Social & Governance ESG Initiatives in Healthcare

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ESG in Healthcare

We've recently been exploring ESG, one of the hottest-trending topics to hit the business world in the last decade, its standing in healthcare, and the implications of making transparent and ethically-minded decisions in the healthcare industry practices.

These more socially-aware practices found footing in the desire for greener initiatives in every industry, especially healthcare, but the investment initiatives in ESG didn't stop there. The social implications of operating with an awareness for global wellness work in tandem with the social aspects of ethical business development and operations and only help to strengthen wellness of community, as well.

We've covered ESG as a whole, deep-dived into Environmental initiatives, and now we'll look at the social and governance components of ESG in healthcare.

Social Defined

According to Market Business News, the term Social, in regard to ESG, means examining how a business treats their people. People are not only employees but also third-party partners and financial stakeholders, communities in which they operate, and the broader political environment.1

Social criteria include:

  • Working Conditions
  • Community Impact
  • Employee Relations & Diversity

Other previous examples shared for social initiatives covered include equity, inclusion, safety and well-being, and quality of care.

Healthcare providers and payers must continue to ensure adequate community health protection and maintain healthcare costs as low as possible.2

Simply put, the aspect of Social is relationship-focused. M&H gives another great example of a social issue a company may face:

For every business decision, there can be unintended social consequences.

For example, the business decision to cut costs by adjusting sourcing for product materials. On paper, it sounds smart and profitable.

But what are labor conditions like in the new location? Are employees or contractors treated fairly? Do they earn a living wage? Will your company's sourcing encourage or increase unfair treatment?

Social Determinants in Healthcare

The World Health Organization defines social determinants for health as "the conditions where individuals develop, work, and age as well as the broad set of forces and systems that shape their daily life."

Social determinants of health include conditions of birth, growth, living, and working, which all contain factors that influence the social economic status of an individual, as well as access to health.

Investing in more sustainable practices and processes in healthcare have a domino effect, impacting the areas of social determinants in health and creating overall wellness and sustainability within the communities that healthcare facilities operate. What do these types of initiatives look like in practice?

How Can Healthcare Workers Influence Social Determinants?

It is possible for physicians or allied health workers to influence patients and communities to improve health and social determinants through a variety of means...

Using clinical experience and research evidence to advocate for social change

From medical students to hospital boards, there are strong voices capable of speaking about the impact social challenges have in their communities for greater policies that are implemented throughout healthcare systems. Physician activism involves support for the ideals and social movements promoting basic incomes, affordable childcare, progressive taxation, and other measures that can decrease healthcare disparities. They may carry out locally pertinent research and employ social determinants data to better interact within their context and generate evidence for advocacy, and the use of personal experience and case studies to impact meaningful change is most effective.

What Can Be Done at the Practice Level?

Primary health for the local community involves the integration between health practice and the delivery of primary care services in a defined area of health. Community-oriented primary services are forms of community diagnosis and community treatment blending with clinical patient care and have a history which inspires innovation for helping disadvantaged patients.

Social requirements have a critical impact on the health and wellbeing of the patients. Before implementing behavioral strategies on social determinants in health, hospitals and care facilities need to analyze current and proposed social needs activities.

Partnerships are essential components for fulfilling patient social needs. Healthcare organizations can address health social determinants by implementing five strategies: awareness, adjustment, alignment and advocacy. Social determinants of health (SDOH), like housing, health insurance, and transportation, may be critical in influencing physical and psychological health of people.

Healthcare providers must develop an alignment plan that assesses social services assets at the community level, organize these resources so that distribution can take place across organizations, and invest in assets that will improve health outcomes.

There are many ways that healthcare providers at every level can make actionable change, and one such example is in Ochsner leadership, physicians, and researchers having spent years analyzing health factors and disparities to identify the greatest needs across the region.03 Based on their data, a strategy was developed and will be implemented over the next 10 years to improve health and reach the vision of ranking 40 by 2030.04

Sustainability Defined

As mentioned, green initiatives appear to be pervasive in nearly every industry, even industries whose focus is not on wellness05, so it comes as no surprise that a demand for more sustainable practices in healthcare would be great. Overall improvement in processes, operations, and construction are imperative, but maintaining those practices is key.

Sustainability is defined as being able to maintain over time, but in the business world, it means to "prevent the depletion of natural or physical resources, so that they will remain available for the long term."06

"Forrester data reveals that a third of US online adults say they spend more time thinking about the climate than they did before the Covid-19 pandemic."

Consumers are calling for sustainability which has led to companies 'greenwashing' or misleading consumers about how environmentally sound a product may be in an attempt to deceive them.07

An example of greenwashing in healthcare may look like:08

Has your department been told a disposable laryngoscope "can be included in any existing hospital recycling program?" Or that "Even if not recycled, the steel blade will rusts (sic) away and the overall weight of the plastic in the handle is small, leaving a smaller environmental footprint than the process associated with cleaning reusables?"

The author goes on to state, "Greenwashing is pervasive in many industries and is becoming prevalent in health care as the sustainability movement has gained traction. Concern for the environment is now trendy, creating a lucrative marketing strategy."

Pillars of Sustainability

Sustainability is broken down into three pillars:

Graph displaying the pillars of sustainability of ESG. Economic circle in top left, environmental circle top right, and the bottom middle circle is social. Where all three intersect is sustainability.

