Kaiser launches environmental scorecard

Kaiser Plaza

Health insurance giant Kaiser Permanente May 4 announced the launch of its Sustainability Scorecard, which requires suppliers to provide detailed environmental data for $10 billion worth of medical products and equipment used in its hospitals, medical offices and other facilities.

It’s the first program of its kind for the healthcare sector, which has seen a nationwide increase in environmental-related health problems over the past few decades. In California alone, pollution is responsible for $193 million in hospital-based medical care each year, according to RAND Corporation, a nonprofit research institute. 

Following the lead of retail industry giant Wal-Mart [NYSE: WMT] and electronics manufacturer IBM [NYSE: IBM], Kaiser Permanente’s scorecard is tied to a 2005 company initiative that created an environmentally preferable purchasing policy.

But at its core, the scorecard is a preventative medicine policy, the company says. “If you want to drive preventative medicine, you need to influence your patients’ lifestyle and environment,” says Robert Gotto, executive director of Oakland-based Kaiser Permanente’s procurement and supply group.

If implemented well, the scorecard could create huge cost savings for Kaiser as well as its suppliers. The company has already saved more than $20 million from previously initiated efficiency investments, it says.

“It’s a wake up call for suppliers,” says JoAnna Abrams, a managing partner of MindClick, a sustainable consulting company with offices in Los Angeles, San Francisco and Seattle. “Those companies that are ahead of the game today are going to come out ahead. If I were a supplier, I’d want to start asking questions now.”

Dallas-based Broadlane, Kaiser Permanente’s key supply chain partner representing $10 billion in buying power, is expected to adopt the scorecard by September 2010, according to Kaiser.

Abrams says knowing both the criteria by which Kaiser is evaluating its suppliers and the kind of documentation the company is looking for will put suppliers ahead of the curve if and when such documentation becomes required by additional companies or government.

It's not all good news, however. The marketplace risks becoming clogged with different requirements and levels of rigor required by each company, Abrams warns.

“There’s going to need to be come conformity, some systematic way in which suppliers are being evaluated.” Abrams says. “That’s ultimately the direction—a common system by which comparisons can be made. But in the meantime, this can drive real change.”