Whether you’ve heard about it at a conference, on social media, in the news, or from your CEO or board of directors, ESG (Environmental, Social and Governance) is a hot topic across all industry sectors — including healthcare technology.
And although ESG can trace its beginnings to a set of screening criteria used by investors interested in purchasing publicly traded companies, both for-profit and non-profit organizations are now using ESG benchmarks to identify areas of success, as well as opportunities for improvement.
“This is becoming top-of-mind for CEOs and CIOs — not to mention socially conscious consumers, industry and philanthropic partners, and in some cases, government, regulatory and accreditation agencies,” said Chris Jenkins, senior vice president at Healthlink Advisors. “As a result, organizations must find ways to intertwine ESG into their ongoing strategies.”
The Elements of ESG
Each element of ESG provides opportunities for health systems to focus on specific areas that impact their business, such as:
- Environmental concerns related to the impact an organization has on the environment and continuously balancing the rapid move to a digital world with efficient use of energy and natural resources to minimize the impact on the environment
- Social concerns related to relationships with staff, consumers, vendors, and the community, as well as diversity, equity and inclusion initiatives.
- Governance concerns, such as incorporating ESG initiatives into ongoing organizational strategy and prioritizing implementation of programs, monitoring/tracking systems, and accountability structures.
What do health systems need to do about ESG in 2023?
In 2023, healthcare IT departments should begin thinking about ESG and outlining priorities for the future – particularly concerning the ongoing transition to digital solutions in healthcare.
“Starting the conversation about ESG now will help healthcare organizations make it a part of their plan so that they can set the stage for the next few years,” said Jenkins. “Our team can assist organizations in their ESG efforts by identifying opportunities to define and meet their goals
ESG opportunities for healthcare organizations include:
- Energy efficiency. Organizations can explore building management systems, consolidation of data centers, moving to cloud-based computing and other initiatives that improve energy efficiency, minimize the use of power and reduce greenhouse gas emissions.
- Purchasing decisions. When purchasing new equipment, organizations should balance digital expansion with environmental impact by considering options that can be turned on and off, reducing work cycles, and leveraging on-demand compute resources.
- Enable sustainability. Organizations can leverage digital technologies that enable environmental sustainability. Leverage AI to automate the use of technology and assess, predict, and mitigate environmental impact and reduce waste. Understand and adopt a materiality assessment to help prioritize investments that strategically balance growth with sustainability.
- Assess the organization’s impact. Organizations should be concerned about their impact on their workforce, customers and community. Decisions and policies should be viewed through the lens of each of these groups.
- Workforce inequities. In a market with labor shortages, it is critical for organizations to identify and address any inequities in their employment practices to ensure applicants, employees and independent contractors have access to opportunities for growth.
- Consider vendor relationships. Healthcare organizations should carefully consider whether the vision, ethics, policies and priorities of their vendors align with theirs.
- Incorporate ESG into processes and strategies. Most healthcare organizations already have a governance structure, so leadership should focus on incorporating ESG into the existing governance process. Further, ESG should be incorporated into short- and long-term strategies.
- Educate the organization. Leadership should make ESG a part of organizational culture by educating team members at all levels about what ESG is and why it’s important.
- Make ESG a part of decision-making. Build ESG into the framework of the organization’s decision-making by creating specific benchmarks that reflect internal priorities and goals.
“Organizations that are focused on ESG can create a competitive advantage because people want to do business with, work for, and be a customer of organizations that are trying to do the right things in terms of the environment, their relationships and their organizational governance,” said Jenkins. “By changing how they do business now, organizations can begin to make a difference in the years to come.”
Chris Jenkins is senior vice president at Healthlink Advisors, a healthcare consulting firm committed to improving clinical innovation, business systems and healthcare IT strategy, delivery and operations. Our team has extensive experience in streamlining imaging strategy and improving IT, physician and patient satisfaction. To learn about how we can assist your organization, contact us.