Drivers and Motivators for Sustainability
Senior hospital leaders may be motivated to take on sustainability projects for any number of reasons: to improve image, build trust and reputation, and save money as well as in response to community pressures or risk management and regulatory considerations. To accomplish their sustainability goals, senior leaders are likely to delegate the work of developing and implementing action plans to department directors. The objective of the Sustainability Roadmap is to provide resources, strategies, and implementation ideas to help busy directors plan their organization’s sustainability journey.
To be successful, it is critical to begin with an understanding of the broad reasons a health care organization might have for pursuing sustainability initiatives:
- To better define sustainability objectives in the context of organizational objectives.
- To make better choices among sustainability alternatives by framing the ways in which various sustainability actions might contribute to broader strategic goals.
- To identify and understand the drivers that facilitate progress as well as the barriers that may slow the journey, increasing the likelihood the strategic plan will satisfy organizational goals and maximize project success.
Sustainability in the C-Suite
In this era of health care reform, health care leaders are under tremendous and increasing pressures from a pay-for-performance model, shifting demographics, new technological challenges, changing compensation models, shortages of relevant trained professionals, and increasing costs in many arenas. The American College of Healthcare Executives (ACHE) has surveyed its members to determine today’s issues of highest concern. The 2011 and 2012 surveys are summarized in Table 1. How does sustainability relate to these key issues?
Many sustainable solutions can integrate with broader strategies to address larger organizational challenges and priorities. Because organizations have limited resources, they must be strategic in resource allocation, thus, knowing WHY a hospital wants to invest in sustainability (i.e., understanding the drivers) is critical in choosing specific projects to implement.
CEOs from other industries often pursue sustainability initiatives for reasons similar to those that drive health care organizations. The Boston Consulting Group and Massachusetts Institute of Technology (MIT) wanted to understand the reasons sustainability initiatives were surviving the economic downturn and why CEOs, in general, were pursuing sustainability. The results of surveys by McKinsey & Company (2010) and the UN Global Compact (2010), asking similar questions about the top reasons for and/or benefits of addressing sustainability issues are summarized in Table 2.
Cost efficiencies, reputation and image, and employee morale and retention are the major reasons companies implement sustainability. These issues are also of vital importance to health care organizations and highlight the cost reduction/revenue increase imperative shown as major challenges facing hospital leaders as summarized in Table 1.
In summary, organizations pursue sustainable initiatives to further the strategic imperatives of the overall organization. Motivations generally include these:
- To improve brand Image, build trust, and build reputation
- To save money
- To increase employee satisfaction, engagement, and retention
- To foster a good public image
- To manage risk and regulatory compliance
- To improve operations
- To demonstrate corporate social responsibility (it’s the right thing to do)
|Table 1: Issues of Highest Concern to Health Care Leaders*|
|ACHE Survey Year:||2012||2011|
|Patient safety and quality||4.4||4.6|
|Health care reform implementation||4.7||4.5|
|Care for the uninsured||5.6||5.2|
|Population health management||7.9||---|
|Creating an accountable care organization||8.6||8.4|
|*Issues are ranked from 1 to 10, with 1 being of highest concern.|
|Table 2: Survey Summary of Reasons for Implementing Sustainability|
|Greatest benefits from addressing sustainability issues||Top reasons for addressing sustainability issues||Factors driving action on sustainability|
|Boston Consulting Group/MIT||Mckinsey & Company||UN Global Compact|
|Brand image (35%)||Corporate reputation (36%)||Brand, trust, reputation (72%)|
|Cost savings (12%)||Alignment with business goals (21%)||Revenue growth or cost reduction (44%)|
|Competitive advantage (10%)||Improve efficiency/lower cost (19%)||Personal motivation (42%)|
|Employee morale/retention (10%)||Meet customer expectations (19%)||Consumer demand (39%)|
|Offering innovation (10%)||New growth expectations (17%)||Employee engagement/recruiting (31%)|
|Process innovation (10%)||Strengthen company positioning (17%)||Government regulation risk (24%)|
|New sources of revenue (8%)||Leadership's personal interest (14%)||Investor/shareholder pressure (12%)|
|Risk management (7%)||Regulatory Risk (14%)|
|Stakeholder relations (6%)||Attract/retain employees (11%)|
|Expectations from distributors (6%)|
|Pressure from NGOs (3%)|
|Key to Response Categories in Table 2|
|Reputation, brand image, community pressure|
Adaptation and Resilience. As the environment shifts, either slowly (e.g., long-term droughts, shifting climate patterns, shifting disease vectors) or more catastrophically (e.g., hurricanes, tornados, severe droughts), health care organizations need buildings that can continue to function in different sets of conditions. The need for adaptation and resilience in the face of changes beyond typical geographically dependent environmental forces is often linked to the sustainability imperative.
