When you think of the biggest polluters of greenhouse gas emissions, health care may not be top of mind. But the health care system is responsible for 8.5 percent of GHGs in the U.S. and about 5 percent globally.
At the same time, health care systems are increasingly affected by the climate change impacts of those outsized emissions. This ranges from facilities being hit with extreme weather and volatile energy prices to patients experiencing heat-related ailments or new illnesses brought on by changing disease vectors from a warming climate. Health systems are also chronically underfunded, and the current administration’s reduction of health care funding will exacerbate the problem.
Fortunately, there are opportunities for health care players of all sizes and stages to reduce their costs through decarbonization – and also contribute to reducing the negative societal and health impacts of emissions.
Decarbonization creates value for health care systems in many ways. The NYU Stern Center for Sustainable Business (CSB) conducted a Return on Sustainability Investment (ROSI) analysis to understand the financial value drivers of decarbonization strategies in health care. Working with the Commonwealth Fund, Health Care Without Harm and the National Association of Medicine’s Health Care Supply Chain Working Group, we cataloged and prioritized decarbonization strategies that can drive financial improvement for health care delivery systems. These key strategies include energy management, transportation optimization, building design and maintenance, sustainable sourcing, food service optimization, low-emissions clinical care, waste reduction and responsible investments. The examples below illustrate how these strategies can drive value for the health care industry.
Building design and energy management
CSB examined the decarbonization of building facilities for a Midwest hospital system and found that an energy retrofit approach of existing facilities would net $1 per square foot. A net-zero building design for new construction would net the building $2 per square foot—helping defray the cost of investment and providing savings over time.
Transportation optimization
When CSB explored last-mile delivery optimization for a health care solutions company, it discovered that by maximizing pharmaceutical deliveries for a single route within a region, the company could reduce fuel emissions and save $254,000 annually. Anecdotally, the firm also discovered staffing efficiencies by consolidating incoming deliveries.
In another example, Kaiser Permanente’s Richmond Medical Center implemented a microgrid that connects renewable energy and battery storage to a pre-existing, diesel-fueled backup power system. It has the potential to save as much as $394,000 per year.
Waste reduction through circularity
Medical facilities generate significant waste through reliance on single-use, disposable products. CSB explored the benefits of applying a circular approach in a hospital system, designing a program to incorporate reprocessed medical devices into their procurement process. An initial cost of half a million dollars led to $3.5 million in annual savings.
The University of Minnesota Medical Center reformulated operating room (OR) kits to reduce disposable products deemed unnecessary as part of individual kits. Across two campuses, reformulation of OR kits diverted 10,553 pounds of waste per year, saving $116,215 annually on purchasing unnecessary products and paying for waste disposal.
Another added benefit to circularity in hospitals is that it can insulate the hospital and their suppliers from tariffs, because they will need fewer imported parts and materials.
Lower-emissions clinical care
With 80 percent of health care emissions coming from Scope 3, decarbonization in the supply chain is especially important. For the pharmaceutical industry, we found that reformulating a product using a green chemistry approach reduced water, chemicals, energy and waste by approximately 80 percent across the board for one company, with a cost savings of approximately $1.5 million per 100 metric tons of product.
| Category | Savings per 100 metric tonne |
| Avoided carbon emission fees ($5/ton) | $240,000 |
| Reduced water use | $766,000 |
| Reduced industrial waste disposal | $364,000 |
| Reduced electricity cost | $177,000 |
| Total savings | $1,547,000 |
In addition, our landscape analysis of direct emissions for health care delivery systems found anesthetics to be a significant contributor to hospital GHG footprints, with estimates of up to 40 percent. Mitigating the use of certain volatile anesthetic gases such as desflurane and nitrous oxide in favor of lower-emitting options resulted in a 78 percent reduction in emissions and $2.4 million in savings annually for one Providence-based provider.
5 steps to take
Hospitals early in their decarbonization journey may wonder where to start. Some decarbonization steps, such as energy-efficiency projects, can be taken with a relatively short payback period and lower initial investment. The savings from these projects can then support funding for other more intensive projects. To begin, companies can:
- Benchmark Scope 1, 2 and 3 emissions using the Greenhouse Gas Protocol or other standardized tools.
- Identify the greatest area of GHG reduction, likely strategies to reduce emissions and low-hanging fruit from a financial perspective. Energy efficiency through conservation, management, circularity and waste reduction should be the first step, followed by renewable energy sourcing.
- Create a roadmap for investment: choose an initial project, perhaps a lower investment and quicker payback one like energy management to complete first.
- Track financial returns and leverage benefits from the completed project to build buy-in and use savings to finance higher impact, longer term, or more intensive sustainability strategies.
- Rinse and repeat.
Decarbonization in health care is good for the planet, patients, and the bottom line. By prioritizing decarbonization and other sustainability initiatives, professionals can help the health care system be more resilient in the face of political, economic and climate shocks.
