Everyone is talking these days about Walmart’s Sustainability Index and how it is driving sustainability to a level that government in the U.S. has not been able to achieve. Now Kaiser Permanente, the nation’s largest non-profit health care provider with 8.7 million subscribers and over $40 billion revenue, is expected to do the same for the health care industry with the launch of its Sustainability Scorecard for medical suppliers. The scorecard evaluates the environmental and health impacts of products.
For years Kaiser Permanente had provided strong leadership both among its peers and among other companies on greening its operations, from improving energy efficiency, to PVC-free carpet, green purchasing, to using renewable energy and building LEED certified facilities. Yet a truly “green” or sustainable strategy cannot be achieved without involving the supply chain.
In an interview conducted by Chris Pinney and Vesela Veleva in August 2008 we asked Dean Edwards, VP & Chief Purchasing Officer, whether Kaiser Permanente collects information from suppliers about what is in their products. Mr. Edwards’ answered “Yes, we do and we find big hole – many suppliers don’t know what is in their products.” Such gaps, however, can lead to significant risks and liabilities as companies from toy manufacturing, to food, to medical and consumer goods have found.
Switching to “green” medical products not only reduces such risks and improves reputation but it also can save money. According to Robert Gotto, Senior Sourcing Director at Kaiser Permanente, the company is saving about $20 million annually as a result of switching to more environmentally friendly products (for more information see http://xnet.kp.org/newscenter/pressreleases/nat/2010/050410sustainability.html).
What does all this mean for medical suppliers and the health care industry overall? It means change.
The industry which is expected to help people live healthier lives has significant environmental and health impacts – from high energy consumption and greenhouse gas emissions (8 percent of the U.S. GHG emissions), water contamination with drugs and other pharmaceutical products, to use of toxic chemicals in products and operations (e.g., mercury, PVC, and DEHP). With purchasing of $1 billion in medical goods each year (and total purchasing of about $14 billion a year) Kaiser Permanente will clearly affect the industry by driving demand for green and toxic-free products. Moreover, through its partnership with Broadlane, the company’s supply chain partner, the scorecard is expected to influence other health care organizations with spending of approximately $9 billion per year.
If you are a medical supplier get ready - the scorecard may be coming your way soon.