Hospitals are generally seen by the public as essential for operation when all else fails. As such, the health care industry needs to determine how it will adapt to changing environmental forces. There are many paths to accomplish this, beginning with how to prepare hospitals to withstand whatever Mother Nature dishes out. A first step is development of a plan for operating after a weather or climate event, from erection of a temporary hospital such as that put up after the Joplin, Missouri, tornado to less drastic measures. A proactive approach to mitigating risk is also important. For example, the City of Chicago’s Climate Action Plan states, “The results of the research are both serious and encouraging. They clearly demonstrate that our current trajectory poses risks to our economy and health.” Chicago’s plan has five strategies, including adaptation, all of which are consistent with the goals of the Sustainability Roadmap. Hospitals should begin to consider such questions, just as cities and business owners are doing.
Reimbursement. Health care reform and dwindling Medicare and Medicaid reimbursements are key issues for American hospitals. These financial challenges highlight the need for serious operational expense reduction. The Roadmap’s performance improvement measures (PIMs) are predicated on the fact that expense reduction is a key contribution of any suggested sustainability programs.
Quality and Safety. Quality, patient safety, and improved outcomes are areas of top concern. Often, sustainability strategies can enhance quality and safety, and most organizations are likely to support only sustainability measures that contribute to these initiatives. AHA lists strengthening communities, making community connections, caring for communities, and health for life as key initiatives; clearly, most sustainability strategies can provide powerful tools for advancing these goals.
All health care facilities exist within a larger community. External stakeholders (neighbors, insurers, regulators, and others) expect health care organizations to be responsible members of the community, doing their part to protect the health and safety of community members and the health of the environment shared by all. Public opinion, therefore, can be a great driver for sustainability initiatives. By modeling ways to minimize the environmental impact of their facilities, health care leaders can demonstrate their organization’s commitment to the health and vitality of their communities. This is a responsible thing to do and can result in positive strategic outcomes for health care organizations.
Communities with high levels of environmental awareness expect health care organizations to be good neighbors by “greening” their operations and facilities where possible. It helps to be prepared when the community asks questions such as: What is your organization doing about climate change? What are you doing to reduce energy consumption? Does your organization recycle its waste?
Be sure to work with your public affairs department on a regular basis to share your successes. Even small ones are stories worth telling.
A recent report from the Commonwealth Fund (Can Sustainable Hospitals Help Bend the Cost Curve?) notes that many hospitals operate inefficiently and that sustainability programs that are essentially waste elimination programs can help save relatively large amounts. The report suggests that hospitals can save more than $15 billion in 10 years by implementing such sustainability programs. Other projects may require small capital investments to capture larger operational savings (various financing tools are located elsewhere in this Roadmap). Often, the most obvious place to start is by reducing energy consumption and focusing on various aspects of energy procurement.
