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checkEducation: Environmentally Preferable Purchasing 101 (EPP 101) - An Introduction to Core Knowledge

All PIM content was independently developed and reviewed to be vendor-, product-, and service provider-neutral.

Description

Providing supply chain staff with an understanding of their role with respect to the organization’s environmentally preferable purchasing (EPP) program will help improve processes, increase departmental collaboration, and reduce operating costs.

  • Project Talking Points

    • As supply chain leaders, what is the supply chain professional’s role in the sustainability initiatives of the healthcare organization? Is there an EPP program? Within materials management and the healthcare organization, what is the level of awareness of the cost saving opportunities within sustainable products and processes?  What other benefits are collateral to EPP program initiative? 
    • EPP can apply to everything that passes through the supply chain to provide healthcare.
    • Purchasing decisions signal the market to move towards a preference for environmentally superior products and services.
    • Assessment of every product for impacts and alternatives is essential – can we use fewer items, maximize utilization, create less waste, and save money while improving quality and outcomes?
  • Triple Bottom Line Benefits

    • Cost benefits: EPP products and services typically have a lower total cost of ownership when compared to traditional products and services. EPP products/services can also have a lower upfront cost (re-usable sharps containers, single use device (SUD) reprocessing, etc.)
    • Environmental benefits: EPP is the process of selecting products and services whose environmental impacts have been considered and found to be preferable to those of comparable alternatives. EPP products and services can be the key to reducing waste, eliminating toxicity and increasing efficiency within products, facilities and operations.
    • Social benefits: EPP assesses the human and environmental effects of products and services and use those results to select healthy and safe products, prevent toxicity and waste, extend the life of products and minimize the use of hazardous materials. The goal is to meet or exceed health, safety, satisfaction and quality standards.  Community awareness, approval, and goodwill are often byproducts of the EPP program.
  • Purchasing Considerations

    • Place purchasing preference towards products and services that address environmental impacts throughout the lifecycle when safety, quality, total cost and services are equal. This includes the environmental footprint of manufacturing, transportation, energy and water use, and disposal.
    • Assess the human and environmental effect of products and services and use those results to select healthy and safe products, prevent toxicity and waste, extend the life of products and minimize the use of hazardous materials.
    • Use the precautionary approach when selecting products containing specific chemicals and materials.
    • When evaluating new product purchases, require the supplier provide environmentally pertinent information along with other criteria such as safety and quality.
      • Work with your Group Purchasing Organization (GPO) or vendor to determine if sustainable alternatives are available.
      • Identify which, if any, toxins and chemicals are used in the new product
        • If possible work with GPO/vendor to identify alternative
        • Vocalize your desire to purchase products in the future that decrease or eliminate substances of concern.
    • Chemicals/Materials of Concern
      • Newly purchased items should avoid, limit or replace the following:
        • Mercury
        • Poly Vinyl Chloride
        • Bisphenol-A
        • Latex
        • Phthalate
        • Volatile Organic Compounds (VOC’s)
    • Energy
    • Water
      • Place purchasing preference towards water-efficient products, devices and retrofits that increase water efficiency within facilities.
    • Waste
      • Product life cycle
        • Product’s end life is considered when making purchases.
        • Products and equipment with a higher durability are favored.
        • Put preference to products that have the ability to be reprocessed or remanufactured.
        • Avoid products that need hazardous or regulated medical waste disposal.
      • Packaging
        • Place preference towards vendors and products with minimal packaging and/or packaging that is recyclable and/or biodegradable.
        • Internal products used for delivery should be reusable. This includes but is not limited to:
          • Totes for internal deliveries
          • Shipping containers
          • Regulated medical waste shipping
          • Rigid sterile cases for surgical items
          • Pharmacy waste containers
      • Materials
        • When possible, purchase products that are made from recycled, bio-based, remanufactured or reprocessed materials.
        • Look for products that can be disposed of through remanufacturing, reprocessing, recycling or composting including:
          • Sharps containers
          • Single-Use Reprocessing Devices
          • Compostable kitchenware
          • Blue wrap remanufacturing and rigid container utilization
          • Bio-based kitchenwae
          • Wherever possible purchase multiple use products over single use.
    • Landscaping
    • Indoor Air Quality
      • Place preference on low/no VOC paints and primers for new construction, renovations, and maintenance.
      • A comprehensive green cleaning program should be used in place of traditional cleaning systems.
      • Place preference towards green seal certified cleaning products, microfiber mops, cloths and dusters, and heap-filtration systems in vacuums.
    • Healthy and Sustainable Food Purchasing
      • When financially feasible place preference towards organic, fair trade, and humanely raised products.
      • When financially feasible place preference towards reusable or biodegradable kitchenware if reusables are not an option. 
      • Consider portion control items.
      • Place preference towards local food purchases.
  • How-To

