Neil Peterson, Alisha Jerauld, CPA and Matt Wold, Merit Medical Systems Inc. 04.01.20
Environmental stewardship has gained new attention over the past several years. At the individual level, consumers have begun to ask questions about how they can shop smarter and make conscious choices that reflect a desire to reduce the impact on the natural habitat. Indeed, these sorts of concerns have been prevalent for over a century or more, but they have gained such widespread traction the business world can no longer dismiss them as niche concerns.
The medical device industry is certainly not immune to pressure being applied by regulators, hospital systems, governments, and consumers alike to conform to this new reality. Increasingly so, medical device manufacturers are being forced to reconcile their business practices with the need to reduce impact on natural resources and the environment. At times, such compliance comes at a very real cost, and yet, without (sometimes significant) spending in this area, there is a very real risk of losing access to markets around the world. We all must adapt to survive, quite literally, but also as financial entities beholden to stakeholders and responsive to consumer demands.
At the same time, embracing a mindset of environmental stewardship does not necessarily have to be something forced upon a business entity. Nor does participating in this enterprise have to be an overall detriment to a company’s financial health. This article describes one medical device manufacturer’s efforts—Merit Medical—with respect to environmental stewardship. In truth, this is just one company’s story, but it is shared with the hope it inspires other business leaders to approach questions surrounding environmental consciousness in a new and different light.
Environmental Consciousness Can Be Part Of The Culture
Merit Medical has a long history of working toward greater environmental sustainability. From the beginning, CEO and founder Fred Lampropoulos instilled a culture of practicing environmental consciousness, even if it meant an impact on the financial bottom line. His belief, and one that continues to be prevalent today after 33 years of operation, is while our primary mandate as a business entity is to serve our customers and respond to the needs of our various stakeholders, we must also be good stewards of the environment. Over the years, that mindset has manifested in practical measures, like recycling programs at all of our plants and facilities, as well as in developing operational policies that will best serve the objective of preserving the planet for future generations.
In more recent history, a combination of internal and external forces has led to these efforts taking a more prominent role in our decision-making processes. For instance, as Merit has expanded and built new facilities, we have increasingly made efforts to incorporate sustainable building standards into new construction. For example, one of our newer buildings at HQ was awarded Silver Leadership in Energy and Environmental Design (LEED) certification—an independent program that assesses a building’s green features. Doing so involved a slightly higher upfront capital investment in building costs, but in the long-term, reductions in energy and resource usage start to become a positive return on investment. As Merit has scaled its operation, the cost of doing business has increased proportionally. In this regard, sustainable facility standards have been a win-win in terms of gaining a measure of control over operational costs while simultaneously ensuring we minimize our footprint on the environment.
At the same time, it is nearly impossible to ignore the recent attention being given to humankind’s impact on the environment. Leaving aside the debate over the facts of climate change, it is clearly evident that more plastic is finding its way into the world’s oceans and landfills, supplies of natural resources are diminishing, and human behavior is having an effect on our ecosystem. Thus, whatever small part companies can play in good environmental stewardship helps protect the planet, almost regardless of whether or not these efforts have any implications for climate change. For its part, Merit has made tremendous strides in manufacturing to reduce extraneous use of plastic wherever possible.
Regulatory Pressure and Customer Feedback Are a Net-Positive
There are also external forces acting on Merit’s daily operations that are, in some ways, an outgrowth of the greater environmental consciousness mentioned previously. As governments from around the world have taken up the mantle of environmental stewardship, more and more regulations have trickled down to the global marketplace. Simply put, a global business entity, such as Merit, must respond to and respect local customs and regulations to gain access to the market. The ever-present challenge, though, is the fluid nature of environmental regulations within a given market, coupled with the fact that regulations differ according to each market. That is to say, doing business in the European Union requires following a different set of dynamic rules than it does in South America, Asia, Australia, or any of the individual countries where we sell products.
The impact of environmental regulations, however, also affects our customer base and supplier relationships, which in turn, circles back to us as product manufacturers and distributors. One example is we often hear from hospitals and large care delivery networks about the desire to reduce landfill contributions. The same holds true for the various original equipment manufacturers (OEMs) we deal with in our supply chain, who consistently want to know what efforts we are making with respect to the environment. In part, those sentiments derive from their own desire to certify to their constituents and customers that they are working with environmentally friendly companies. What this ultimately means, though, is that up and down our supply chain and in almost every interaction we have as a buyer of raw materials and seller of medical devices, there is an expectation that Merit is having a positive and demonstrable impact on the environment.
Taking Action: Responding to the New Reality
If the aforementioned seems a somewhat dizzying array of newly discovered pressures on Merit’s business model, in fact, it is. Yet, we welcome those pressures as they align with our ingrained corporate values when it comes to environmental consciousness. Indeed, Merit has implemented several initiatives that help balance the need for reducing our footprint while continuing to be a profitable enterprise.
