Sustainability in Business: A Case of the Healthcare Industry

Executive Summary

This report highlights contemporary issues, best practices and challenges associated with integrating the concept of sustainability in the healthcare industry. The document is divided into four main sections. The first one explains key sustainability issues in the healthcare industry and their impact on the adoption of the concept in the medical field. The second section explains how sustainable development has been adopted in the industry with real-life examples provided to quantify the effects of its adoption on selected medical facilities. The third part of this report draws attention to the role of hospital supply chains in determining the environmental and societal effects of the healthcare sector on human populations. The overriding theme in this area investigation is the role of consumers in creating a sustainable supply chain model. Lastly, a summary of the main findings of this report will be provided in the last section of the report and a set of recommendations that focuses on how to improve sustainability standards provided. The findings of this report will be useful in informing future policy decisions regarding the integration of sustainable development practices in the healthcare sector.

Introduction

Sustainable development is a relatively new concept in business management. It refers to a company’s ability to meet its present needs without undermining its capacity to sustain operations in the long run. The main motivation for adopting sustainable development practices in business is hinged on the desire to balance human activities with the requirements of the natural world (Hart, Sharma and Halme, 2016). The concept of corporate social responsibility (CSR) has emerged from this school of thought and it presupposes that companies should behave ethically by contributing to the welfare of society as they pursue their profit-oriented objectives (Ahmad, Omar and Quoquab, 2019). CSR has since evolved from this mundane concept to a philosophical outlier of corporate operations. Key to its implementation is the need to embrace sustainable business practices because they improve a firm’s image in the public eye (George, Merrill and Schillebeeckx, 2020). Therefore, sustainable business practices are the bedrock of present and future corporate operations.

Depending on the industry involved, different firms have embraced sustainable business practices using varied techniques. For example, those in the manufacturing sector have integrated the concept into their key operations by adopting effective production processes. They have been guided by the need to pursue organisational goals while reducing the environmental impact of their production processes. In the retail sector, sustainable business practices have been used to inform supplier selection processes by helping organisations to identify the right type of supplier to fulfil their procurement requirements (Rasche, Morsing and Wetter, 2019). Therefore, sustainable business practices have been adopted to align an organisation’s main processes with its procurement needs.

The adoption of sustainable management practices in the healthcare sector has not been as robust as in the aforementioned two sectors despite the importance of this industry to various economies and general societal wellbeing. Relative to this assertion, the Office of National Statistics (2018) says that, for many countries around the world, the healthcare sector is one of the most important tenets of the economy. For example, in the United Kingdom (UK), the industry accounts for about 10% of the total gross domestic product (GDP) (Office of National Statistics, 2018). Indirectly, it contributes to the growth of the national economy through a reduction in worker absenteeism, increased human resource productivity and the creation of job opportunities (Stericycle, 2020). Despite the strategic importance of the healthcare industry to human wellbeing, there has been little attention paid to understand how unsustainable supply chains in the sector cause inefficiencies and increase its environmental impact. This report addresses this issue by explaining how sustainable development can be implemented in the healthcare sector as an important tenet of modern human enterprise. However, before delving into the details of this analysis, it is critical to know the main sustainability issues underlying this review.

Key Sustainability Issues

The sustainability model has been adopted by many organisations as a broad concept to minimise the environmental and social impacts of business enterprises. Different economic sectors have registered varied experiences relating to the implementation of this concept. However, most of them support its use because of its capabilities to minimise wastages and enhance efficiency (Bronkhorst, 2017; Salmivaara and Kibler, 2019). For example, sustainability has been associated with the reduction of seven types of wastes (overproduction, unnecessary movement, waiting, excess transportation, unnecessary processes, unnecessary inventory and defective goods) in the manufacturing sector (Schaltegger, Hansen and Lüdeke-Freund, 2016). In the healthcare sector, sustainability has been linked with community environmental and social development.

Existing care delivery structures have been designed to reflect the relevance of the health sector, as seen through numerous regulations that govern healthcare processes. In this regard, most healthcare facilities have administrative and policy guidelines that are energy-intensive and highly impactful to societies (Bronkhorst, 2017; Salmivaara and Kibler, 2019). Such complex systems characterise the industry as a cohesive business entity whose existence is dependent on the proper functioning of all its parts (Colombo, García-Goñi and Schwierz, 2016). Therefore, sustainable development in the healthcare sector should not only be regarded as a main operational requirement but also a quality concern.

Several key challenges are associated with adopting sustainable practices in the healthcare industry. For example, the complexity of the healthcare system has made it difficult to holistically adopt the concept, thereby influencing the type of access and quality of health services available to selected populations. The complexity stems from the fact that access to healthcare is a function of several socioeconomic factors, such as household earnings, education levels and affordability of health insurance, which influence the extent that communities can embrace sustainable development practices (Mohd-Tahir, Paraidathathu and Li, 2015). Varying structures of national health policies also make it difficult to embrace sustainable development because of their diverse influences on human populations, based on the economic, political or social policies adopted by a specific regime.

