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KSR Publishing, Inc.
Copyright © 2016
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         Clinical intelligence for supply chain leadership

 

INSIDE THE CURRENT ISSUE

September 2016

Special Focus

 

New exchange aims to bleed green,
not red

Greenhealth pushes sustainable products, services to the forefront of contract availability

sustainableby Rick Dana Barlow

When it comes to progressing toward and implementing environmentally responsible contracting and purchasing of sustainable products and services, a small percentage of forward-thinking "green"-minded healthcare organizations have been making some waves.

Through their individual philosophies and projects, they have been carrying the flag for sustainability in healthcare, which they promote as fitting hand-in-glove from a missional standpoint.

Their efforts motivated and paved the way for propelling sustainability to the next level in a more prominent role.

Back in May, Practice Greenhealth and Health Care Without Harm put their green efforts into overdrive, tapping two veteran group purchasing organization executives to found Greenhealth Management. John Strong, former head of the heritage Premier Health Alliance (now part of Premier Inc.) and later Consorta (now part of HealthTrust), and Mary Starr, previously a key leader in Consorta, HealthTrust and University HealthSystem Consortium (now part of Vizient), used Greenhealth Management to launch Greenhealth Exchange, a supply chain support services organization designed for strategic sourcing, contracting and purchasing sustainable products and services for healthcare provider organizations that join it.

Even as the GPO industry has consolidated in recent years Greenhealth Management through Greenhealth Exchange saw a need unfulfilled and a niche worth addressing to make its debut with several high-profile healthcare organizations, including Practice Greenhealth, Health Care Without Harm and four prominent provider organization shareholders to start: Dartmouth-Hitchcock Medical Center (Lebanon, NH), Dignity Health (San Francisco), Gunderson Health System (LaCrosse, WI) and Partners HealthCare (Boston).

Healthcare Purchasing News reached out to Strong, Greenhealth President, and Starr, Greenhealth Vice President, Member Care, to pose some pointed questions about their mission, timing and ultimate objective.

HPN: What is Greenhealth Exchange all about and how is it set up?

John StrongSTRONG: The idea for Greenhealth Exchange (GX) emerged from the goals that Practice Greenhealth (PG) and Health Care Without Harm (HCWH) members were pursuing with industry initiatives, focused on areas like healthy interiors and safer chemicals, as well as an overall goal to accelerate the adoption of green and sustainable products. Although members were able to identify what they needed to do, they did not have ready access to products that met all of the appropriate specifications necessary to provide the benefits desired, were available at a price that would allow for a comprehensive roll out and were being manufactured in enough variety of shapes and sizes to fit multiple users’ needs.

These issues, and the desire to work with manufacturers that are producing sustainable products and vet those products resulting in a "green" profile, prompted the establishment of the Greenhealth Exchange. GX is already working to solve these issues by leveraging member and PG and HCWH expertise to identify truly "green" products. We believe that by focusing our members’ purchases on the products where they have established the sustainability specifications, we can develop contracts that members are confident are "green" while providing competitive pricing.

It is important to note that GX is a "B Corp," or Public Benefits Corporation. This structure requires that the Board act as fiduciaries in a slightly different manner than traditional companies. As such, expectations include operating with a greater sense of transparency, acting in the interest of their employees and the communities they serve, and acting in the interest of the environment. Additionally, the corporation must provide an annual report of the actual benefits provided through their work.

What does GX bring to the industry that you feel other organizations do not?

John StrongSTARR: GX will leverage the expertise of members, 60 to 80 PG and HCWH and other subject matter experts, such as the Responsible Purchasing Network, which is heavily involved in developing specifications and contracts for state, county and other government entities working towards the use of more sustainable products. This group will closely examine each contracting category and determine what they believe to be the desired attributes on a product-by-product basis. This work will be based on what products are currently available, what products might be in development and other factors such as packaging, transport, disposal, etc.

In addition to establishing contracts for products/suppliers deemed acceptable based on these standards, GX is developing a comprehensive database that will allow members to see these attributes detailed out by product and supplier. This will allow them to make product selection based on the needs and priorities of their organization. For example, if composting is widely available at one organization’s facility, they will be able to identify those products in our catalog and know that they meet the membership’s established sustainability specifications. These databases currently exist in retail, but have not previously been utilized in healthcare./p>

In addition, our metrics engine will provide environmental benefits reporting for members, and GX membership as a whole, illustrating the benefits of purchasing these green products in terms of waste reduction, less toxicity, lower energy consumption and more.

