Corporate Social Responsibility (CSR) is a concept that has many different meanings and definitions. The way it is understood and implemented differs greatly for each company and for each country. CSR has been defined by the World Business Council for Sustainable Development (2000) as:
There are many reasons why it pays for companies, both big business and SMEs (small and medium enterprises) to be socially responsible and be conscious about the interest of the key stakeholders. The healthcare industry has a variety of challenges that the average person may not fully understand. Issues such as stringent regulatory compliance, intense labor shortages in nursing, increased and costly technological advancements, implementation of international quality standards and substantial community dependence make this industry one of the most operationally difficult. Hospitals have to work harder than other industries to win and retain that trust while coping with the operational challenges.
A review of the Fortune top 1000 companies list, reveals that among the 14 listed in the “Healthcare: Medical Facilities”, not one has issued any kind of non-financial reports. A GRI reports’ list shows that among the 1003 organizations reporting in the year 2008, only eight from the healthcare service have reported their sustainability performance. Considering the level of trust that people have in hospitals, it is strange and unfortunate to see so few reports coming out from hospitals. It is also regrettable that there is no comprehensive guidance available on implementing CSR in hospital operations.
CSR could play a major role in this context by highlighting the performance of the hospital in a transparent and sincere way and result in better understanding from the community about the above mentioned challenges that this sector faces. Moreover, CSR will help the healthcare sector to elaborate on social issues that could serve to improve their images and enhance the stakeholder engagement by making their performance indicators available to public. Some of the key benefits are as below:
Getting license to operate– from key stakeholders not just shareholders
The private sector is gaining a much bigger role and responsibility for economic development globally. This responsibility is not limited to economic issues but must also include social and environmental contribution. Hospitals that fail to recognize this responsibility are at the risk of being denied the social acceptance that comes from the community. Without this acceptance, hospitals can never function in a profitable and sustainable manner.
Reputational risk is considered as one of the most crucial threats facing an organization and is even more critical for a hospital. This includes risks not only to loss of patients, but goes beyond to hospital itself, and may even impact the whole industry. In case of a reputational crisis involving the hospital, the consequences could be huge in terms of lost trust, legal costs and patient loyalty. A damaged reputation might require years to rebuild and cost a large sum of money. A hospital which has a sound CSR mechanism and a history of exceptional service to society and environment often does not suffer as much as a hospital with no CSR plans, in the incidence of a reputation crisis.
More Efficient use of resources
Utilization of a holistic CSR framework in hospitals can result in higher efficiency in operations, for instance, improved efficiency in the use of energy and natural resources can result in substantial cost savings. A better waste management system will not only reduce the amount of waste but will also ensure its safe disposal.
Enhanced patient loyalty
Patients need to be able to trust a hospital in order to recommend it to someone. Trust is probably the most valuable currency in the healthcare industry and it doesn’t come easy. In order for hospitals to earn patient trust and loyalty, they need to go beyond healthcare services and create an emotional bond with the patient through ethical business practices. Patient loyalty goes a long way in contributing towards sustainable business growth of a hospital.
Increased Ability to Attract and Retain Quality Employees
There is clear evidence linking the employee morale and loyalty to the social performance of the company. This is especially vital in the case of a hospital. If a hospital employee continually witnesses violation of ethical norms in the hospital, he or she would not want to be involved with that hospital.
When competitors adopt less costly but not socially responsible and ethically sound healthcare solutions, a hospital should take advantage of this challenge and explore new innovative and green solutions. This raises the barriers to entry and will make CSR as the industry norm with your company being the pioneer.
Attracting Investors and Business partners
Investors no more only rely on financial data but also look at how a company deals with the relevant social and environmental issues. If a company is not prudent enough to pay any attention to these issues, with time it will lose credibility and no investor wants to invest in a company that has no credibility or stakeholder trust. In order for a healthcare service provider to attract investors who can fund their expansion, they need to focus on social, environmental and economic performance in addition to financial performance.
A CSR program developed in accordance with the overall government direction can help the company win favors from the government. Many governments give financial incentives for sound CSR initiatives, including environmentally friendly innovations. Hospitals that demonstrate they are engaging in practices that go beyond regulatory compliance are being given massive support from governments in form of waivers and less scrutiny.
Improved Bottom Line
All of the above factors inevitably translate into better financial performance over the years.