Partnering with health systems will increase our spending with diverse suppliers to address economic, racial, and environmental disparities that impact community health.
Throughout Kaiser Permanente's more than 75-year history, we have consistently taken a stand for equity, inclusion, and diversity, which are inextricably linked to our mission. One way that we help address inequities is by making deliberate choices about the purchases we make — from hospital supplies to countless other goods and services. This focus on impact spending involves seeking out and using small suppliers and businesses owned by women, people of color, and other underrepresented groups as a way to improve the economic health and well-being of the communities we serve and contribute to their success and resilience.
Even small shifts in a health system’s spending portfolio can make a difference. When local businesses and minority- and women-owned businesses are awarded business contracts, they are able to employ local residents and provide stable wages that allow employees to consistently afford food, housing, health care and other necessities — all of which are crucial to individual and family health. This local spending also has a multiplier effect that can increase local economic activity beyond the one purchase.
Creating economic opportunities for community advancement helps address systemic racism, breaking cycles of trauma and underinvestment in communities of color. Our impact spending strategies also ensure that Kaiser Permanente’s spending decisions are environmentally sound, economically viable, and socially equitable.
During a challenging year for so many small businesses, particularly those in communities of color, Kaiser Permanente exceeded its impact spending targets. In 2020, we spent $2.56 billion with diverse suppliers, an increase of 27% over our 2019 diverse spending. We also spurred $510 million in diverse spending by suppliers on our behalf in 2020.
To make a larger impact in equitable spending and to improve community health across the country, in 2020 Kaiser Permanente worked with Healthcare Anchor Network to create an industry initiative: the Impact Purchasing Commitment. Kaiser Permanente along with 11 hospitals and health systems signed on.
Participants who signed the commitment promise to help build healthy, equitable, and climate-resilient local economies with how they spend their dollars.
“As we continue to find opportunities to improve health and equity in our communities, Kaiser Permanente encouraged the Healthcare Anchor Network to create actionable change in the economies of our communities by leveraging their collective assets and purchasing power,” said Kaiser Permanente chair and chief executive officer Greg A. Adams. “This commitment to social equity through supplier diversity, environmental protection through sustainable sourcing, and economic impact through job creation is critical to both individual and community health.”
Kaiser Permanente worked closely with HAN, Health Care Without Harm, and Practice Greenhealth to design the commitment. The institutions that have signed on to the Impact Purchasing Commitment agree to collectively increase their spend by at least $1 billion over the next 5 years with minority- and women-owned business enterprises and local and employee-owned, cooperatively owned, and/or nonprofit-owned enterprises. Participants also agree to work with at least 2 of their large existing vendors to create hiring pipelines in the disinvested communities they serve. Additionally, participants commit to adopting sustainable procurement goals toward purchasing goods and services that minimize damage to health and the environment.
“Health systems are uniquely positioned to have positive impact as leading employers and economic engines in their communities,” said David Zuckerman, executive director, Healthcare Anchor Network. “In addition to providing quality health care, they can leverage institutional resources, including almost $500 billion in annual spending, to help address the economic, racial, and environmental resource disparities that impact community health outcomes.”
Kaiser Permanente invites all organizations and health systems to join in this effort to leverage purchasing power to improve the health of communities by signing the Impact Purchasing Commitment.
Some ways organizations can get started on their impact spending journey include:
“Organizations can make a big impact in their communities by following these steps and applying a sustainability and social impact lens to their procurement practices,” said Kaiser Permanente chief supply chain and procurement officer Mary Beth Lang. “I encourage all organizations to leverage their organizational assets and shift their spending efforts in order to create a more equitable society.”