By Jon Miller and Jim Motavalli
At a December 15 Wharton School conference entitled “Sustainability and Health Care: Creating and Capturing Value,” several partners described a new initiative aimed at creating an industry-wide, cloud-based solution to greening the healthcare supply chain.
The collaborators now piloting the initiative include healthcare giant Johnson & Johnson, furniture maker Steelcase, global purchaser Premier (representing 3,600 U.S. hospitals), Edward-Elmhurst Health hospital group and sustainability solutions company MindClick. Their goal is to make it easy for hospitals to get relevant sustainability information about products they’re considering. The pilot program is scheduled to turn into a broad-based launch next year.
The conference, hosted by Wharton’s Initiative for Global Environmental Leadership (IGEL) and sponsored by Johnson & Johnson, began by providing a broad context for the new data-driven effort. Speakers from the World Economic Forum, the private equity firm KKR and Wharton discussed how sustainability drives value for a wide range of organizations, including large and small for-profit companies, mission-driven non-profits and even the U.S. military.
According to JoAnna Abrams, CEO of MindClick, the new initiative in healthcare is benefiting from a similar approach, launched in 2011, that has allowed Marriott to integrate sustainability into its massive procurement system. The problem in healthcare, said Abrams, is that gathering sustainability data is currently time consuming, labor intensive and expensive—and because there is so much data and so little consistency, the effort is often wasted. She estimated that, “$25 million industry wide is going to collecting information that can’t be used.”
As part of the new “environmentally preferably purchasing” (EPP) initiative, MindClick is working with its partners to standardize the data that providers will supply, develop the software platform that will accommodate the massive amounts of data generated, and create the metrics that will be used to transform all this data into usable and useful information for hospitals nationwide.
The value of such a database, said Kevin Lewis, national program coordinator for Premier’s GreenHealthy division, is in moving from a highly labor-intensive approach to a more automated model that frees up staff time to act on the information collected.
Dustin Heiler, a market and business developer at Steelcase, says that today’s environmental data collection can be problematic for suppliers, because of the time commitment required, and because questions are neither standardized nor always relevant. “We may be asked questions about a chemical that was banned 15 years ago,” he explained. Instead of responding to disparate sustainability surveys from multiple providers, Heiler said Steelcase sees value in providing information to one source that strategically targets the key issues hospitals really need to evaluate their suppliers.
A reliable, widely used data base of EPP products could help jump-start the business case for corporate sustainability initiatives, such as the Johnson & Johnson internal Earthwards review process that recognizes products that have made three or more significant sustainability improvements. And the waste savings can be considerable. In one example offered at the conference, Steelcase furniture provided to Premier customers in 2014 contained 47% recyclable content. That furniture has the potential of diverting more than five million pounds of potential waste from landfills.
The U.S. healthcare sector represents 18% of U.S. GDP with more than $200 billion in annual purchases. And not all the money is well spent. Olivier Oullier, head of strategy, global health and healthcare strategy at the World Economic Forum, said at the Wharton conference that a third of the annual global spend on healthcare is wasted.
Michael Paul, president of the Enterprise Consumer Group at Johnson & Johnson, ended the conference by discussing Johnson & Johnson’s strategic approach to breaking down silos and marshalling all of the company’s vast capabilities for the benefits of its major customers. It seems clear that such boundary-crossing, all-encompassing solutions, whether company-specific or industry-wide, are what it will take to realize the benefits of truly sustainable healthcare.
There’s value in getting ahead of the curve, Paul said. He noted that Johnson & Johnson’s acquisition of Sterilmed, a reprocessor of medical devices, “sends a strong message that we care about waste reduction, and also about reducing costs to our customers.”