Sustainability isn’t a ‘special project’ for healthcare supply chains. Instead, it’s part of a larger framework that maximizes the impact of health systems’ spending power and their larger role in bettering communities.
By Erin Cristales, Vizient
“Only Vizient can do this.”
It was a sentiment widely echoed at this year’s American Hospital Association Conference, where Simrit Sandhu — executive vice president, strategic transformation and clinical supply solutions at Vizient — spoke as part of a panel discussion titled Moving the Needle on Environmental Sustainability. The “this” in question is helping health systems and suppliers bolster their approach to environmental, social and governance (ESG) to build a more transparent and resilient healthcare supply chain — and a healthier planet for all.
It may sound easier said than done. But as the bridge connecting providers and suppliers to data, analytics and expertise that support healthcare excellence, Vizient is in fact working to make the process a whole lot simpler — and more purposeful.
“The cost of sticking with the status quo is significant,” Sandhu said. “In 2007, Vizient’s board of directors put forth a challenge to leverage our data and analytics, along with the scale of our membership, to make meaningful advancements in environmental stewardship, equity and outcomes. At its core, environmental responsibility comes down to creating healthier communities and organizations. From that perspective, the choice is simple for us to do everything we can to model the way and support our members on the journey towards sustainability.”
One of Sandhu’s partners on that journey is Terri Scannell, senior social responsibility director at Vizient. Scannell also was a participant at AHA, where she shared the many lessons she’s learned in creating positive change at the intersection of healthcare, community impact and sustainability. Here, the two delve into the importance of ESG — and how providers and suppliers must think beyond traditional notions of what makes the healthcare supply chain truly cost effective, efficient and resilient.
Terri Scannell, left, and Simrit Sandhu
Q: Simrit, you have frequently discussed the importance of approaching the healthcare ecosystem as a two-sided marketplace, and Vizient’s role as a convener for providers and suppliers. Considering the supply chain accounts for approximately 80% of emissions in the healthcare sector, how can providers and suppliers best come together to make a difference, and what role does Vizient play in bridging those connections?
Sandhu: Instead of creating one-to-one change, Vizient can create many-to-many changes. Thousands of members rely on us for aggregating their purchasing power, and we have many more who rely on us for our clinical and supply databases and understanding how to benchmark performance across many different types of attributes. We’re a convener through that network effect of channel scale and membership, and that gives us a platform to create change that sticks. We believe that ESG performance around all these different attributes is very important to measure because without measurement, there is no meaningful progress made. The industry has given us feedback that they would love Vizient to use our network effect to convene value and baseline measurements to help create performance management along those attributes.
Scannell: Particularly with supply chain, we bring transparency and efficiency to the marketplace, and we bring those for more than just price.
Sandhu: Absolutely. Vizient has a unique role in the marketplace to boost the signal to our suppliers and make it easier for our member hospitals to understand their role in reducing healthcare’s footprint on the environment. The healthcare industry, and particularly the supply chain, is comprised of largely global corporations who are under significant pressure from investors, stakeholders, regulators and customers to be transparent and accountable for the embodied carbon [which refers to greenhouse gas emissions arising from the manufacturing, transportation, installation, maintenance and disposal of building materials] in their products and services. A lot of the questions we get are what does performance improvement look like? Where can we find that data? How can we measure it? Making that visible by meaningfully measuring and sharing it across our member and supplier platforms so that it’s a transparent process for both parties is so important.
We’re proud to offer the largest source of sustainability data in the healthcare industry, and we use it to provide actionable insights. One great example is Vizient’s new Carbon Action Dashboard. This industry-first tool provides transparent and actionable scopes 1, 2, and 3 carbon calculations, identifies peer performance for benchmarking and provides carbon sensitive recommendations for performance-improvement opportunities where possible. Additionally, Vizient Domestic Sourcing features products manufactured in the U.S. that have reduced carbon emissions because they don’t have to be transported by plane, train, truck or boat across the globe. In addition, Vizient Domestic Sourcing bolsters our nations’ supply chain operations, expedites product shipping time, spurs the U.S. economy and job market, and leads to increased innovation.
Scannell: We’re in a very good position to help mitigate this issue — not only because we can provide data, transparency and accountability, but we also have the patent-pending Vizient Vulnerability Index™, which can overlay the health impacts of climate change in addition to factors related to health equity. And these health impacts of climate change come to our member hospitals’ doors. One of the things that puts hospitals in the catbird seat is they can play a role in investing in the health of their communities. And with the data that we have, Vizient can play a role in advising on the direction of those investments and helping to measuring the outcomes.
