Social Capital

General Issue Category
(industry agnostic)

Disclosure Topics (industry specific) for:
Health Care Delivery

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Energy Management

Energy Management

Health care delivery companies operate energy-intensive facilities and rely on both purchased electricity and fuel. The consumption of both can contribute to environmental impacts, including climate change and pollution. Legislative attempts to limit these impacts and to incentivize energy efficiency and renewable energy may result in price volatility associated with fossil fuels and conventional electricity. Companies that are able to improve energy efficiency can decrease costs and limit exposure to fluctuations in energy pricing.

Waste & Hazardous Materials Management

Waste Management

Health care delivery companies generate a significant amount of regulated medical and pharmaceutical waste. Disposal fees for these types of waste are typically higher than that of conventional waste and can present a significant cost for the industry. Companies that are able to reduce the amount of waste generated by enhanced waste segregation strategies, recycling, and reuse can limit their exposure to these costs.

Data Security

Patient Privacy & Electronic Health Records

The Health Insurance Portability and Accountability Act (HIPAA) requires health care providers to establish administrative, physical, and technical safeguards to protect the integrity, confidentiality, and availability of patient health information. Failure to comply with such regulations can lead to civil and criminal penalties. The extent and enforcement of these fines was strengthened by the American Recovery and Reinvestment Act (ARRA). The ARRA also established financial incentives for the meaningful use of electronic health records, as well as reduced Medicare payments for companies that fail to demonstrate meaningful use. Although meaningful use was supplanted by Promoting Interoperability by the Medicare Access and CHIP Reauthorization Act (MACRA), financial incentives and penalties remain tied to the effective use of electronic health records. As legislative efforts continue to promote the use of electronic health records and health care delivery companies face increasing threats related to cybersecurity, disclosure on the use of electronic health records and data security will allow shareholders to monitor performance in these areas.

Access & Affordability

Access for Low-Income Patients

The Patient Protection and Affordable Care Act (PPACA) expanded the number of insured individuals. However, more than 10 percent of the adults in the U.S. remain uninsured. Health care delivery companies will continue to face challenges associated with serving uninsured and low-income patients. These challenges are likely to be compounded by reductions in Disproportionate Share Hospital (DSH) payments. Disclosure on how companies manage the provision of care to uninsured populations and shifting DSH allocations will allow shareholders to understand the associated risks and opportunities.

Product Quality & Safety

Quality of Care & Patient Satisfaction

The ability to deliver quality care and ensure patient satisfaction is an essential value driver for health care delivery companies. The link between performance in this area and shareholder value was strengthened by the Patient Protection and Affordable Care Act (PPACA). Included in the Act’s provisions, is the establishment of the Hospital Value-Based Purchasing Program, which provides incentive payments, based on performance on a series of health care quality measures. In addition, the PPACA created programs that reduce inpatient payments for hospitals with excessive readmissions rates and hospital-acquired conditions.

Customer Welfare

Management of Controlled Substances

The Health Care Delivery industry is in a unique position with respect to the evolving opioid epidemic in the U.S. As one of the largest prescribers of opioids, the industry has contributed to an increase in the use of these substances and subsequently to a rise in addiction levels. As the providers of care, the industry also treats individuals who are suffering from addiction and related health concerns. Although health care delivery companies do not typically face direct costs associated with the prescription of opioids, they face significant costs in addressing the health care needs of those suffering from addiction and related illnesses. Industry-wide efforts to reevaluate approaches to pain management through the development of new policies, training, and oversight may have financially material impacts.

Selling Practices & Product Labeling

Pricing & Billing Transparency

In the U.S., concern over pricing and billing transparency in the Health Care Delivery industry has led to numerous legislative efforts at both the state and federal level. More than 40 states report information on charges or payment rates, and make the information available to the public. For hospitals accepting Medicare patients, the Centers for Medicare & Medicaid Services (CMS) provides average charges per patient and average Medicare payments for the 30 most common ambulatory procedures and the most frequent diagnosis-related groups. Beginning in 2019, CMS is also likely to require that hospitals publish a list of their current standard charges online, and that these charges be updated annually. This would strengthen requirements established in the Patient Protection and Affordable Care Act (PPACA), and be similar to existing requirements in numerous states. These legislative and regulatory efforts, coupled with increased emphasis on health care cost containment, may enhance scrutiny on the pricing and billing practices of companies in this industry. Firms that are able to achieve compliance and transparent pricing structures may be better positioned to protect shareholder value.

Employee Health & Safety

Employee Health & Safety

The Health Care Delivery industry is heavily dependent on a skilled workforce, and employees are routinely exposed to injury, illness, and infection during their regular duties. Relative to other industries, Health Care Delivery has one of the highest rates of injury and illness. Companies that are able to manage this issue more effectively can reduce costs associated with workers’ compensation, productivity, morale, and employee retention. Companies often mitigate risks by implementing proactive health and safety management protocols, developing training requirements for employees, and conducting regular audits of their own practices.

Employee Engagement, Diversity & Inclusion

Employee Recruitment, Development & Retention

Health care delivery companies will continue to face increased competition for physicians due to increased demand which is intensified by current and future shortages. The ongoing ability to recruit, develop, and retain health care practitioners is critical to success in this industry and disclosure on related performance indicators allows shareholders to understand how companies are managing this important human capital issue.

Physical Impacts of Climate Change

Climate Change Impacts on Human Health & Infrastructure

An increase in extreme weather events associated with climate change could present physical threats to health care delivery facilities and create challenges in serving affected populations. Coupled with the potential spread of infectious diseases, and food and water scarcity, these events may present material implications for the Health Care Delivery industry. Company disclosure on policies, practices, and preparedness relating to climate change will help investors understand how value will be protected.

Business Ethics

Fraud & Unnecessary Procedures

Health care delivery companies in the U.S. are subject to significant fines and penalties under the Federal False Claims Act and similar state laws. Entities that receive at least $5 million annually in Medicaid payments must have written policies for all employees and contractors regarding false claims, false statements, and whistleblower protections under these laws. The ability to ensure compliance in this area may have material implications for health delivery companies.

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