    1. Before understanding EPP and the respective organizational role, a background should be set by defining what sustainability means.  
      1. Sustainability has many definitions, but perhaps the most common comes from the World Commission on Environment and Development (Brundtland Commission 1987), which defines sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”.
      2. Sustainability is more than environmentalism; it is the strategic elimination of waste.
      3. A strategic approach to sustainability will eliminate hidden costs.
      4. The greening of healthcare is a business imperative not universally appreciated.
      5. The triple bottom line (TBL) captures an expanded spectrum of criteria for measuring organizational success – People (equity), Planet (ecology), and Profit (economy).
      6. A balanced TBL approach will create value for the organization and community served.
      7. In practical terms, "triple bottom line accounting" means expanding the traditional company reporting framework to take into account financial outcomes as well as environmental and social performance.
    2. The associated benefits of hardwiring sustainability into the organizational structure and culture are:
      1. Mission demonstration
      2. Improved patient outcomes through minimized chemical and hazardous material exposure
      3. Achievement of cost savings
      4. Optimized environmental conditions
      5. Creation of a learning community
      6. Increased employee retention and morale
      7. Reduction of health risks to staff
      8. Increased regulatory compliance
      9. Increased operational efficiencies
      10. Brand recognition
    3. Why should healthcare focus on sustainability?
      1. The hospital workforce is comprised of roughly 4.1 million individuals.
      2. Hospitals have 24/7 operations, which in turn means resource consumption 24/7.
      3. Hospitals spend over $7 billion on energy each year, with vast efficiency opportunities available.  
      4. Facilities are often the largest water users in their community.
      5. Over 2 million tons of waste per year is generated, with vast efficiency opportunities available.
      6. The Living Planet Index showswe are using the planet’s resources faster than they can be renewed. Hospitals can help towards this cause by reducing their resource consumption.
      7. Our impact upon the planet (humanity’s ecological footprint), has more than tripled since 1961
    4. How would one define Environmentally Preferable Purchasing (EPP)?
      1. According to the Federal Government definition from Executive Order 13101:
        1. EPP is the process of selecting products and services whose environmental impacts have been considered and found to be preferable to those of comparable alternatives
        2. EPP is a way for purchasers (health-care institutions) to implement their values and goals as they relate to environment, health, and safety
        3. EPP takes into consideration performance, availability, and price.
    5. Attributes that constitute an EPP product:
      1. Does the product and/or packaging contain recycled content?
      2. Are energy and water efficiency standards used in product production?
      3. Does the product have energy, water, and waste efficiencies in operational use?
      4. Does the product avoid chemicals of concern including but not limited to PBTs, DEHP, flame retardants, bisphenol A, or VOCs?
      5. Is the product made from renewable plant-based materials?
      6. Is the product durable, and can it be easily upgraded and/or fixed?
      7. What is the reusability of the product?  
      8. Is the packaging recyclable? Stackable? Does it minimize volume of packaging?
      9. Is the product recyclable, reprocessable, or compostable?
      10. Is it a hazardous or regulated medical waste? Does it create any regulatory compliance issues?
    6. Supply chain and sustainability
      1. Supply chain in an organization is often 2nd in costs to labor. 
      2. Total cost of products and contracted services must be addressed in a holistic way to drive these costs down. Are there examples where product utilization does not match the patient activity?   How can this be tackled - one unit at a time, one product at a time?
      3. Total Cost of Ownership is comprised of:
        1. Purchase Price
        2. Occupational Health Costs
        3. Operations, Maintenance and Management
        4. Disposal Cost
        5. Environmental Consequences
        6. Liability
      4. Total Cost of Ownership (TCO) & Cost, Quality, Outcomes (CQO) Movement
        1. TCO = acquisition cost + operating cost (time) + disposal cost
        2. AHRMM’s Cost, Quality, Outcomes Value
          1. CQO = TCO + quality impact + clinical impact
          2. TCO works in tandem with a CQO approach as a joint methodology to facilitate a more holistic approach to procurement activities.  TCO can be thought of as a multi-variable formula that considers ongoing operational costs and disposal/end of life issues in addition to the initial purchase price of an asset, and is an important tool for thinking about long-term sustainability considerations. TCO supports the goals of the CQO mindset.  All of this supports a more sustainable supply chain and healthcare environment.
          3. AHRMM is actively building and supporting the CQO Movement to support healthcare supply chain professionals as they adopt the intersection of cost, quality, and outcomes as their new operational framework for evaluating their positive impact on the industry.  Adopting a CQO approach to procurement considers not only product cost (C) but also quality (Q) of patient care and services provided, patient satisfaction, quality of care, and (O) outcomes (financial reimbursement driven by outstanding clinical care at the appropriate costs) resulting in an integrated approach to healthcare supply chain purchasing
      5. Life Cycle Costing and Total Cost of Ownership
        1. Rethinking product costs: traditional purchasing approaches have typically employed first costs to compare products, but this approach may not reflect the actual overall cost of the product from cradle to grave.
        2. Life cycle costs: when making product and service comparisons, purchasers can use a life cycle cost analysis (LCA) to provide the environment and social costs assignable to each, making it easier to identify the least resource-intensive choice. LCA includes costs related to resource extraction, manufacturing, transportation, and use and disposal of materials throughout the supply chain process
    7. Green Building
      1. Why focus on Green Buildings?
      2. Healthcare account for 96 million square feet of  construction (+3% over 2004) and $18.7 billion in new construction contracts (+9% over 2004)