Hospitals consume two-and-a-half times more energy per square foot than other commercial buildings, spending more than $8.5 billion dollars annually on energy. As a result, the prospect of saving money on energy costs and reducing reliance on fossil fuels is a huge driver for undertaking sustainability initiatives. In coming years, energy costs are almost certain to rise, which will put additional pressure on health care organizations’ budgets. Energy cost increases will likely be driven by:
- Supply challenges. World demand for energy resources, spurred by the growth of India, China, and other developing countries, will put demand pressure on available resources, driving costs upward.
- Rising energy prices. The Energy Information Administration (EIA) and the Commercial Buildings Consumption Survey report both rising energy prices and increasing “energy use intensity” (EUI), resulting in a significant rise in hospital energy costs. (See Figure 1.)
- Climate change laws. Local, national, and international laws are moving toward regulations that will result in higher prices for fossil-based energy and provide various incentives for using alternative sources of energy. (See Climate Change Law 101).
Figure 1: EIA Consumption Survey
|ENERGY STAR for Healthcare and the U.S. Department of Energy's (DOE) Hospital Energy Alliance (HEA) have challenged the health care sector to significantly reduce energy use. The DOE goal is to see commercial buildings reduce energy consumption by 70 percent based on today's building codes. It is clear the healthcare sector can potentially save billions of dollars by reducing its energy use.|
The energy Green Light Projects described on the Sustainability Roadmap are characterized as low-hanging fruit because there are no major barriers to their implementation. For example, repairing existing equipment and optimizing operations are relatively straightforward projects. By contrast, if a project requires significant capital, resource expertise, and/or an energy management plan, you should design an action plan that takes these requirements—or barriers—into account. Be sure to assess your drivers (strengths and opportunities) and barriers (potential pitfalls and weaknesses) when developing plans to improve your facility’s energy efficiency.
Other opportunities for reducing operational costs include the following:
- Reducing waste costs: The cost of waste disposal, especially disposal of expensive regulated waste, is a common financial driver. Materials consumption in health care facilities results in $10 billion annually in waste disposal costs. Opportunities for cost reduction through smart source reduction and waste management may be as high 40 to 70 percent or $4 to $7 billion annually.
- Reducing water costs: Hospitals are water-intensive. Today, water is relatively inexpensive in the United States compared to other parts of the world. For example, in 2010 in Spokane water cost $0.25/100 gallons, in El Paso $0.60, and in San Diego $1.38, compared to $2.86/100 gallons in Glasgow, Scotland. Water prices are predicted to rise around the world and across the United States. As large water users, hospitals have an opportunity to help launch significant efforts to reduce water use and improve water quality.
- Reducing supply chain costs: Supply chain costs are rising (along with waste, water, and energy costs). Assessing opportunities to maximize material, supply, and equipment use can drive down costs and have a positive environmental impact.
ACTION. Explore different financial models for implementing sustainable solutions. Rebates and incentive programs are out there – you have to know where to look.
In 2009 ACHE surveyed health care CEOs to determine their response to sustainability (Healthcare Executive Magazine, May/June 2009, pp. 93-94). The survey included a question as to what barriers were impeding the executives’ ability to pursue such programs. An overwhelming majority of respondents identified cost as the primary barrier to these programs; 74 percent of respondents said they could not pursue sustainability initiatives because “it costs too much to build green.”
It is true that many sustainability strategies can cost money, often a lot of money. It is also true, however, that well-planned sustainability programs can be implemented at no cost or even for an initial savings. Often, initial investments in sustainability programs produce savings that outweigh their depreciated value, ensuring a positive impact to the bottom line. And, where capital is scarce, hospitals have a range of financing options to help implement projects. The Roadmap provides Ways to Fund Sustainability Solutions. We also welcome information about additional tools and case studies. If you have something to share, please contact us.
