It’s not easy to wrangle the largest players in any industry to give up competitive advantages.
But that’s what the five largest health care group purchasing organizations (GPOs) in the U.S. (Amerinet, HealthTrust, MedAssets, Novation and Premier) did when they agreed to work together on a standardized list of questions for suppliers about their products’ impact on humans and the environment.
It’s a move that can have a big impact on greening the industry’s supply chain: Purchases of the five GPOs represent 90 percent of all GPO purchases and total $135 billion a year, according to Curtis Rooney, president of the Health Care Supply Chain Association.
“These GPOs put competition aside to show that they are committed to sustainability,” said Beth Eckl of Practice Greenhealth, a nonprofit organization of more than 1,200 health care organizations (including hospitals and GPOs) aimed at embedding sustainable practices in the health care industry.
While Kaiser Permanente had developed its sustainability scorecard in 2010, there was still a need for standardized questions in order to compare each product using the same measures, according to Eckl, the director of the organization’s environmental purchasing program.
“Purchasers in general are in a key position to affect sustainability,” Eckl said. “What comes in the front door has an impact out the back.”
Released in October, the first version of questionnaire — which used Kaiser’s scorecard as a model – has 13 questions and took six months to complete, according to Eckl.
It focuses on non-electronic products only and inquires about products’ use of natural resources and end-of-life, as well as whether it contains carcinogens or substances such as BPA, polystyrene, PVC or DEHP. (Commonly used products used in hospitals such as IV bags and tubing contain PVC and DEHP, for instance, and are known for their negative effects on human health and the environment). A second version, which will include standardized questions for electronic products, is currently in the works.
“If you look at the supply chain, it’s much more than just the products themselves – it affects energy usage, water usage, waste disposal, chemicals — purchasing has a footprint in every one of those,” said Seema Wadhwa, the director of the Healthier Hospitals Initiative, a group comprised of 500 member hospitals across the U.S. that advocate for health care organizations to use more sustainable business practices.
“The impact is that it really sends a very strong message to industry,” said Gina Pugliese, a vice president at Premier, one of the nation’s largest GPOs. “They really represent a consensus of what we believe are important to make our patients safer,” she said.
Rooney said his organization has been working with suppliers “so that they wouldn’t be caught off-guard” by the focus on sustainable products in the questionnaire.
But the questions won’t be applied to all of the health care supplies procured for hospital use. According to Rooney, although 98 percent of hospitals in the U.S. have a «relationship» with a GPO, they buy an average of 70 percent of their products through contracts secured by the purchasing organizations.
Overcoming competition
GPOs work to negotiate the best prices for the group of hospitals they represent by leveraging the group’s purchasing power – and compete against each other to land the best deals for their members.
Practice Greenhealth had worked with the GPOs for several years to identify the environmental attributes they should ask when collecting information from suppliers, said Eckl, but it wasn’t until a conference in April 2011 that the organization was able to corral the group into going a step further to collaborate on the standardized questions.
“We made a stronger case to them, as they were already asking 80-100 percent of the same questions,” Eckl said. “We said ‘Wouldn’t it be more powerful and send a stronger message to your suppliers if you standardized them?’”
So what was the trigger that eased the GPOs’ long-standing competitiveness?
Lisa Koenig, who manages all sustainability efforts for Amerinet and Premier’s Pugliese both said their companies recognized the importance of sustainable health care products.
Rooney said that the reason was also market-based. “The driving force was simply an awareness by the GPOs that their customers — the hospitals — were interested in this area [of sustainable health care],” he said.
Pugliese said that another reason for standardization is that it helps the GPOs in addition to their suppliers.
“If everyone is asking about different environmental attributes of the same products, we can’t get what we need…it would be really challenging,” she said. “There’s much more power in numbers.”
Standardizing questions also brings costs down for health care providers as suppliers save time when responding to just one set of questions, Pugliese added.
“It’s our mission to improve quality and safety and patient care and reduce costs,” said Koenig. One of the largest GPOs in the U.S., Amerinet made $7.7 billion worth of purchases in 2011 for its 56,000-plus list of members.
“Sustainability is about safety – we thought as a group we could help move the market with one voice,” she said. “I don’t think it was a conscious decision to work together – it was just natural to work on the same goal.”
Some competition has been preserved among the GPOs. Each will be interpreting the answers independently and implementing the questionnaire on its own timetable by the end of this year, according to Eckl.
“That’s why we don’t get more specific [in regard to interpreting the answers],” Eckl said. It’s more competitive for GPOs to do this independently, she said.
Koenig, who said that Amerinet will start using the questions with suppliers before September 1, added that although the questionnaire represents progress, it only scratches the surface of what needs to be done.
“You have food services, environmental services, pharmacy services, construction and so many other things that have to be looked at…those questions need to be standardized as well,” she said.
Lessons learned
What did Practice Greenhealth learn in the process of working to align the health care supply group purchasing industry across a common goal?
Eckl said her organization originally asked hospitals to use the questions and endorse the questionnaire as well in their own purchasing process – but had surprising results.
“We did not expect some of the responses we received at the end of the pipe,” she said. “We didn’t realize that it would be such a burden for the hospitals to integrate this into their supply chain process.”
So instead of asking hospitals to endorse the questions, Practice Greenhealth asked them to pledge to support their GPO in using these environmental questions.
Practice Greenhealth also realized how important it is to collaborate with the entire supply chain, Eckl said.
“We have hospitals, GPOs, health systems and suppliers – and it’s important to work with all stakeholders in this process,” she said. “It’s more effective if they’re all at the table.”
A defining moment
The move towards a greener national supply chain comes at a time when the movement is gaining greater recognition.
Last week, the Council on Environmental Quality spotlighted the issue at a White House event on sustainable health care. One of the speakers on the panel was Gary Cohen, the founder of Health Care Without Harm — an organization formed in 1996 in response to an EPA finding that the leading source of dioxin (a known carcinogen) was medical waste incinerators. It also campaigned successfully to phase out mercury from medical equipment used in the U.S. [Full disclosure: Author Kristine Wong, working as a community organizer, in 2000 secured a grant from Health Care Without Harm to support a nonprofit’s campaign to urge the VA Hospital in Seattle, Wash. to purchase PVC-free and sustainable health care products.]
“Gary Cohen said it took 15 years to come to this,” Eckl said. “It has taken a long time to get where we are today.”
Seema Wadhwa, the director of the Healthier Hospitals Initiative who also spoke at the White House event, said it was a “very defining” moment.
“People are starting to understand that sustainability is a critical strategic opportunity — it’s no longer tied only to corporate social responsibility,” she said. “It’s really a smart business decision for health care across a spectrum — it’s uniquely tied to the mission of the work that’s done [in health care].”
“We’ll be able to look back and say that the White House event was a key indicator that we’re going in the right direction,” she said.
Source / Fuente: GreenBiz.com
Author / Autor: Kristine A. Wong
Date / Fecha: 29/07/12
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