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Saving money and reducing emissions
The Sustainable Development Unit supports the health and social care system to embed and promote sustainable development - in order to reduce emissions, save money and improve health. Jerome Baddley writes about the opportunities for sustainable procurement to save money, help the environment and boost local communities and economies
The health sector is facing major challenges with growing demand for services and increased financial pressure. This calls for new approaches and new ways of thinking that combine financial efficiency with improved delivery of health outcomes. In addition public authorities have a legal duty to operate with regard to their environmental, social and economic impacts and should endeavour to improve their performance on all three. Sustainable procurement is one of the ways that the system can support these objectives.
Procurement decisions driven by cost savings can often have unintended, unrecorded and unrewarded environmental benefits, such as the associated air pollution reduction benefits of telecare. The reverse is also true; environmentally preferable options can often result in financial savings, such as energy saving measures aiming to reduce an organisation’s carbon footprint frequently results in a reduction in costs.
Financial savings can also come from identifying innovative approaches to social, environmental and local economic challenges; such as a community share issue to pay for NHS energy generating technology. Integrating a wider ‘triple bottom line’ view in procurement can benefit or reveal hidden benefits to public health, patients and local communities – ensuring that the pressure on NHS finances supports high quality care for all, now and in the future.
The importance of procurement to the carbon reduction agenda has been well established since the SDU published the first NHS Carbon Reduction Strategy in 2009. The carbon embedded within the goods and services procured by the NHS and wider sector are estimated to be two thirds of the system’s total carbon emissions.
This is the largest contribution to the system’s overall footprint, greater than energy use and travel combined. Measuring and reducing the carbon footprint of procured goods and services is one way to demonstrate a more sustainable procurement approach across the system. Indeed the leadership of the NHS locally and nationally in this area is essential. The NHS is one of the largest procurers in the country, spending over £20 billion per year on goods and services.
The SDU recently estimated that the health sector could save over £400 million and cut 1 million tonnes of carbon emissions every year by 2020 through making changes that also benefit people’s health. The Securing Healthy Returns report identified 35 areas - including some specifically focused on areas of procurement such as theatre kits in hospitals and furniture reuse - and calculated their financial and environmental benefits. The work clearly showed that there does not have to be a compromise between financial, environmental or social sustainability.
Early progress has already been made in decarbonising the NHS and wider sector’s supply chain. The sector exceeded its 10 per cent reduction target by 2015 . However given the size of the challenge to further reduce emissions by 80 per cent the opportunity for reduction in procurement emissions provides a huge target to aim at.
In parallel to the increasing pressure on health sector spending there has been a rapid growth in the size of the UK’s low carbon and environmental goods or ‘Cleantech’ sector. This has been in part driven by the 2008 Climate Change Act, but also by a push for organisations to manage rising utility and natural resource costs. In 2015 the Department for Business Innovation and Skills calculated this sector to be worth over £26 billion; 2.5 times the size of the pharmaceuticals sector.
In the UK we already have world class expertise in our low carbon economy to help us address some of the pressing financial and environmental impacts in the health sector supply chain. In saving money for the NHS could we also support job creation in an innovative low carbon and resource efficient healthcare products and services sector?
Procuring for Carbon Reduction (P4CR) was a programme initiated to address the commitment to reduce emissions. In addition to the various guides and tools, P4CR introduced the Hierarchy of Interventions which forms the backbone of the SDU’s methodology and solutions in lowering the sector’s carbon footprint.
This offers the most easily demonstrable cost savings as well as environmental/carbon benefits and is where the system has the biggest influence. The most environmentally sustainable solution is to look for opportunities to reduce the need and demand for goods and services. A sustainable procurement approach constantly questions whether procured products are necessary, supports interventions that reduce demand for products or uses them more efficiently ensuring procured products are not wasted.
The system can exert direct control over its resources and carbon emissions by buying products, equipment or services that consume less and have a lower environmental impact throughout their ‘in use’ life and at their disposal and recycling.
Substitution and Innovation
Understanding the environmental and social impact of procured goods in more detail can help identify opportunities to improve sustainability. Where appropriate, alternative products, materials or approaches can be used that have less impact on the global environment and are more sustainable. This offers opportunities to work with the market to create carbon efficient alternatives.