The opportunity to use resources more efficiently through a comprehensive sustainability program is another driver. Supply chain efficiencies that include environmentally preferable purchasing (EPP) strategies and reduce a facility's energy use, water use, and waste stream can lead to improved resource utilization, improved operations, and reduced costs.
|ACTION. Implement a Departmental Sustainability Champion program and engage staff throughout the organization.|
Investments in sustainability can also help attract and retain staff members. Many employees place significant value on working in a facility that demonstrates and communicates its commitment to environmental responsibility and good stewardship practices. Indeed, staff members can become some of the most zealous advocates for sustainability measures, ensuring that well-implemented and supported programs achieve multiple synergistic benefits.
More research is needed to quantify direct and measurable staff satisfaction and health outcomes that result from sustainability efforts, but anecdotal evidence and studies show that these synergies do exist. Select sustainability initiatives can support the healing mission of a health care organization by improving efficiency, eliminating some levels of error, or supporting an incremental improvement in patient outcomes.
|ACTION. Develop a Sustainability Principles Statement that publically states the organization’s commitments.
Publish a sustainability report. Include sustainability dashboards in your newsletters. Have fun and create a video like Every day is Earth Day!
The opportunity to promote an organization’s commitment to sustainability can be a driver for a particular initiative. Public relations efforts should target the entire community, both internal (staff members) and external (patients, visitors, and the community at large). A strategic public relations effort can communicate an organization's commitment to environmental stewardship and corporate social responsibility and often can have tremendous, untapped marketing value.
Finally, consider pursuing professional award programs that can help a hospital promote its sustainability efforts (e.g., the ASHE Vista awards, the AHE Environmental Stewardship Award, and Practice Greenhealth.
|ACTION: Ensure that your organization is in compliance with regulatory requirements for waste disposal, air emissions, and water effluent.
See Climate Change Law 101 for information about pending national climate change legislation as well as international agreements.
See Waste Regulations for an overview of the many types of waste and regulatory agencies with oversight responsibilities for them.
Health care is a resource-intensive industry that uses significant raw materials, water, and energy resources, resulting in great output of solid waste, effluent, and emissions. The health care sector is subject to oversight from numerous regulatory agencies, which sometimes have overlapping regulations.
Regulations are evolving as new data emerge that show the impacts of climate change, pharmaceuticals found in groundwater, and air pollution as well as the connection between exposure to chemicals and public health. Local, state, and federal legislation responding to this information and other sustainability concerns continues to unfold and ratchet up performance requirements for all facility types.
Understanding potential requirements can help health care organizations anticipate regulatory changes and can also facilitate their participation in public comment periods opened by bodies developing standards and codes.
Hospitals must comply with existing regulations, anticipate future regulations, and act responsibly to minimize the need for more restrictive or punitive regulation. When hospitals fail to meet relevant regulations, they expose themselves to considerable risk. Increasing numbers of jurisdictions are requiring different kinds of transparency, including performance reporting even from health care organizations.
In addition, many guidelines and standards, although not now required by every jurisdiction, may ultimately be adopted by local regulatory agencies for enforcement. Anticipating such requirements can position an organization to be in compliance when regulations go into effect.
Reach out to your state or local government to understand what is required of your facility as regulations can vary quite a bit. For example, some states and municipalities mandate environmental performance objectives such as climate action plans, while others are just now requiring waste data reporting to meet state recycling goals or to reduce hazardous waste.
Federal facilities such as military-related hospitals must comply with specific federal requirements or executive orders, many of which relate to environmental performance. These can be significant drivers for sustainability initiatives.
Staying on Top of Changes in Regulations
An easy way to track changes in regulations is to use “RSS feeds.” Go to your state environmental protection or environmental quality agency website and sign up for its RSS feed, checking for relevance to health and welfare regulations. Some vendors also have RSS feeds that are terrific sources of information. Make sure you are in the loop to be notified of changes.
Regulatory agencies also focus on whom (or what) a regulation is designed to protect. The tougher rule, or the one that is more stringent, always takes precedence.
|ACTION. Use the Roadmap’s tools to create a management plan, collect data, set target goals, and use the PIMs to get the work accomplished.|
The opportunity to use operational resources more efficiently through a comprehensive sustainability program is another driver.
