In collaboration with First Health Advisory
In our last Perspective about ESG, we wrote about the structure and components of an ESG program. In part two, we will take a look at investment and strategy.
Investing in Environmental, Social, and Governance (ESG) initiatives can have financial and non-financial benefits for companies. From a financial perspective, research suggests that companies with strong ESG practices can outperform their peers in the long term and have lower risk profiles. This is because ESG factors can be indicators of a company’s ability to manage risk and create value over time.
In addition to financial benefits, ESG initiatives can also lead to non-financial benefits, such as enhanced brand reputation, increased employee engagement and retention, and improved relationships with stakeholders. By demonstrating a commitment to ESG, companies can also enhance their reputation with the community, customers, and partners, who increasingly view ESG performance as a key factor in their decision-making.
However, it is important to note that the benefits of ESG investing can vary depending on the specific initiatives and the relative company exposure. Additionally, while ESG investing is becoming more mainstream, it is still a relatively new field in healthcare, and there is ongoing debate about the most effective ways to measure and manage ESG risks and opportunities.
Understand ESG Opportunities and Risks for Effective Investing
Investing in ESG initiatives should be based on a company’s specific circumstances, goals, and values, and should be informed by a thorough understanding of the risks and opportunities involved.
Overall, ESG initiatives are a good idea for hospitals. Hospitals have a significant impact on the environment, society, and local communities, and they can play an important role in promoting sustainable and responsible practices, including:
- Environmental sustainability: Hospitals can focus on reducing energy and resource consumption, managing waste, and reducing their carbon footprint.
- Social responsibility: Hospitals can focus on improving patient satisfaction, promoting diversity and inclusion, and supporting the health and well-being of their employees.
- Governance: Hospitals can focus on ethical practices, transparent communication, and effective management and leadership.
By implementing ESG initiatives, hospitals benefit their patients, employees, and local communities and improve their financial performance, enhance their reputation, and increase their resilience to potential risks.
An enterprise health system ESG plan typically includes the following components:
- Environmental performance: Set targets and implement strategies to reduce the company’s carbon footprint and address environmental sustainability issues.
- Social responsibility: Pursue initiatives to promote workplace diversity, equitable hiring and opportunities for advancement, human rights, and responsible supply chain management.
- Governance and ethics: Establish clear guidelines for corporate governance, including executive compensation and accountability, and promote a culture of transparency and ethical behavior throughout the company. This component also includes things such as cybersecurity responsibilities to protect the assets and privacy of the community and/or investors.
- Stakeholder engagement: Establish ongoing communication and engagement with stakeholders, including investors, patients, physicians, employees, and local communities, to understand their ESG priorities and ensure that the company meets their expectations.
- Performance measurement and reporting: Set metrics and track progress toward ESG goals, and regularly report ESG performance to stakeholders in a transparent and meaningful way.
Determine Cybersecurity and ESG: A Critical Element of Governance
Of particular importance and relevance in the current healthcare delivery landscape is the subject of cybersecurity. Many healthcare delivery organizations are assets of the communities they serve, and they maintain vast repositories of sensitive patient information.
Ultimately, the health system’s IT and executive leaders are accountable to a Board of Trustees made up of community representatives. If an organization does not have the proper security protections in place, it is vulnerable to malicious attacks — which can negatively impact IT systems and budgets, place patients at risk of identity theft or other harm, and damage the organization’s reputation.
“Healthcare delivery organizations reliance on digital platforms and information exchange has become mission critical, so much that the provision of care is often brought to a halt in a cyber-attack. This digital dependency, and the need to make data easily available to many people across a huge geographical footprint make healthcare a prime target for ransom and extortion. When health outcomes and patient safety are at risk, the communities our health systems and their governing boards serve have a duty to mitigate risk to the best of their abilities,” said Carter Groome, Chief Executive Officer at First Health Advisory.
First Health Advisory is an industry leader in healthcare cybersecurity and can offer managed solutions that deliver the performance, security, privacy, and resilience appropriate for health systems of all sizes and needs.
As healthcare organizations begin to turn their attention to ESG initiatives, hiring a consultant with experience in all aspects of healthcare IT can help clarify the organization’s ESG goals, identify opportunities for IT involvement, and create an implementation plan that integrates seamlessly with the organization’s overall strategy — enabling an organization to further enhance the value they bring to the communities they serve.
Lindsey Jarrell is Chief Executive Officer 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 developing IT solutions to support all aspects of health system operations, including supporting CIOs and IT operations amid increasing cost pressures.
Carter Groome is Chief Executive Officer at First Health Advisory, a healthcare risk assurance firm dedicated to improving patient safety and enterprise cyber resilience. First Health Advisory provides full spectrum managed security services in support of mitigating risk and uncovering efficiency in the environment of care. To learn more about how First Health Advisory, contact us at 866-597-3270 or info@firsthealthadvisory.com.