We’re pleased to share the news that SPLC member Practice Greenhealth has just released an important new Total Cost of Ownership tool for those wishing to advance sustainable purchasing in healthcare and in other sectors. Those of you who attended SPLC’s recent Summits had the opportunity to get a sneak peak at this tool and give feedback on its design.Background
Many procurement and sustainability professionals are familiar with the term Total Cost of Ownership (TCO). In theory, TCO is a brilliant and simple idea: Instead of just considering a product’s upfront price, buyers should consider all the costs associated with a product over its lifetime—from initial purchase through its use, maintenance, and disposal. Many of these additional costs are associated with social and environmental impacts, such as energy use, worker exposure, and landfill/incineration. So reducing TCO is often a win for an organization’s bottom line and a win for sustainability.
In practice, however, calculating a TCO for any given product or service can be very tricky. For that reason, it’s rarely actually done except in instances where someone has developed a highly-specialized TCO calculator to make the job easier (e.g., EPA’s Excel-based TCO calculator for IT hardware, or Edmund’s TCO calculator for vehicles).
Practice Greenhealth’s Breakthrough Solution
- Computers, Copiers, Televisions (e.g., EPEAT vs non)
- Lighting (e.g., energy efficient, longer lasting vs status quo)
- Data centers (e.g., energy efficient vs non)
- Lab freezers (e.g., conventional vs ultra low temp)
- Faucets and showerheads (e.g., EPA WaterSense vs non)
- Laundry equipment
- Food steamers
- Boilers (e.g., chemical-free, closed loop, tempering device vs non)
- Combination ovens (e.g., boilerless vs boiler-based)
- Microfiber mops (vs bucket mops)
- Cooling towers (e.g., chemical free, use non-potable water vs non)
- A wide variety of hospital consumables and durables, such as gowns, drapes, basins, sharps containers, trocars, Laryngeal Mask Airways, patient positioning devices, and more.
- Getting Started with the Greenhealth Cost of Ownership (GCO) Calculator (60 minutes)
Tuesday September 13, 2016 (recording will be made available)
- Detailed Assessments of Consumable/Reusable Goods using the Greenhealth Cost of Ownership (GCO) Calculator (60 minutes)
Tuesday, September 27, 2016 (recording will be made available)
- Detailed Assessments of Durable Goods using the Greenhealth Cost of Ownership (GCO) Calculator (60 minutes)
Thursday, September 29, 2016 (recording will be made available)
Greenhealth Cost of Ownership (GCO) vs TCO
Practice Greenhealth has chosen to market their tool as a “Greenhealth Cost of Ownership” (GCO) calculator rather than as a generic “Total Cost of Ownership” calculator. This would suggest that it is only appropriate for use by purchasers in healthcare. Not so. It is true that some of the pre-loaded cost categories and factors in the tool are unique to healthcare, such as costs associated with sterilizing products or with disposing of regulated medical waste, but these can be zeroed out by non-healthcare users. In fact, all of the cost categories and cost factors that underly the calculations can be examined and modified by the user so that they match the exact circumstances of the buying organization (e.g., local utility rates, labor costs, etc). The full GCO Toolkit even provides templates for collecting that information from the people most likely to have specific use-phase cost data for an organization, such as facilities.
Practice Greenhealth Unveils Greenhealth Cost of Ownership Calculator
Understanding cost of ownership data will help hospitals find cost savings and minimize environmental impact, in response to industry need
(Reston, Va.)— Practice Greenhealth—the nation’s leading nonprofit membership and networking organization for sustainable health care—revealed its Greenhealth Cost of Ownership (GCO) Calculator today.
The calculator is a first-of-its-kind for the health care sector that allows hospitals and health systems to analyze the hidden costs of products and devices beyond the initial price tag, such as maintenance, water, energy and disposal costs. Additionally, the GCO Calculator is invaluable to manufacturers and suppliers of health care products and devices to identify strengths and weaknesses of their products through a common framework.
“Caring for patients, staff and the community while reducing our impact on the environment has become a top priority in how the health care industry carries out our mission,” said Beth Eckl, Director of Environmental Purchasing Program at Practice Greenhealth. “We’re proud to unveil our Greenhealth Cost of Ownership Calculator, designed to help hospitals analyze how environmentally preferable products can actually reduce costs while minimizing environmental impact.”
Hospitals have the second largest energy footprint of all sectors, are huge water users and generate 5.9 million tons of waste annually. These impacts are both costly to hospitals and harmful to the planet and community health. The tool is expected to help drive a shift in how purchasing decisions are made by providing powerful data that allows hospitals to assess whether investing more upfront in green products can reduce costs in the long run. Gaining more visibility over these costs—beyond the initial price tag—is the first step.
“It has sometimes been difficult to understand how the products that we use everyday in our hospitals and clinics impact the environment or affect our bottom line working for or against our mission,” said Andy Madden, Senior Director of Supply Chain at Dana Farber Cancer Institute. “With the Greenhealth Cost of Ownership Calculator, we have a new tool that allows us to understand the total cost of ownership of products and services to help make smarter purchasing decisions and lower costs.”
Practice Greenhealth kicked off the development of the GCO Calculator in January 2014 with the support of major organizations committed to the project. Dana Farber Cancer Institute, Dignity Health System and Kaiser Permanente participated in the pilot of the GCO Calculator before its official roll out. The GCO Calculator is available to download online and stores all data generated by the user.
“For years, Practice Greenhealth has worked with hospitals across the nation to accelerate the availability and purchase of sustainable products and services,” said Eckl. “We’ve found that the initial cost of green products is sometimes higher compared to their counterparts, creating barriers to environmentally preferable purchasing on a sector-wide level. Hospitals now have a way to analyze the additional costs of a product and make strategic purchasing decisions that are good for the environment, good for patients and staff and good for the bottom line.”
As hospitals and health systems address economic and environmental challenges head on, many have zeroed in on purchasing as an opportunity to reduce costs and improve public health.
Hospitals spend 25% of their budgets on supplies for their operations while millions more are spent using, maintaining and disposing of these supplies.
Practice Greenhealth will hold a free webinar on September 13th at 1pm EST to give hospitals and health systems a firsthand look at the GCO Calculator and learn more. Organizations can learn more, download the tool, and register for webinars at www.PracticeGreenhealth.org/GCO
About Practice Greenhealth
Practice Greenhealth is the nation’s leading health care membership community whose mission is to transform health care worldwide so that it reduces its environmental footprint, becomes a community anchor for sustainability and is a leader in the global movement for environmental health and justice. To learn more about Practice Greenhealth visit: www.practicegreenhealth.org