While not typically included, the American College of Healthcare Executives (ACHE) and others are calling for System Sustainability to be added to the list. ACHE goes on to state that healthcare is a four-level framework consisting of:09

  • Patients
  • Providers
  • Organization
  • Operation

Economic Sustainability Defined

Economic sustainability refers to practices that support long-term economic growth without negatively impacting social, environmental, and cultural aspects of the community.10

Economic sustainability in healthcare, particularly, means continuous wellness care for the most disadvantaged and vulnerable members of our society, regardless of their financial stability. These means of operation are not exclusive to non-profit facilities and take into account the overall impact on providing care for a working community.

Environmental Sustainability Defined

Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations.11

Generally, sustainable concepts in healthcare growth and operations focus upon the co-existence of natural and existing environments. In the last decade, the sustainability concept has gained momentum in design circles by codifying ratings and standards, as well as by gaining professional credentials, and it is widely understood that endeavors faced by the healthcare industry should be approached with a holistic and sustainable mindset.

Sustainability has been an important focus for socially-consciousness organizations. Unsustainable developments are affecting ecosystems and the social systems of humanity worldwide. Historically, and especially in the the wake of the pandemic, the healthcare industry has had a major hand in environment destruction, but new leadership and heightened awareness of global issues have demanded change. Health practitioners should serve as examples of sustainable practice and facilitate the necessary transition into sustainable practices, as health and wellness of body is a model for the world.

Social Sustainability Defined

The American College of Healthcare Executives defines social sustainability in a healthcare system as the hospital or healthcare systems ability to enhance quality of life and improve the well-being in a population.12

A great example of this is the efforts healthcare takes to combat social determinants of health in their community members.

Ochsner Health is an example we've referenced before. Their system has partnered with local and state leaders to create a comprehensive strategy with a 10-year commitment to enhance healthcare access and improve health equity and outcomes.13

How is Healthcare Related to Sustainability?

Social sustainability refers to the ability to enhance the quality of the lives of patients in health settings. Healthcare architecture supports connection, provides access, enhances health and promotes fairness.

These issues are deeply layered and nuanced, and short of having a magic wand to wave to improve social aspects of healthcare and society, what can be done to impact societal change in healthcare?

Because these are overwhelmingly community issues and communities do not exist in a vacuum, social change in healthcare requires community collaboration. How do communities get together to impart a positive impact in healthcare? Collaboration with community, health departments & community leaders, the use of clinical experience in advocacy of social changes, and the participation in local health assessments provides vital information and empowers people and institutions to alter their practices for the better.

The state of healthcare and its impact on social issues is directly affected by advances in technology, better management, and medical developments. However, social movements have also had a profound effect on healthcare institutions and practices.14

Social factors are a major component of an individual's health and well-being and include:

  • Education status
  • Poverty
  • Access to healthcare
  • Social connectedness
  • Food security
  • Housing security

By taking an active role in community outreach initiatives, healthcare organizations can advocate for and enact social change to identify and mitigate health disparities.

Governance Defined

"Healthcare governance is defined as the C-suite working in concert with frontline clinical and operational staff to ensure that policies and procedures solve real-world problems, all while keeping a uniform and human-centered approach enterprise wide."15

"Good care depends on good governance"

Market Business News defines Governance as how a corporation governs itself. This includes:

  • Board Diversity & Structure
  • Executive Compensation
  • Corruption/Bribery
  • Political Lobbying

Other previous examples we covered were ethical behavior, tax transparency, and compliance.

"Healthcare is about people. Healthcare networks' most valuable assets are its clinicians and staff members. Ensuring that new policies and technologies help, rather than hinder, providers and staff keeps everyone focused on what's important: Enabling the delivery of safe, high-quality care in a fiscally responsible manner."

The Netherland government perfectly outlines examples of good governance for our healthcare providers:16

  • Ensure patients receive safe, good-quality care
  • Clearly allocate responsibility within the organization
  • Carry out good financial management
"This ESG pillar needs the most reinforcing. In the absence of standard metrics, different health organizations choose to report different information about their internal and external efforts to improve equity."

Governance: The Scope of Measurement and Control in Healthcare

Sustainability studies and reports are more commonplace in business operations now, and they are ways for organizations in every sector to gauge their impact and efforts. Reports for self-governance can include ways organizations have adapted technologies to improve sustainability, such as zero-wasting policies, water conservation, and mobile phone technologies which help reduce carbon consuming.

The healthcare industry is questionably the most criticized, regulated, and important cornerstone of our society and is common metric for the wellness of a nation. Working to satisfy patient need in tandem with ROI and the governing agencies that oversee the industry is a staggering feat, but working efficiently and effectively is a real possibility for healthcare.

Setting standards, both internal and government-imposed, allows healthcare practices that promote higher standards of care, higher standards of workplace wellness, and most importantly, more access to sustainable and affordable health care for community.

Next Steps in ESG for Healthcare

We hope this three-part series had helped educate you more about the importance and need Environmental Social Governance ("ESG") in healthcare, and every industry. There are ways to make strides in these areas in our personal lives, and we can also push the corporate drive for more ethically and socially sustainable practices as consumers.17

Learn more about these initiatives in healthcare and becoming an active part of improving your community, humanity, and the environment:

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