Sandhu: You can’t have healthy communities on a sick planet. Socioeconomic factors lead people to live in certain communities that are disproportionately impacted by climate change. With the Vizient Vulnerability Index, we're able to measure the impact that lack of clean water, food, air and housing have on vulnerable communities. This tool aggregates public health data, including EPA data on air and water pollution, and when combined with Vizient’s Clinical Data Base can provide neighborhood-level insights around eight specific social determinants of health. Health systems can then use this information to better understand the specific vulnerabilities of their communities and the health outcomes they influence.
For instance, we know in some areas that housing insecurity can lead to low birth weight. While we are still understanding what this means in terms of a community’s environment, our data scientists are looking to expand this domain specifically to help members better grasp the impact a clean or toxic environment can have at the local level. The more visible and transparent we make this, the broader net that can be cast around helping solve for the problem, whether with philanthropy, community impact investing or supplier-based efforts around hiring and sustainability. Spotlighting these issues is not punitive — it’s an opportunity to improve.
Sandhu: The supply chain has often confused effectiveness with cost but creating vibrancy and resiliency in the supply chain is far more effective than looking at point-in-time prices. We can’t think of sustainability as a “special project.” Instead, think about ESG as existing within a larger framework of maximizing the impact of your spending power. Be it the work around sustainability and green practices, social governance and humane working conditions, employee engagement, diversity and economic wealth — if we can convert those efforts to redefine what true efficiency and effectiveness in the supply chain looks like, we have a chance to create longer-term solutions, which would positively impact the short term as well. If we just focus on price in the inflationary environment we're facing, there is a 1% to 5% price increase coming on products. But if you focus on crude cost, it’s much, much larger. The movement from disposable to reusable is the right thing to do — even though the price may go up a little, the long-term cost impacts to healthcare and the environment are so much lower. You can't afford not to do this.
Scannell: If you factor in the cost of waste management, there is a savings. Often, when circularity or recycling programs are deployed, hospitals can reduce their most expensive waste stream — red bag waste — thereby saving money.
Q: What are some simple, tangible steps toward better sustainability that suppliers and providers can immediately implement?
Scannell: Realign your balance sheet with your values. You have to understand what your stakeholders need and look at all the elements that you can make change with. That's data. That's people. That’s purchasing power and hiring power. Hospitals have large physical investments in land and buildings, and leading practices can lower energy costs and make a community’s critical infrastructure healthier.
Sandhu: There are many things you can do. One of Vizient’s earliest steps in sustainability was to learn from other industries. We took a few members and went to Walmart’s headquarters for a week and met with each operational division to learn strategies we could apply to healthcare. An example that stands out is shifting from paper to digital. We’ve worked to change FDA regulations so product disclosures could be digital, like for medical devices. The paper included in just one hip implant was several hundred pages and was immediately tossed into operating room waste. Red bag waste is the most expensive waste to process, and by shifting these phonebook size manuals from paper to digital, we were able to reduce waste to landfills and lower waste cost.
Also think about blue wrap — healthcare delivery uses millions of pounds of blue wrap annually, as it keeps surgical instruments sterile. Most of it goes through a hospital’s waste management system, which incurs a disposal cost and ends up in a landfill. The U.S. Environmental Protection Agency estimates it accounts for 19% of all OR waste. But when recycled, it’s diverted from waste and can be used to create very useful products like shipping pallets. And of course, look at reducing chemicals of concern in your supply chain. Using products with harmful chemicals is not only a danger to patient safety, but also workforce safety, as staff members are exposed regularly. For instance, a typical pediatric hospital room contains more than 250 chemicals of high concern. Vizient leads the industry in sustainable sourcing, even giving our members access to a free dashboard that provides insights around their commitment to sustainability. We also offer an Environmentally Preferred Opportunity Service to identify sustainable product conversion opportunities and their associated impacts. Examining your use of products with harmful chemicals can improve health outcomes, promote sustainability, and in some cases, lower costs.
Where you can start from a strategic standpoint is aligning to a larger “why” by understanding how ESG is part of your larger operational improvement framework. If you start there, you go further. It’s also important to channel the power of your employee base — after all, they're passionate about this work. Meaningful change is going to take collaboration across many parties, and Vizient is committed to forging partnerships across the healthcare ecosystem to make meaningful change happen.