Because it Makes "Economic Sense": How Methodist Le Bonheur Healthcare Changed Its Operations

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Society's ability to cover the costs of healthcare has been under consistent pressure over the past several years. Healthcare still makes up more than 17 percent of the U.S. gross domestic product, and hospitals and health systems are looking at different ways to cut down their contributions to the growing problem.

Roughly a decade ago, executives at Methodist Le Bonheur Healthcare in Memphis, Tenn., decided it was time to do something. The seven-hospital integrated delivery system has roughly $1.4 billion in annual operating revenue, making it a major player in both its local market and the healthcare market at large.

Methodist teamed up with Johnson Controls, a global outsourcing firm that helps hospitals with sustainability projects. Chris McLean, executive vice president of finance and CFO of Methodist, says the system wanted to become more efficient — while improving patient care and satisfaction along the way — through a mass-scale sustainability initiative that supported its faith-based mission.

Because "sustainability efforts engage a lot of people and capture people's passions," Mr. McLean says the partnership would inevitably lead to a better bottom line and quality care, as well.

"Sustainability as an overall strategy for Methodist Le Bonheur Healthcare is based on the fact that we are living in a very unpredictable time for the healthcare industry," Mr. McLean says. "It's up to us to not only deliver great healthcare, but to do it in a way that society, especially our community, can afford it. Becoming more sustainable and reducing our energy and operational cost help us do that. So we are not only becoming sustainable to say that we have a green strategy — we are doing it because it makes economic sense."

What Methodist is doing

Methodist worked with Johnson Controls on several projects. Specifically, it looked to better manage areas that require a lot of capital or financial oversight — equipment maintenance, facility construction and energy. For example, all equipment repairs and replacements became Johnson Controls' responsibility, a move that Mr. McLean says has eliminated unexpected downtime and "has taken a lot of worry and concern off our backs and allowed us to focus on delivering great clinical care."

As a growing system, Methodist also wanted to ensure its new, big-ticket projects are well-suited for the community and the environment. Last month, the system opened its new 100-bed hospital, Methodist Olive Branch (Miss.) Hospital. Mr. McLean says hospital leaders and Johnson Controls sustainability experts helped Methodist Olive Branch attain Leadership in Energy and Environmental Design certification, the first in Mississippi. LEED certification not only gave Methodist green credibility; it also held down costs "while using some of the latest technology" due to the more efficient energy environment.

"For us, making our facilities reliable and efficient is part of providing our patients with a healing environment," Mr. McLean says. "We want to create an atmosphere that is calming and soothing."

What other hospital executives should do

Methodist shares its sustainability stories and advice with other institutions at conferences and speaking events. Mr. McLean says for hospital and health system leaders that are making the long-term financial investments in sustainability, it's difficult to walk the road alone. He, and other health systems, suggest that executives conduct due diligence to find the right community partners and vendors for these types of operational projects.

"A lot of talent has to come together from a lot of different places to make it happen," Mr. McLean says. "That is why when we were looking at our facilities, we were looking to work with talented experts that could become part of the team."

In addition, it's imperative for organizations to commit fully to their projects (in other words, don't back out if a few speed bumps occur), while buy-in from physicians and staff members drives the entire initiative, Mr. McLean says.

"We would encourage other hospitals and health systems to do what we did and start looking at their facilities to set goals, implement changes and track successes and progress," Mr. McLean says. "They should also put together a team and get everyone on the same page. Have your core leadership team focusing on the same sustainability goals and objectives, so you know collectively how you are going to achieve a sustainable and efficient environment."

More Articles on Hospital Finance:
How Investments in Community Health Pay Off
Coordinating Care and Incentives: Q&A With Cleveland Clinic CFO Steve Glass
4 Reasons Why Sustainability Investments Are Vital to Hospital Finance Strategies

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