12 ESG insights for healthcare leaders

The environmental, social, and governance (ESG) movement has taken off, leaving a number of questions for healthcare executives. Is ESG simply another term for mission, vision, and values? Or is there more to ESG?

A panel of four ESG leaders agreed that there’s more to ESG. At the 2022 Crowe Healthcare Revenue Cycle Virtual Symposium, the panel talked about the most effective healthcare ESG strategies and tactics for hospitals and health systems.

The panelists were:

Melissa Smith

Vice President, Revenue Cycle, Inova Health System

Shameka Smith

Principal, Healthcare Consulting, Crowe

Mike Witek

Healthcare Consulting, Crowe

Melissa Smith

Vice President, Revenue Cycle, Inova Health System

Shameka Smith

Principal, Healthcare Consulting, Crowe

Mike Witek

Healthcare Consulting, Crowe

On what ESG means

“The term ESG is new. It’s very broad. It’s kind of an all-encompassing concept, but it relates to some things that have been around for a long time. Many of you have heard the terms sustainability, corporate responsibility. Those are all really the same thing as ESG. Now we’re just operating under kind of this new acronym.”

– McClure

On where healthcare organizations are on ESG

“I think organizations are at different stages in the [ESG] game. A lot of the organizations we work with, their mission, their values, their goals, that’s kind of ingrained in the fabric of who they are. . . . Maybe on the environmental side, there might be some work to do, but on the social side, on the governance side, that’s something that’s been part of the game for decades when it comes to tax reporting, community benefit, doing community health needs assessments, things like that.”

– Witek

On where ESG opportunities exist for healthcare

“The important part here is for healthcare organizations to really home in on the social aspect of ESG and the benefits they’ve been providing to communities. . . . There are definitely opportunities for healthcare organizations . . . to increase the understanding of their mission, vision, and values throughout the organization as well as in their communities, and especially with the environment and the governance piece to just be more vocal in reporting the work that is already being done.”

– S. Smith

On the ESG people and processes needed

“In this newer era of emphasis on ESG, one of the best practices is getting together more people within your organizations than have traditionally been involved. So, you're getting a variety of perspectives and business processes that you're pulling together.”

– McClure

On the prospect of ESG regulation in healthcare

“ESG is not a regulation per se, but we do foresee that that will soon be the case for healthcare organizations. And it’ll be important for organizations to be thinking about that coming down the pike. How do you comply, and how do you involve internal audit? You need a multidisciplinary team. That team should include internal audit because this will be a risk to the organization going forward.”

– S. Smith

On eyes on healthcare organization ESG

“There are a lot more stakeholders who care about what’s happening at your organization, and what they’re looking for is comparability in the disclosures. They want data that’s verifiable. They want to be able to compare organizations to make sure that they can see things are truthful because this information does impact investment decisions that impact which service provider you go to. So, what we’re seeing is that ESG is increasingly important to a wide variety of stakeholders, and we need really good data and processes around it.”

– McClure

On putting together a multidisciplinary ESG team

“Make sure there are many stakeholders and different voices and different leaders involved, whether that be compliance, legal, reimbursement, finance, revenue cycle, internal audit, community health program leaders. We [revenue cycle] sit underneath from a tactical and operational perspective. [ESG] may not be a regulation yet, but it really is trickling down into the day-to-day work. And I do think it’s important to have a team coming together.”

– M. Smith

On the importance of including internal audit on the ESG team

“What's important is the accuracy, validity of that data, and how [healthcare organizations] report that data. ... Whatever story you’re telling, make sure you involve internal audit to ensure that the data is accurate. Internal audit may be able to identify additional data sources that are not top of mind for an organization. Depending on whatever those strategies are in implementing ESG, internal audit can help define that and set goals and metrics and identify additional data sources within the organization.”

– S. Smith

On the need to bring in data from disparate sources for ESG reporting

“As organizations grow, maybe through acquisition, M&A work, there might be a lot of disparate data. So, you might be using different [electronic medical records]. There might be different financial systems. That’s usually where internal audit has some expertise to come in and work with that disparate data, put all that information together, and then be able to tell that story.”

– Witek

On monitoring and benchmarking healthcare ESG performance

“It’s important to know what others are doing [regarding ESG]. And I would say we feel really good about what we do even in light of that. Right? So, I wouldn’t say that we limit ourselves by what others are doing, but I do think it’s important to understand and always be aware of what others are doing both in your industry [and] in your region.”

– M. Smith

On ESG as a recruitment and retention tool

“One of the most common questions we get is, what are my peers doing? What's everybody else doing? And should I be doing that? And if they are doing it, what does that look like? Who's driving that [ESG] message? Which organizations are, which organizations aren't? Something like 80% of millennials agree with ESG initiatives. They find that very important in a place that they work at.”

– Witek

On ESG engagement from the top

“Make sure it’s not just lip service. You need C-suite ESG engagement and the right ESG tone from the top. You need team member engagement, diversity, equity, and inclusion. We’re fortunate to have some magnet hospitals that recognize the engagement of our nurses and that team member portion of our workforce and the voice that they really have in the governance. Also, we now have team member resource groups within the diversity and inclusion umbrella. It’s another way to genuinely and thoughtfully and intentionally engage and include our team members.”

– M. Smith

It’s clear from these 12 session insights that ESG is more than a new abbreviation and substitute term for an organization’s mission, vision, and values statements. It’s an entirely new way for hospitals and health systems to quantify and report their sustainability to a host of stakeholders, including investors, employees, business partners, competitors, customers, and regulators. That, in turn, makes doing ESG right critical for the future of any organization – in healthcare or any other industry.