Supply Chain Management
Improvements in the performance of suppliers and their supply chain can be achieved by setting clear expectations through procurement process, and working closely with suppliers to find solutions that deliver sustainability benefits.
Performance on carbon reduction in procurement is improving. The SDU’s Health Check 2016 showed that carbon emissions in relation to procurement have reduced by 16 per cent since 2007. A large part of this is due to pharmaceuticals’ carbon footprint (through both carbon intensity and spend reductions).
Attitudes amongst procurement professionals are also shifting. A survey into the state of sustainable procurement implementation published in 2016, concluded that most procurers (88 per cent or respondents) now take sustainability considerations into account, in varying degrees. It also indicated there is strong demand for greater, more visible and accessible support for sustainable procurement.
Whilst carbon is a good indicator, it does not fully capture what sustainability is for the health and care system. The SDU’s interests and remit include wider social and ethical issues, such as, for example, managing labour standards in health supply chains. The health and care system has an ethical duty to protect and promote health and well-being. It is important that suppliers of goods and services operate in a socially responsible way. Buying goods or services from suppliers which damage public health through poor environmental practices or promote social inequality through their employment practices is a breach of that duty.
Equally the health co-benefits of buying goods or services from providers that take sustainability, staff health and wellbeing and environmental impact seriously will deliver savings and improve health outcomes through linked environmental, social and financial considerations. The products and materials used in delivering health and care are procured from all over the world. An environmentally and socially responsible procurement approach provides an opportunity to enhance health and wellbeing globally as well as in the UK. The recently reviewed Ethical Procurement for Health Workbook offers a mechanism for extending our wider sustainability principles to global supply chains, with benefits not only for the system but also for workers worldwide
In January 2018 the SDU will publish its 2018 Health check including a full carbon footprint of the NHS and wider care sector. At that point the scale of the carbon reduction challenge will be updated and the opportunities presented by sustainable procurement will come into clear focus. We are increasingly seeing how partnerships can deliver benefits to heath and care organisations, the public and businesses. By encouraging collaboration with suppliers organisations can draw in private investment in to solving the sustainability challenge we face in the NHS.
The NHS and wider health sector in the UK is well regarded around the world for the care it provides and the steps it has taken to address carbon reduction and climate change. If approached with a wide enough lens, the sustainability challenge is a huge business opportunity and an opportunity to save money for the sector, whilst also delivering health benefits, through social and environmental gains, both at home and internationally.
Royal Liverpool and Broadgreen University Hospitals worked with their supplier of surgical devices - to optimise the way in which theatre packs were supplied and used. In doing so they improved staff efficiency and patient safety whilst reducing waste and carbon. By moving from individually wrapped items to specially designed pre-prepared packs containing core items for a given procedure, the trust almost halved the set up time per operation, increased consistency and simplified stock management processes. This has saved valuable staff time and improved efficiency. This initiative has also reduced associated packaging waste by 90 per cent (around 2.6 tonnes) helping the Trust to reduce its carbon footprint by five tonnes.
Central Manchester University Hospitals NHS Foundation Trust switched from ready-to-use liquid dialysate to dry dialysate powder and a mixing system. Whilst this was cost-neutral, it helped reduce carbon emissions associated with freighting large volumes of liquid dialysate which is 90 per cent water; the 3,000 litres of liquid dialysate delivered every week reduced to 200kg of dry mix, delivered once a month. The trust estimated that this has resulted to an annual saving of 8.3 tonnes of carbon. Dialysate is used in haemodialysis machines to help patients with kidney problems. In another example, the Isle of Wight replaced single incinerated use sharps containers with multi use containers to reduce the volume of plastics for incineration. They achieved a 90 per cent carbon reduction, 10 per cent cost savings and infection control improvements.
NHS Supply Chain has recently let a contract for examination and surgical gloves, products with known and documented labour standards risks, using the Labour Standards Assurance System, a risk management tool that relies on early engagement with the supply base, to articulate their expectations to the market and set a robust framework with clear objectives on labour standards for the successful suppliers to adhere to, as part of their contract. This approach did not lead to an increased price; in fact, an impressive £782,000 (or 1.4 per cent) of savings have already been achieved whilst NHS Supply Chain’s procurement team anticipate further price reductions. This is because ethical and labour issues were not ‘bolted on’ but rather they were considered from the outset, as an integral part of the products required and as an expectation of responsible suppliers.