Merit’s executive structure includes a vice president of environment, social & governance—a position responsible internally for developing and implementing various initiatives, and externally for communicating with our customers and stakeholders about those efforts. In truth, the need for such a role is a necessity in light of the lack of continuity in regulatory standards in each of the many markets in which we operate, but also because Merit’s catalogue includes over 20,000 unique product offerings all packaged and shipped differently. To say the least, it is enormously complex to respond to one country asking us, for example, what each carton and product weighs—and in some instances, asking for even more granular information such as how much the ink and staples in our instruction booklets contribute to overall weight—and another asking for a completely different set of facts. To this end, Merit has recently completed building a database of this kind of information so we can respond quickly and efficiently to these kinds of requests. And expediency certainly matters: Merit very recently had a shipment held up in customs in one market until we could provide proof all of the products used in shipping (from carton material to the paper products to the labels themselves) were sourced from sustainable forestry areas. A similar concern also applies to vendors in our supply chain; for instance, some of Merit’s products require the purchase of materials like gold, tungsten, and tin. Some of these materials are produced in known conflict areas, so Merit takes precautions to be absolutely sure they are not sourced from sanctioned areas lest we risk access to certain markets. Meeting compliance with those kinds of standards entails a detailed understanding of not only our own business practices, but also those of our vendors and exactly what third-party operators they are dealing with as well.
One of the challenges inherent to the manufacturing of medical devices is we have a need to use a tremendous amount of plastic. In particular, many of the products Merit produces and sells are single-use devices, which is a necessity for our customers—and in turn, for patients—to reduce the risk of spreading bloodborne pathogens. With the law of unintended consequences, though, single-use devices create logistical challenges for manufacturing and order fulfillment.
In response, we have taken a two-fold approach. First, reducing extraneous plastic use in the molding process and recycling and reusing all plastic pieces used during manufacturing, including purge material and molding parts that do not make it into the end product. We recently spent a significant amount of money updating our manufacturing facilities to use hot runner molds, which reduces waste. As a further step, we have begun to investigate whether it may be feasible to collect used devices from our customers and recycle parts that do not come in contact with blood or other fluids.
The second part relates to how we manage order fulfillment. For the past 15 years, we have actively looked for ways to reduce the environmental impact of our packaging and shipping protocols. This has taken a variety of forms, including reducing box dimensions and weight, material thicknesses, and finding new ways to ship items to reduce the corrugated materials used. For instance, Merit’s Smart Shipping program uses more robust single cardboard boxes for packaging and shipping rather than two or three different boxes with overpack and filler used for the same purpose. Importantly, we only use corrugated boxes that are made from 40 percent recycled materials, again ensuring we are only using environmentally friendly materials. In large part because of these efforts, we have reduced our use of corrugate by 72 tons over the past 12 months. There are certainly cost implications to this approach, as the sturdier, single-use box is more expensive. That is somewhat offset by the fact our handlers are assembling only one box instead of multiple boxes, and we also save on overpack and filler (bubble wrap and the like). Overall, it is likely a wash financially, but since we have a net positive effect on the environment, Merit considers these costs prudent and justifiable.
Conclusion
Merit’s environmental initiatives to date really demonstrate three important facts. First, making an impact starts with a commitment. Second, the spirit of innovation that drives success in the medical device industry is translatable to finding unique solutions to help preserve our planet. Third, making an impact on the environment can result from small and large efforts, such programs can touch every aspect of an operation, and a comprehensive commitment to environmental stewardship is feasible while still maintaining and growing a global business entity.
Merit’s efforts, so far, are by no means perfect, nor are we willing to stop finding new ways to improve. One area in which we have been deficient is in developing and tracking metrics that measure and demonstrate the results of our various programs. We have measured some of our efforts like tons of materials recycled, kilowatt hours of energy saved, plastics recycled, CO2 emissions reduced, and renewable energy supported. We could do a better job in things such as measuring water, waste, and energy usage in our global operation; setting benchmarks for reduction; implementing programs designed to have a positive effect; and then measuring outcomes for more transparent reporting. The financial side of Merit already functions in a similar capacity in terms of establishing profit and growth goals, and that really speaks to the point about using the lessons we have learned as a medical device manufacturer to improve our standards with respect to the environment.
What we hope others will take away from Merit’s desire to be a leader in environmental sustainability efforts is commitment can take many forms. Making a true global impact is cumulative. While we continue to seek out large-scale opportunities to practice good environmental stewardship, we also have many smaller programs (e.g., a garden at our main campus annually contributes 1,200 pounds of food used in our cafeterias; we now haul hard food waste at a reduced cost with a company that uses it to produce renewable energy) that contribute to our overall initiative. The bottom-line truth is the demand for better environmental consciousness may be driven by market forces, but reducing our impact on the environment is also something we should all be concerned about as citizens of a planet in crisis.
Neil Peterson is vice president of operations for Merit Medical Systems Inc. He has more than 30 years of experience in medical device manufacturing.
Alisha Jerauld, CPA, is vice president, environment, social & governance for Merit Medical Systems Inc. In her role, Jerauld works with internal and external stakeholders to design and implement initiatives related to environmental sustainability.
Matt Wold is a packaging engineer for Merit Medical Systems Inc. He has been with the company for 15 years and helped design Merit’s Smart Shipping program.