Beyond product specifications and contracting, GX is committed to changing the market to expand the availability of sustainable products. We will do this through the creation of an Innovation Hub. This Hub is starting to work on three areas of new products:

  • A new company bringing an innovative green product to market that may be struggling to market and sell their products to a large industry like healthcare.

  • The enhancement of a product that already exists, but could be better — or greener.

  • The identification and development of a new product that doesn’t exist, but solves a problem in the efforts to improve sustainability.

How can/do you leverage your members’ experience in sustainability?

STARR: Members, along with subject matter experts, are highly involved in the establishment of the sustainability attribute requirements as well as determining where our contracting priorities should be focused. Additionally, members are continuously identifying the gaps in sustainable product availability, which further shapes our contracting priorities. Just listening to the members talk with each other and our subject matter experts about a particular product category and hearing their experiences helps to identify areas for more focus. The sharing of these experiences allows members to leverage others’ experiences, and obtain their sustainability goals faster while avoiding potential pitfalls.

How many members do you have?

STRONG: At the time the company was launched on May 14, 2016, we have four health systems currently signed on as owners totaling 50 acute-care sites and hundreds of non-acute and other locations. Those owners are Dartmouth Hitchcock, Dignity Health, Gunderson Health System, and Partners HealthCare. In addition to these owners, we have several evaluator/collaborator organizations that add hundreds of additional locations to our group. We are also in discussions with other potential owners, and next year we will open up access to members in a classification that will not require ownership.

Why is sustainability a priority for them?

STRONG: Greening and making the supply chain more sustainable should be on everyone’s priority list. Because healthcare has the second largest environmental footprint of industries in the U.S., and each year contributes more greenhouse gases to the atmosphere than all of Great Britain, creating healthier and safer communities is a rapidly developing goal for those leading our most progressive healthcare organizations. Therefore, demonstrating the value of cleaner and greener products is an important part of community education on better living. Take food as an example. Why should a patient seek better meats and vegetables at home if they aren’t available while they are a patient at their acute or non-acute care provider’s facility? Patient safety is paramount in healthcare facilities today, yet the healthcare community routinely uses products that leach harmful chemicals into our most vulnerable patients in pediatrics, the NICU and PICU. Some of these chemicals, such as mercury, PVC and DEHP, can have a lasting impact on a patient’s life.

What are the obstacles you face as an organization and a movement?

STARR: As a whole, sustainability efforts are hampered by the complexity of product make-up, manufacturing processes, packaging, conflicting supply/customer priorities and many other issues that make improving sustainability difficult. That’s why no one has undertaken these efforts before.

We have found that the passion our members have for these efforts is truly inspiring and we want to enhance those efforts and shorten the time it takes for them to identify and implement improvements in their facilities. And, like all start-ups, we are working on obtaining the recognition and understanding in the industry that will allow us to quickly move towards creating more specifications and contracts and working with our members to implement those contracts. The information system we are developing will provide significant benefits to the members and the industry, but also requires focus and determination. We have made great progress and are lucky to have such committed members and experts helping us. Our overall goal is to make this industry and those beyond healthcare more sustainable so that we all live in a better world.

Why do you think GX will be any more effective at offering sustainable product and service contracts at better prices than any other GPO?

STRONG: Our program is about more than price. However, it is an expectation of our owners that suppliers will recognize that our purchase volume is exclusively focused on green and sustainable products. With our model, we don’t believe green products should cost more. In addition to just "price," we will provide data on total cost of ownership when appropriate. We will also provide details on what the environmental impact of product usage is for members accessing our contracts, which provides value beyond price.

GPOs seem to be struggling with getting suppliers to provide line-item detail about their products’ sustainable attributes to assist providers in pursuing environmentally preferable purchasing strategies and tactics. How will GX improve this?

STRONG: First, GX is establishing what the minimum required attributes for contracted products and suppliers will be verifying those attributes with their proposals. We are not relying on a supplier to determine "how green is green enough" for our membership. This takes extensive effort on the front end of the contracting process with input from experts in the field as well as member representatives. Additionally, GX is investing heavily in the development of a system that will profile a product’s sustainability attributes. There are systems like this that already exist in the retail space, and we will be leveraging that framework and experience to provide a view for members that clearly illustrates what makes a product green. After contract purchases are made, members can then pull reporting from our system outlining the environmental impact of those purchases.