      3. Cost per square foot of an average community hospital has risen from $180 (2002) to $325 (2005)
      4. Life Cycle Costing of Building
        1. Failure to review and amend operations before construction can result in extra costs for unnecessary space/structural design.
        2. Building owners typically focus on reducing initial cost of construction and deferring maintenance.
        3. Ultimately building owners pay too much operationally for a lower quality/performing facility.
        4. ASHRAE studies found over a 40-year life cycle cost analysis that 75% of the total costs of owning and operating a building is made up of operation, maintenance and alterations (retrofit/renewal). The other 25% is comprised of construction and financing costs
      5. Costs of Building “Green".
        1. A study of 33 LEED buildings revealed that building “green” increases initial costs from .66% to 6.5% over conventional building standards. This however, does not include cost savings over the buildings life.
      6. Leadership in Energy and Environmental Design (LEED)
        1. The current wave of green construction that has swept the US over the past five years has been spearheaded by the U.S. Green Building Council (USGBC).
        2. LEED is a tool to promote and implement sustainable design, construction, and operations.
        3. The USGBC began to develop the LEEDRating System in 1995 in response to the U.S. market’s demand for a definition of “green building.” Other rating systems such as BREEAM (European system) existed at that time and were reviewed before work on LEED began.
        4. The LEED standard was developed by USGBC members through volunteer committees.  The support tools, such as the Reference Guide and Training Workshop, were originally developed with funding from the U.S. Department of Energy.
        5. LEED has also diversified to rating systems outside of office buildings and major renovations to commercial interiors, core and shell, existing buildings, healthcare, etc.
        6. This supports sustainable planning, design, and construction of healthcare facilities by adapting the U.S. Green Building Council’s LEED® to respond to the unique set of opportunities and challenges presented by the healthcare sector.
    8. Energy Efficiency
      1. Hospitals are the 2nd most energy intensive buildings in the U.S. spending $10 billion annually on energy (2010)
      2. Healthcare represents 8% of the total US carbon footprint
      3. Healthcare is behind the curve compared to other industries in adopting energy efficiency measures.
      4. According to ASHRAE, if the majority of large medical centers reduced energy consumption by 1% in one year (e.g., 2014) that would result in:
        1. 100,000 megawatts saved
        2. The cost avoidance of 20 new coal-fired power plants
        3. Reduced carbon emissions by 18,140 metrics tons or equivalent to 3,780,000 automobiles
        4. If interventions to reduce energy use were adopted nationwide, estimated five-year net cost savings would be just under $1 billion ($980 million). Reported in 2012 Study by the Commonwealth Fund:  “Can Sustainable Hospitals Help Bend the Health Care Cost Curve?”
    9. Water Efficiency
      1. Water efficiency saves energy and reduces greenhouse gas emissions.
      2. Pumping and treating water requires vast amounts of energy.
      3. Running your hot water faucet for five minutes is equivalent to running a 60-watt light bulb for 14 hours.
      4. 40% of U.S. water consumption is used to produce energy.
      5. 25% of energy used in California is used to pump, treat, and dispose of water.
      6. Organizations can track water in Energy Star Portfolio Manager. By tracking water use alongside energy use, you can better understand how these resources relate to one another, make integrated management decisions that increase overall efficiency, and verify savings from improvement projects in both energy and water systems. Organizations that manage water and energy performance together can take advantage of this relationship to create greener, more sustainable buildings
    10. Waste Management
      1. “Waste is not an inevitable result of production, but rather a measure of its inefficiency.” -  Joseph Romm
      2. Waste and climate statistics
        1. 42% of U.S. GHG emissions are associated with the energy used to produce, process, transport, and dispose of the food we eat and the goods we use.
        2. Extraction or harvest of materials and food, production, and transport of goods.
        3. Provision of services, reuse of materials, recycling, composting, and disposal.
        4. 29% of U.S. GHG emissions result from the provision of goods produced within the United States.
        5. The provision of food contributes another 13% of U.S. greenhouse gas emissions.
        6. Traditional “waste” management represents 1 to 5% of U.S. GHG emissions.
        7. Material consumption requires energy to “mine”, manufacture, transport, and dispose of.
        8. Only 1% of products are durable enough to still be in use six months later.
        9. For every pound of product produced, 32 pounds of waste is generated.
        10. Methane is 21 times more potent than CO2 as a green house gas.
        11. One ton of trash produces 123 pounds of methane.
        12. Net CO2 emissions are 4-5 x lower for typical recyclables, and 40 x lower for Aluminum.
        13. 62% of what gets buried in landfills is recyclable or compostable.
        14. Check out this EPA resource for more information on Opportunities to Reduce Greenhouse Gas Emissions through Materials and Land Management Practices.
    11. Leverage the expertise of your vendors and GPOs
      1. Vendors and GPOs have useful resources, tools, and support mechanisms such as:
        1. 50 Ways to Go Green Checklist
        2. Chemical Policy Statement
        3. PVC-DEHP Elimination Resource Guid
        4. SUD Reprocessing Toolkit
      2. Vendors and GPOs can assist your organization with audits and assessments such as:
        1. Utilize more reusable totes and shipping containers.
        2. Reduce/eliminate packaging or take it back for re-use.
        3. Deliver all printers and copiers set for double sided and black/white copying and printing.
      3. Some GPOs may have a product evaluation/steering committee. See if your organization can act as a participant.
      4. Some vendors and GPOs may have a “Green Product Guide” that will allow your organization to understand how much of your purchasing qualifies as “green”. Once a baseline is established this information can be used to make strategic “green" purchasing decisions moving forward.
  • Case Studies