Emerging challenges in the healthcare field, such as the occurrence of new infections, a burgeoning ageing population and a growing prevalence of chronic ailments have further made it difficult to adopt sustainable practices as more resources are directed towards tackling these pressing problems. Consequently, sustainable development practices remain relatively underutilised in the healthcare sector because weaknesses in the health system affect the safety of health workers and (Jewett and Szabo, 2020). However, some healthcare administrators have made attempts to integrate the concept in their operational practices with mixed results. The section below explains how they have done so.

Adoption of Sustainability

Sustainability is an integral aspect of business operations because it allows organisations to operate more efficiently and effectively. Its effects on various economic sectors are profound because of four main elements that influence operational activities: sustainable production, sustainable processes, sustainable use and sustainable end-of-life management (Sénit, 2019). The healthcare sector has been slow in embracing these principles sustainability because of the issues highlighted in section 2.0 above. However, some gains have been made in implementing sustainable practices in the industry. This section of the report gives evidence of its application in China and Switzerland.

China

The World Health Organization (2019) authored a report showing significant success in the implementation of sustainable development practices in China through the adoption of energy-saving initiatives in selected Chinese hospitals. In their investigation, they identified the “Green and Safe Hospitals Initiative” that was introduced in rural China as a successful sustainable program (World Health Organization, 2019). The program was aimed at improving the health of hospital workers, patients and local communities by saving resources and protecting the environment. Most of the societal impacts of the “Green and Safe Hospitals Initiative,” identified above, were reported in Jilin Province by its health bureau (World Health Organization, 2019). Jilin University Hospital was the first healthcare institution in the province to participate in the program and its adoption of sustainable management practices was guided by the need to generate alternative energy and improve its efficiency standards (World Health Organization, 2019). The project yielded significant positive results through a reduction in heating and cooling costs. These benefits were realised because the healthcare facility used solar as an alternative energy source.

Switzerland

Switzerland has also adopted sustainable development in its healthcare sector by interfacing hospital designs and layouts for maximum operational efficiency. For example, the concept has been touted as a reliable technique for promoting multimodal transport that would improve access to health services in the community (World Health Organization, 2019). Communities that want to increase access to healthcare services by allowing people to use different forms of transport to access healthcare facilities have benefitted from such an approach (World Health Organization, 2019). For example, the design of Riviera-Chablais Hospital in Rennaz, Switzerland, helped to create similar advantages after experts carefully evaluated the ramifications of having a multimodal transportation network on the facility’s sustainable record. The initiative was spearhead by civil society groups, such as the Community of Interest for Public Transport, which forced the contractors to consider planning for multiple modes of transport, such as cycling, rail and road (World Health Organization, 2019). This strategy helped to improve people’s access to health services.

The Chinese and Switzerland examples highlighted above show that sustainable development has been applied in the healthcare sector to improve community wellbeing by enhancing access to services and reducing the resource needs to provide them. However, the success of these initiatives largely depends on stakeholder involvement because interested parties have a unique role to play in making sure the sustainable development model works. Indeed, unlike internal organisational goals that can be achieved by increasing employee productivity, sustainable development objectives require the participation of various stakeholders (Newbery et al., 2016). Consumers are an important stakeholder group because they influence the quality of care offered in healthcare facilities and the costs of accessing such services (Studer et al., 2019). Since supply chain functions play a critical role in the implementation of sustainable solutions in the healthcare industry, the role of consumers in creating a reliable ecosystem is explored below.

Role of Consumers in Creating a Sustainable Supply Chain

A company’s supply chain functions play an important role in meeting its procurement needs. However, most supply-based ecosystems fail to integrate environmentally sustainable practices, hence undermining the potential for organisations to reap the benefits of the model. However, the process of creating an effective supply chain system depends on the willingness of all stakeholders to perform their roles effectively (Heizmann and Liu, 2018). Stated differently, there needs to be a collaborative effort from all interested parties to make sure all supply chain functions are carried out effectively.

Consumers play an important role in creating effective sustainable supply chain systems because they reward organisations that adopt such principles with loyalty and positive word-of-mouth recommendations. In this regard, medical facilities that have embraced sustainability have benefitted from an improved image as they are often used as model organisations for others to emulate (Bauer and Gegenhuber, 2015). Social media has driven this trend because it has allowed patients to share their experiences receiving care at different health facilities. Patients have also used data from social media to compare the types of services offered at different healthcare facilities (Bauer and Gegenhuber, 2015). The information obtained from these virtual information platforms have provided people with reliable and first-hand information on the level of preparedness of various health facilities regarding sustainability.

