The Cost of Health Care Sustainability

When we think of hospitals, we are focused mainly on the different types of health care they provide and the costs of those procedures. People do not recognize the amount of money that goes in to providing such care or the amount of waste that is produced. Annually, hospitals spend more than $200 billion on both medical and non-medical products. Hospitals also use more energy and emit twice as much carbon dioxide compared to commercial buildings of similar sizes due to the fact that they run all day, everyday and have to follow strict settings.

Although spending more on sustainable procedures could help to reduce both costs and the amount of waste produced, there are many professionals who doubt the actual value of investing in such a concept.

The well known medical/pharmaceutical company, Johnson & Johnson, along with The Wharton School of the University of Pennsylvania, had looked into the idea of investing in sustainability. In order to make a decision on whether or not Johnson & Johnson should be spending money on sustainability, Vice President of Finance at Johnson & Johnson’s Medical Devices and Diagnostics, Joe Wolk, had also worked with Deloitte and made a Sustainability Valuation model. (For those that do not know, Deloitte is one of the largest international professional services firms and can be read more about here.) The model was based on three factors:

1. Customer segmentation: what percentage of our customers cares about sustainability, and what weight does sustainability carry in our customers’ decision- making process?

2. Product differentiation: can sustainability be the differentiator for a product in the procurement process?

3. Sustainability differentiation: who is the sustainability leader in our sector, and how big is the gap between that competitor and us? Do we have the opportunity to differentiate ourselves with a more sustainable product?”

By looking at the model, Johnson & Johnson was able to figure out where they should be spending more on to appeal to customer satisfaction and the environment. Their Earthwards process also helps to provide more environmentally friendly products. “In 2013, the total revenue generation for the Earthwards portfolio was more than $8 billion.” 

Johnson & Johnson had realized the downs of hospitals and has taken action in CSR by providing more for the society and the environment, all the while making revenue. Although hospitals are still costly and are still producing waste, Johnson & Johnson are taking steps in reducing those aspects.

 

Read more about the article here.

Learn more about Johnson & Johnson’s sustainability here.

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