Sustainability in healthcare faces two conflicting objectives: meeting the growing demand for lower-cost medical care and at the same time investing in sustainability practices. We must find ways to balance the two to improve the global impact. The World Health Organization (WHO) estimates that between 2030 and 2050, climate change will cause approximately 250,000 additional deaths per year, as it affects the social and environmental determinants of health — clean air, safe drinking water, sufficient food and secure shelter.
The healthcare sector has the potential to significantly reduce its emissions by taking a series of critical steps. Sustainability now encompasses more than just environmental protection — it includes efficient and affordable healthcare solutions, as well. Achieving sustainable healthcare involves delivering high-quality care while minimizing environmental repercussions.
Hospitals: Leading the way
Hospitals play a big role in healthcare, have a strong impact on the environment and are increasingly making sustainable choices. This industry is nuanced in the sense that it comprises not-for-profit and for-profit organizations. While the SEC requires ESG disclosures for listed companies, most US hospitals are nonprofit. However, most large hospital systems have a well-defined ESG strategy in place and have made significant progress in this direction. In 2020, for instance, a leading managed care organization became the first US healthcare organization certified as carbon neutral. Several large US hospital systems have outlined plans to meet net-zero greenhouse gas emission requirements by 2050. The key features of their strategies are based on:
- Energy management: This includes using energy-efficient technology and reducing waste. Imagine hospital wings with energy-saving equipment, lighting and advanced heating and cooling systems. Investing in solar panels and green roofs has a greater impact in the long run, promoting healthcare solutions that are environmentally friendly and efficient.
- Waste management: While hazardous and biomedical waste is largely segregated to avoid cross-contamination, non-hazardous waste is increasingly being separated into recyclable waste, such as construction waste, devices, batteries, aluminum, wood and paper. They are later disposed of, treated and processed properly.
- Electronic health: Incorporating electronic health records (EHRs) and telemedicine services goes beyond enhancing patient care; it also contributes to a notable reduction in paper waste and the carbon footprint linked to travel for medical appointments. A recent study showed an impressive 154% increase in remote medical consultations in 2022 due to the widespread adoption of telehealth, resulting in substantial reductions in carbon emissions.
- Procurement practices: ESG criteria are increasingly becoming part of the decision criteria for selection of suppliers. This is especially relevant for existing strategic suppliers that drive most of the procurement spend to ensure they have emission reduction goals and ESG initiatives in place.
- Health equity: Hospitals are increasingly focused on eliminating any healthcare disparities across race, ethnicity, gender, socioeconomic, physical ability and mental status of patients. A larger focus is being driven through National Committee For Quality Assurance (NCQA) quality metric criteria focusing on preventive health measures such as immunization, hypertension control, colorectal, breast and cervical cancer screening and diabetes care. The Joint Commission’s industry-wide Health Equity Standards that came into effect on January 1, 2023 have significantly promoted this imperative.
Pharmaceutical and medical device manufacturers: Changing for the better
The pharmaceutical and medical device industry has formed a more definitive ESG strategy due to a combination of being publicly listed companies that are continuously under scrutiny and working in a global regulatory setup. Health access, employees, environment and ethics form the foundation of sustainability strategy across large companies in this sector. Pharma and device manufacturers are driving a 360-degree strategy that comprises the key ESG aspects:
- Health access and equity: Critical to global health equity is continually expanding affordable access in every corner of the world with low and medium-income populations. Drug and device manufacturers seek to improve access to quality healthcare for the underprivileged population. Much effort is being driven by drug and device manufacturers to reduce mortality due to the lack of medicines, devices and vaccines that target infectious and preventive diseases, showcasing their commitment to accessible healthcare solutions.
- Product safety and quality: If everything else is stripped away, assuring the safety, efficacy and reliability of drugs and devices will remain at the core of the promise every time a patient receives a drug. Quality and safety at every stage of product development, manufacturing, supply chain and commercialization are increasingly vital in drug and device manufacturer investments and strategic decisions.
- Diversity, equity and inclusion: Efforts to improve diversity, equity and inclusion across the workforce and society at large are happening on several fronts. Talent acquisition and development to improve gender and ethnic/racial diversity in management and STEM roles, pay equity across workforce for equivalent positions, workplace injury, chemical exposure and safety, employee mental health, employee engagement on feedback and workforce issues are some of the key focus areas across the industry.
- Greenhouse gas emissions: Reducing greenhouse emissions is a key input for new drug manufacturing process design. According to the International Journal of Life Cycle Assessment, adopting eco-friendly drug manufacturing could reduce carbon emissions by up to 25% compared to conventional techniques. Relationships with upstream and downstream drug supply chain partners on Scope 3 emissions, business travel carbon footprint and spend analytics to choose the right partners are helping gain additional advantage. Finally, end-to-end operational efficiency is improving by focusing on using renewable electricity, carbon credits and carbon neutral operations across Scope 1 and 2 GHG emissions.
- Water usage and waste discharge: Drug and device manufacturing is a highly complex process involving numerous chemical and mechanical steps that utilize large amounts of chemical ingredients, material, water, solvents and reagents. Advancements are being made in manufacturing processes to improve water conservation, wastewater treatment, water recycling, limiting the discharge of active pharmaceutical ingredients to wastewater and accidental discharge mitigation plans while working with local government authorities to meet all regulatory guidelines, highlighting responsible water usage and waste discharge in healthcare solutions.
Health insurance: Building a healthier future together
While hospitals and pharmaceutical companies deliver healthcare, health insurance companies pay for it. Unlike drug manufacturers but similar to hospitals, their business model is localized in the US. However, unlike hospitals and similar to drug manufacturers, they are largely for-profit enterprises and subject to SEC disclosure requirements. Payors have aligned their ESG strategies with the Managed Care Industry Standards published by the Sustainability Accounting Standards Board. While they are driving a wholesome 360-degree strategy, health equity is an important area of influence for Payors with the below focus points:
- Care gaps: Closing gaps in care, such as missed wellness visits, vaccinations, screenings and medication adherence, is a key focus area for health insurers to improve health equity in their covered population. Payors are taking the lead in filling these gaps using technology, value-based care and intervention programs, showcasing innovative healthcare solutions to bridge healthcare disparities.
- Mental wellness: Behavioral health is another key area of focus for members affected by stress factors associated with debilitating illness and treatment, older adults, post-partum depression, LGBTQ population and young adults. Improving access to mental health professionals in the network is a critical step in this direction.
- Home health: Access to care is severely affected by the ability to visit a provider’s office. Many population segments, such as Medicare and Medicaid, are disproportionately impacted. Through a combination of virtual care, house calls and partnerships with home health providers, payors are trying to reduce undiagnosed conditions and improve health outcomes.
- Prescription drug pricing and adherence: Out-of-pocket expenses keep a significantly large population from being able to adhere to their prescriptions. Diabetes, addiction, asthma, biologics and birth control are common areas where affordability affects health outcomes. Payors have increased their focus by eliminating copays and simplifying access to prescription drug assistance programs.
- Women's health: Ethnicity-based differences exist in maternal and infant mortality rates. Access to birth control, menstrual health, mental health and cardiovascular diseases are some areas that Payors are focused on to ensure women have access to equitable healthcare.