4 Reasons Why Sustainability Investments Are Vital to Hospital Finance Strategies

Hospital leaders have gradually become more aware of how important sustainability is in their communities, and becoming a greener hospital has now become embedded in many hospitals' financial strategies.


For example, according to a Johnson & Johnson whitepaper, 54 percent of hospitals say green attributes are "extremely important" in their purchasing decisions. In addition, 40 percent of hospitals plan to adjust product requests for proposals to account for sustainable elements, and more than one-third of hospitals have already switched to supplies that they consider to be greener.


Keith Sutter, senior product director of sustainable brand marketing for Johnson & Johnson, says hospital CEOs, CFOs and quality-focused executives who have not already sewn sustainability into their cultures may be behind the curve. Here, he outlines four specific reasons why hospitals should take sustainability measures into account and how they directly affect a healthcare organization's finances.


Single-use device reprocessing1. Hospital sustainability efforts promote responsible public health and other mission-based goals. Hospitals that decide to go green will see savings to their bottom line, but these initiatives also fall in line with a hospital's mission of improving public health. Mr. Sutter says hospital executives who emphasize ways to combat climate change and promote public health will see benefits across the board.


"This is about saving money and costs, but it's also about delivering on the promise of all healthcare institutions," Mr. Sutter says. "How can we deliver efficacious care to patients in a way that also doesn't detract from their long-term health by hurting the environment?"


2. Financial leaders acquire "life-cycle thinking." Investing in sustainable measures such as energy-efficient equipment and alternative forms of energy requires hospitals to spend capital — an idea that few financial leaders are embracing right now amidst sequestration and reimbursement cuts. However, investing in these practices allows CEOs, CFOs and other hospital leaders to gain what Mr. Sutter calls "life-cycle thinking."


"This cuts right at the heart of CFOs — this total cost of ownership — which isn't something a lot of hospitals are embracing in a structured way," Mr. Sutter says. "It's not just the upfront costs that are important. It's like when you're buying car: The purchase price is important, but it's not always the biggest factor. What about the cost to insure and fuel? It's the same thing with any piece of capital. That is where sustainability starts — with life-cycle thinking."


3. Employee retention increases with greening strategies. As the old sales adage goes: It's cheaper to keep loyal customers than to find new ones. The same applies for hospital employees. It's cheaper for hospitals to find the right employees and keep them at their organization. Mr. Sutter says when hospitals allow employees to be active participants in greening the organization, they are more likely to be happy and stay. This saves the hospital money through the sustainable measures taken, but the strategy also indirectly saves the hospital money on labor costs it never has to spend.


"Turnover is consistently an issue in many healthcare organizations," Mr. Sutter says. "What we've found is nurses and other hospital staff are very engaged when it comes to sustainability initiatives. It shows the organization is making a commitment to the long term."


4. Sustainability pays off in the long run. When it comes down to making a case in front of board members or other C-suite leaders, sustainability efforts and investing in green strategies has to show some type of dollar-and-cents savings. Mr. Sutter says it does. The ROI for many efforts, ranging from reprocessing of single-use devices to investing in more eco-friendly, durable materials, is there. In addition, he says hospitals exhibit intangible savings by investing in their "brand."


"Hospitals and healthcare institutions often are critical facilitators and must demonstrate a commitment to the community," Mr. Sutter says. "Reducing waste and energy saves [hospitals] immediate money with an immediate return on that investment, but it also has a lasting impact for a hospital's equity and brand in the community."


More Articles on Hospital Finance:

9 Ingenious Ways to Cut Costs at Your Hospital

11 Ways Hospitals and Health Systems Can Increase Profitability in 2013

Why Healthcare Leaders Cannot Afford to Ignore "Greening" Anymore


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