    Cleveland Clinic | Greenhealth Magazine

    Key Points:

    • Cleveland Clinic’s sustainability program creates and overarching framework that includes and engages with all departments and campuses.
    • The organization’s communication of their sustainability program is a vital part of keeping staff, patients, and community engaged.
  • Cross References: LEED

    • LEED (2009) Existing Buildings: Operations and Management. Materials and Resources Prerequisite 1: Sustainable Purchasing Policy
    • LEED (2009) Existing Buildings: Operations and Management. Materials and Resources Credit 1: Sustainable Purchasing: Ongoing Consumables
    • LEED (2009) Existing Buildings: Operations and Management.  Materials and Resources Credit 2: Sustainable Purchasing: Electric Powered Equipment
    • LEED (2009) Existing Buildings: Operations and Management. Materials and Resources Credit 3: Sustainable Purchasing: Furniture
    • LEED (2009) Existing Buildings: Operations and Management. Materials and Resources Credit 4: Sustainable Purchasing: Reduced Mercury in Lamps
    • LEED (2009) Existing Buildings: Operations and Management. Materials and Resources Credit 5: Sustainable Purchasing: Food

     

  • Cross References: GGHC

    • GGHC (v2) Operations: Environmentally Preferable Purchasing Credit 1.1-6.2
  • PIM Synergies

  • More Resources

    • Practice Greenhealth supports its member organizations with numerous components of their sustainability journey. In addition to its member support, its Greening the Supply Chain™ initiative  is open to all hospitals; bringing hospitals, GPOs, and suppliers together to innovate. White papers, sample RFI language, case studies, webinars, and more are available via the initiative website.
    • Healthcare Without Harm’s vision is to lead the global movement for environmentally responsible healthcare. As thought leaders, researchers, and educators, Health Care Without Harm creates and aggregates a wealth of information about the “why” of sustainable healthcare, and ties it to our shared common mission of health. Its sister organization, Practice Greenhealth, focuses more on the “how” of sustainable healthcare. Detailed fact sheets on specific chemicals of concern or global supply chain issues can be found on its comprehensive website.
    • The Healthier Hospitals Initiative (HHI) is a national campaign to implement a completely new approach to improving environmental health and sustainability in the health-care sector. HHI is a guide for hospitals to reduce energy and waste, choose safer and less toxic products, and purchase and serve healthier foods. One of the six priority challenge areas is Smarter Purchasing.
  • PIM Descriptors

    Supply Chain

    Level: Beginner

    Category List:

    • Training and Education

    PIM Attributes:

    • Optimize Operations
    • Strategies/Projects

    Improvement Type:

    • Operations
    • Source Reduction
    • Toxics Reduction
    • Waste Minimization

    Department:

    • Purchasing/Materials Management/Supply Chain
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