Supply chain efficiencies that include environmentally preferable purchasing (EPP) strategies that call for less waste and fewer wasteful practices is a smarter use of resources.
Operating efficient buildings, in which control strategies turn off equipment not in use or call for fixing leaking steam traps, saves energy and associated costs and results in sustainable operations.
A comprehensive waste management program demands that staff reduce waste at the source, manage hazardous materials safely, and reuse and recycle everything reasonably possible. It requires an engaged staff.
Sustainability measures that reduce a facility's energy use, water use, and waste stream can lead to more efficient resource utilization, improved operations, and reduced costs as well as a more satisfied staff.
|ACTION. Measure and report your performance. Provide sustainability dashboards in your newsletters.|
Stewardship is often cited as a major reason for undertaking sustainability initiatives. Sufficient data exist to suggest that environmental health directly affects human health, and the link between environmental impacts and human health are increasingly apparent. In 2006 the presidents of many of the nation’s colleges and universities created the American College and University Presidents Climate Commitment (ACUPCC). Recognizing their duty to prepare the young leaders of the future, these leaders acted together to commit themselves to achieving radical environmental improvements in their operations and in the way they educate their students. In the same way, leaders of the health care industry have a responsibility to protect the present and future health and safety of their patients, visitors, and staff; their immediate communities; and their global community.
Corporate social responsibility (CSR) encompasses ways companies manage their economic, social, and environmental resources and account for their actions and decisions, both to shareholders and to stakeholders such as employees, local communities, and society at-large. Health care systems should communicate their CSR efforts by promoting success stories that showcase their commitment to measuring sustainability performance, the outcomes they track and how they are tracked, and how the organization strives for excellence (beyond compliance) in operations as they pursue their sustainability goals. The importance of CSR is also consistent with AHA's Hospitals in Pursuit of Excellence program.
Some health care organizations consider U.S. energy independence a driver for sustainability initiatives and, as a result, they support our country’s shift to less dependence on foreign oil by reducing consumption and reliance on fossil fuels. According to the U.S. Department of Energy, in 2011 the United States relied less on foreign oil than in any of the previous 16 years. But, with less than 2 percent of the world’s oil reserves, the United States must find new ways to produce the energy the country needs.
Climate change is increasingly becoming a driver for sustainability initiatives in more health care facilities. The 2007 assessment report of the Intergovernmental Panel on Climate Change (IPCC) concluded that "warming of the climate is unequivocal" and that human activity has "very likely" been the driving force in that change over the last 50 years. Taking action to reduce greenhouse gas emissions (GHGs), including carbon, methane, and anesthetic gases, is necessary to stop or slow global climate change.
As the amount of scientific information on climate change grows, awareness of the harmful effects of our actions on the environment increases, fostering a greater sense of environmental responsibility and commitment to good stewardship practices. Environmental responsibility is fundamental to all aspects of sustainability, including the following:
- Resource Use. Increased worldwide resource consumption and associated direct and indirect costs for air emissions, water effluent, and waste disposal mean that mitigation measures make increasingly good sense, including from a financial perspective.
|ACTION. Hospitals take different approaches to embracing environmental responsibility and mitigating climate change. Understanding the issues is the first step. Subsequent actions may include a number of efforts, such as completing greenhouse gas inventories and developing energy reduction strategies.|
- Water Supply. A sufficient water supply has emerged as one of the primary resource issues in the United States and throughout the world. Concerns about drought, water contamination, and the availability of fresh water need to be addressed to meet the demands of growing populations, particularly more affluent ones that typically consume and waste more resources
- Energy Use. Sufficient energy supply is key to the delivery of health care. Visit the Energy Topics section of the Roadmap for a more in-depth discussion of this issue.