Today's business climate forces hospitals and health care organizations to face contradictory decisions. Now more than ever, they are required to save every dollar they can through cost avoidance and stewardship. At the same time, these organizations must maintain function to care for their communities and improve their operations along environmental, social and governance (ESG) standards.
Improving along ESG standards is better for the planet and society and carries significant implications for access to capital. Investors, from banks to private equity to donors, seek opportunities to invest in organizations committed to ESG improvement as part of their strategy for improving their ESG standards. Let us consider how typical hospitals can improve ESG standards while also maintaining regulatory compliance and growing their reputation.
Environmental: Reducing Emissions, Consumption and Waste
The environmental standard centers around reducing greenhouse emissions, consumption and waste generation. Fortunately, options are available to improve quickly in these areas.
- Electricity and Natural Gas Usage. The HVAC system uses the greatest amount of energy out of all hospital systems. Over time, the coils in heating and cooling equipment become contaminated with debris and biofilm, increasing the pressure drop across the coils and reducing thermal transfer efficiency. Thoroughly cleaning the coils on an annual basis can reduce energy consumption dramatically. Additionally, transitioning to LED lighting inside and outside the hospital will reduce energy consumption. Both strategies may be supported by incentives from the energy provider and pay for themselves over time.
- Medical Waste. Medical waste disposal via incineration and dumping into specialized landfills carries high environmental costs across the board, from transportation to incineration. Alternative methods of on-site shredding and ozone exposure can help render medical waste so it can be disposed of with normal, non-medical waste. Again, this pays for itself over time and reduces environmental impact.
Social: Improving Fire and Life Safety
The social standard centers around health and safety standards and sourcing and labor policies. For hospitals, this translates directly to how they manage their fire and life safety practices. Every accredited health care organization must meet compliance standards set by the Centers for Medicare & Medicaid Services (CMS). Additionally, any incidents endanger the hospital's reputation, which can negatively impact patients' perceptions of the hospital. Health care organizations are best served by:
- Fire/Life Safety Assessments. Hospitals are already required to maintain a safe Environment of Care as a condition of participation in CMS programs. A thorough assessment of life safety features (e.g., rated barriers and doors, sprinkler coverage, above-ceiling issues, fire alarms, smoke control) ensures that compromised safety features are identified and corrected. If an incident occurs, it will be mitigated, and patients, visitors and staff will be protected, which is a direct requirement of the Social Standard.
- Surgical Fire Safety. The use of modern surgical techniques involving lasers and cauterizing equipment increases the risk of surgical fires. Having a comprehensive review of preoperative risk assessments and training on extinguishing fires and evacuation is the gold standard for protecting patient safety and the hospital's reputation.
- Emergency Management. A good offense makes for a great defense. Hospitals must be prepared for all disasters, anticipate potential hazards and plan for an immediate and ongoing response. These emergency preparedness measures start with making the hospital resilient in the design and building stage and continue through daily operations, disaster response, and continuous operations. Hospitals are best served by a virtuous cycle of assessments, drills and evaluations, and emergency plan and procedure improvements. While a hospital cannot prevent a disaster, it is judged by how well it anticipates and responds. Hospitals provide care for the community, especially after an emergency.
Governance: Maintaining Accreditation and Protecting Patients
The governance standard centers on the sustainability of the business and anti-corruption issues. For health care organizations, this means maintaining their accreditation status and protecting patient safety and information.
- Accreditation. Accreditation activities are not just tasks to be completed – they impact the bottom line. CMS accreditation is required to receive reimbursement from Medicare and Medicaid, with reimbursements making up 25% to 90% of a hospital's revenue. Hospital administration is responsible for ensuring that all accreditation activities (e.g., inspection, testing, maintenance, assessment, planning) are performed to best practice standards.
- Security. Hospitals must have security measures to protect patients, visitors and staff, as well as patient and HR information. Physical and virtual measures are required to control who has access to the hospital and secure areas within the hospital while protecting hospital IT networks. Hospitals are best served when they assess and test security measures through drills and simulations. Like emergency preparedness, security preparedness needs to be a virtuous cycle of identifying new risks, assessing current physical and virtual security vulnerabilities, conducting drills and evaluations, and continuously improving security measures.
Improve Your ESG Score
Hospitals and health care organizations do not need to radically change how they do business or incur significant additional costs to improve environmental, social and governance standards. In many ways, it means improving what they are already required to do but doing it more effectively.
Jensen Hughes proudly partners with health care organizations, architects and contractors, providing professional solutions to navigate these complex matters. Learn more about how the Jensen Hughes Healthcare Team can help your organization improve its ESG score and achieve its goals.