These pieces of information have empowered consumers to make decisions about their healthcare options. They have also allowed healthcare service providers to obtain valuable data about consumer perceptions on sustainability that are useful in improving their supply chain processes through digital means (Gerlach, 2019). For example, some healthcare administrators have used such information to introduce social sustainability as a key part of their healthcare models (Gerlach, 2019). This is why most healthcare programs do not only focus on treatment but also on the prevention of diseases. Broadly, from the quest to embrace sustainability, consumers have encouraged service providers to develop sustainable supply chain processes if they want to sustain demand.

How to Motivate Consumers to Adopt Sustainable Practices

Consumers should be motivated to adopt sustainability by being equipped with knowledge regarding the benefits of embracing the concept. This action should be taken because some people do not understand what the concept means and why they need to embrace it. Therefore, by teaching people about its importance, health administrators are likely to realise a greater consumer buy-in when they adopt sustainable systems and procedures (Laukka, Rantakokko and Suhonen, 2019). Alternatively, to increase consumer participation in sustainable practices, stakeholders in the health sector should make the concept enjoyable to its clients, as opposed to a task that has to be completed. For example, from a policy perspective, sustainability should not be a legal requirement that health administrators have to comply with but rather a mantra that underpins their operations.

Overall, the process of collaborating with customers to build sustainable supply chain systems needs to be encouraged because this stakeholder group plays an important role in improving the development of sustainable supply chain operations, especially in the delivery of healthcare services. However, based on the complexity of the healthcare supply chain system, it is difficult to utilise consumer input without a careful plan on how to integrate their contributions into the broader healthcare service model (Sharma, 2020). To this end, the recommendations outlined below provide possible strategies that can be used to address this problem.

Recommendations

The impact of businesses on the environment and society has been highlighted as a key challenge in the adoption of sustainable practices. As such, there is a need to address the potential negative impact that commerce has on the healthcare economy through the adoption of sustainable management practices. One way to do so is to embrace eco-design in the construction of healthcare facilities. It is premised on the need to develop buildings with environmental considerations in mind. Adopting the eco-design model is central to improving the adoption of sustainable management practices in the healthcare sector because it influences service delivery at the initial stages of care delivery.

The first step of implementing the eco-design model involves a careful review of the environmental strengths and weaknesses of providing health services to a specific group of people. The next step should involve identifying priority areas and identifying the most important ones for improvement. Afterwards, there is a need to specify details of proposed changes and align them with other important review criteria, such as a cost-benefit analysis or an economic feasibility plan, to create synchrony of organisational tasks (Traoré et al., 2019). Part of the process of developing an eco-design for the healthcare sector should be a reorganisation of process design parameters, where the processes, systems and procedures used in healthcare institutions are designed to minimise the environmental impact of business operations and improve the societal effect. Figure 1 below highlights this process design

Eco-design (Source: Course materials)
Figure 1. Eco-design (Source: Course materials)

According to figure 1 above, sustainable development is designed to reduce resource consumption, reuse resources and remanufacture products. Under the remanufacturing option, product recovery and reuse can be done, while product recovery will involve the design for disassembly and repair. Overall, this eco-design should be used to remodel supply chain ecosystems in the healthcare sector and make them more responsive to environmental and social needs. Indeed, the overreliance of healthcare institutions on procurement functions means that the best way to adopt sustainable practices should be pegged on the enhancement of its supply chain activities. This goal means that the corporate and supply strategy adopted in the industry should be supported by other functions, such as performance measurement, cost-benefit analysis, relationship portfolios, organisational structures and employee competencies. Therefore, training and continuous improvement should be regarded as part of the process for integrating sustainability in organisational activities.

Summary

The pieces of evidence provided in this report show that most companies adopt sustainable business practices to conserve the environment and support local communities. They use multiple strategies to accomplish these goals, including promoting energy conservation, responsible use of raw materials and the protection of natural resources. The benefits accrued from the process are aligned with the main goals of sustainable production, which are to reduce emissions, minimise the use of raw materials, reduce the lifecycle cost of products and services and lower the impact of business processes on companies and their employees. These advantages have been reported in the healthcare industry.

The recommendations outlined in this report will play an important role in balancing the environmental, economic and social needs of the healthcare sector by helping managers to build an ecosystem that will cater to the interests of all parties. Healthcare administrators can use them to develop robust management systems that will accelerate the current rate of growth in the healthcare industry without compromising the ability of future generations to do the same. This way, managers can develop a long-term integrated approach to care management that would improve the community and social wellbeing. Based on these insights, adopting the concept of sustainable development in the health sector would encourage all stakeholders in the industry to conserve and enhance their resources to achieve common goals.

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