If you’re reaching out to organizations already using another GPO or two for all of their contracting needs, how are you not discouraging them from being compliant to these GPOs?

STARR: Our owners formed this organization to focus on one area — sustainable products and services. This focus will not replace the need for a member to use a mainstream GPO for most of their products and services, nor is it the intent of our members to cancel or eliminate membership in a larger GPO. We were formed because our members believed there was more to do in the sustainability area, and an intense focus would not only improve their options for green products, but it would eventually improve the availability and pricing for the market as a whole. They believed this so strongly that they invested in the creation of GX and are committing staff resources and expertise to the contracting process we are undertaking.

Are you looking to complement/supplement existing GPO contracts and relationships, particularly for sustainable products and services? Why?

STARR: Probably both. For those categories we are working on now, it is a combination of suppliers that have similar products under GPO contracts, and some suppliers that have no GPO contracts. For those that already work with one or more GPOs, the products we are discussing with them may be included in other contracts, but are offered along with their other products, which could be considered "brown." Or we are talking to them about a subset of their other GPO-contracted items that meet our established requirements. Because we are establishing our desired attributes, it is not likely that our contracts will exactly mirror other GPO contracts. Our contracting priorities are based on the categories our members believe provide the best opportunities in the area of green purchasing and have the greatest overall impact on the environment and their patient’s health.

What and where are the incentives to be sustainable? Hospitals would have to be concerned about the environment and services more than their budgets — long-term vs. short-term — and we know that’s not realistic, right?

STRONG: We heartily disagree with that premise. Again, focusing efforts and purchasing volume in this area will level the pricing. Healthcare organizations should be focused on the environment since environmental factors have such an impact on patients’ well-being. It would seem counterintuitive to be treating a patient for an illness while at the same time potentially exposing them to harmful chemicals being emitted from furnishings, ceiling tiles, flooring or cleaning chemicals and more.

Why are environmental programs seen as an afterthought at our healthcare facilities when their missions are to improve the lives of patients and their community? GX was created to improve the availability of green products and pricing so that healthcare facilities that are focused on this component as part of their overall mission have greater access to a wider variety of truly green products at competitive pricing.

You mention that the obstacles GX and sustainability efforts face include "the complexity of product make-up, manufacturing processes, packaging, conflicting supply/customer priorities and many other issues that make improving sustainability difficult." I’m going to be more blunt and add one: Price. "Eco-friendly/green/sustainable" products tend to be much more costly than traditional products. Why should hospitals be penalized with higher prices for "sustainable" products just to help the environment when they should be incentivized somehow to do so?

STRONG: We agree. Hospitals should not be penalized for purchasing green products. But in the past, these products have been included along with brown products on contracts, so committed volume on "green" products was not established. Or, there is a contract specifically for green products, but another supplier — maybe larger with higher market share — is on contract for "brown" products. Again, diluting volume for the green product.

GX will ONLY contract for green products. This will help suppliers by providing higher volume for production resulting in lower manufacturing costs.

What makes you think GX will survive over time as an independent company any more than other GPOs (e.g., MedAssets, Consorta, et. Al.) that have come and gone — particularly if they see your services and merely replicate those opportunities?

STRONG: GX is a B-corp. Our Board has additional fiduciary responsibilities beyond those of a C-corp Board. In the long term, contracting will be part of the functions of the organization, but as we evolve, we should be a catalyst for innovation in the green space, a source for green attribute transparency and a repository that tracks the overall benefit to the member organizations, community and environment as a whole.

How does your program/system work when a provider wants to join?

STRONG: Ownership in our organization is similar to other cooperative ownership relationships. Interested healthcare entities can work with us to understand our program, compare it to their needs and priorities and work through the Owner Patron documents. There is a $150,000 investment to become an owner. However, because the Greenhealth Exchange is a cooperative, owners receive dividends back at year’s end. The five-year return on investment is expected to be five times the amount of the original investment. Owner Patrons will also have Board and committee representation.

Next year, we will be establishing a membership classification that does not require ownership. The structure and fees of that class will be determined prior to roll-out.

Just curious, are the products and services you represent compliant with GS1 and UDI standards?

STARR: Since UDI is primarily for tracking medical devices, we don’t expect to have a need for that, but do support standards for healthcare supplies. So, if someday, there are medical devices with sustainable attributes that meet our established criteria, we would comply with UDI standards. We will be in compliance with GS1 and will require suppliers submitting data to include GLN information. HPN


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