Steelcase, for instance, has crunched the data, and found that EPP is becoming big business. In 2014, 47% of its sales to Premier members were of recycled content (4.28 million pounds), and 62% was recyclable materials.
The Right Data
Of course, not all data are created equal. Knowing which data will be most useful can be challenging. But individual players have made progress. Several years ago, Kaiser Permanente set up the first list of relevant EPP questions, which have since been refined, updated and made generally available to all through the efforts of the nonprofits Practice Greenhealth (PGH) and Health Care Without Harm (HCWH).
In the private sector, Steelcase has devoted considerable effort to identifying the most important factors that hospitals need to know. Speaking at the Wharton conference, Dustin Heiler, the company’s marketing and business developer, said, “Important metrics are whether our furniture products have good end-of-life options, and whether they contain chemicals of concern, such as fire retardants, halogenated organic compounds, PVC plastic or DEHP plasticizer.”
Collecting such data is the first step towards making it accessible. Today, health care metrics are available only if a hospital or GPO asks for them from manufacturers. The result is that suppliers are inundated with redundant requests for information. And some of those queries are about products that have been discontinued, or no longer contain the toxic elements that are the source of the initial concern. An analysis of the Edward-Elmhurst hospital chain’s purchase and use of endotracheal tubes, for instance, found that some often-asked sustainability questions weren’t relevant to the category (including queries about the use of a long-banned chemical).
With the help of PGH and HCWH, GPOs have played a major role in collecting EPP data when their members request it. “The GPOs definitely hold a lot of power in this conversation,” said Seema Wadhwa, assistant vice president of sustainability and wellness at Inova Health System. But, she explained, “They’ve not had success in getting the data they need independently.”
And data alone is not enough. “Metrics are important, but sometimes the available sustainability metrics are terrible and their value is limited unless they are understood by analysis,” said Erwann Michel-Kerjan, executive director of the Wharton’s Risk Management and Decision Processes Center. “Bad metrics create uncertainty in markets.”
Integrating the Data
Even when the value of Big Data is appreciated by those involved in the health care supply chain and the right data are identified and collected, providers need a way to easily integrate the sustainability data into their purchasing decisions. Ashley Swanson, a professor of health care management at Wharton and a moderator at the conference, noted, “Hospitals have a lot of objectives — community goals, clinical goals, sustainability goals — and how to balance those priorities in making procurement decisions is really complex. It’s important to give them more information to consider these tradeoffs.”
One promising approach was unveiled at the Wharton conference: a sustainability database that would provide actionable information for every category of products that hospitals buy. New products would automatically be entered into the database, and older entries constantly updated with the latest information.
An initial case study, including Johnson & Johnson, MindClick, Premier and Steelcase, offered a taste of what a fully functional database could achieve – large savings for providers and suppliers, and a healthier environment for everyone.