The medical device industry is certainly not immune to pressure being applied by regulators, hospital systems, governments, and consumers alike to conform to this new reality. Increasingly so, medical device manufacturers are being forced to reconcile their business practices with the need to reduce impact on natural resources and the environment. At times, such compliance comes at a very real cost, and yet, without (sometimes significant) spending in this area, there is a very real risk of losing access to markets around the world. We all must adapt to survive, quite literally, but also as financial entities beholden to stakeholders and responsive to consumer demands.
At the same time, embracing a mindset of environmental stewardship does not necessarily have to be something forced upon a business entity. Nor does participating in this enterprise have to be an overall detriment to a company’s financial health. This article describes one medical device manufacturer’s efforts—Merit Medical—with respect to environmental stewardship. In truth, this is just one company’s story, but it is shared with the hope it inspires other business leaders to approach questions surrounding environmental consciousness in a new and different light.
Environmental Consciousness Can Be Part Of The Culture
Merit Medical has a long history of working toward greater environmental sustainability. From the beginning, CEO and founder Fred Lampropoulos instilled a culture of practicing environmental consciousness, even if it meant an impact on the financial bottom line. His belief, and one that continues to be prevalent today after 33 years of operation, is while our primary mandate as a business entity is to serve our customers and respond to the needs of our various stakeholders, we must also be good stewards of the environment. Over the years, that mindset has manifested in practical measures, like recycling programs at all of our plants and facilities, as well as in developing operational policies that will best serve the objective of preserving the planet for future generations.
In more recent history, a combination of internal and external forces has led to these efforts taking a more prominent role in our decision-making processes. For instance, as Merit has expanded and built new facilities, we have increasingly made efforts to incorporate sustainable building standards into new construction. For example, one of our newer buildings at HQ was awarded Silver Leadership in Energy and Environmental Design (LEED) certification—an independent program that assesses a building’s green features. Doing so involved a slightly higher upfront capital investment in building costs, but in the long-term, reductions in energy and resource usage start to become a positive return on investment. As Merit has scaled its operation, the cost of doing business has increased proportionally. In this regard, sustainable facility standards have been a win-win in terms of gaining a measure of control over operational costs while simultaneously ensuring we minimize our footprint on the environment.
At the same time, it is nearly impossible to ignore the recent attention being given to humankind’s impact on the environment. Leaving aside the debate over the facts of climate change, it is clearly evident that more plastic is finding its way into the world’s oceans and landfills, supplies of natural resources are diminishing, and human behavior is having an effect on our ecosystem. Thus, whatever small part companies can play in good environmental stewardship helps protect the planet, almost regardless of whether or not these efforts have any implications for climate change. For its part, Merit has made tremendous strides in manufacturing to reduce extraneous use of plastic wherever possible.
Regulatory Pressure and Customer Feedback Are a Net-Positive
There are also external forces acting on Merit’s daily operations that are, in some ways, an outgrowth of the greater environmental consciousness mentioned previously. As governments from around the world have taken up the mantle of environmental stewardship, more and more regulations have trickled down to the global marketplace. Simply put, a global business entity, such as Merit, must respond to and respect local customs and regulations to gain access to the market. The ever-present challenge, though, is the fluid nature of environmental regulations within a given market, coupled with the fact that regulations differ according to each market. That is to say, doing business in the European Union requires following a different set of dynamic rules than it does in South America, Asia, Australia, or any of the individual countries where we sell products.
The impact of environmental regulations, however, also affects our customer base and supplier relationships, which in turn, circles back to us as product manufacturers and distributors. One example is we often hear from hospitals and large care delivery networks about the desire to reduce landfill contributions. The same holds true for the various original equipment manufacturers (OEMs) we deal with in our supply chain, who consistently want to know what efforts we are making with respect to the environment. In part, those sentiments derive from their own desire to certify to their constituents and customers that they are working with environmentally friendly companies. What this ultimately means, though, is that up and down our supply chain and in almost every interaction we have as a buyer of raw materials and seller of medical devices, there is an expectation that Merit is having a positive and demonstrable impact on the environment.
Taking Action: Responding to the New Reality
If the aforementioned seems a somewhat dizzying array of newly discovered pressures on Merit’s business model, in fact, it is. Yet, we welcome those pressures as they align with our ingrained corporate values when it comes to environmental consciousness. Indeed, Merit has implemented several initiatives that help balance the need for reducing our footprint while continuing to be a profitable enterprise.
Merit’s executive structure includes a vice president of environment, social & governance—a position responsible internally for developing and implementing various initiatives, and externally for communicating with our customers and stakeholders about those efforts. In truth, the need for such a role is a necessity in light of the lack of continuity in regulatory standards in each of the many markets in which we operate, but also because Merit’s catalogue includes over 20,000 unique product offerings all packaged and shipped differently. To say the least, it is enormously complex to respond to one country asking us, for example, what each carton and product weighs—and in some instances, asking for even more granular information such as how much the ink and staples in our instruction booklets contribute to overall weight—and another asking for a completely different set of facts. To this end, Merit has recently completed building a database of this kind of information so we can respond quickly and efficiently to these kinds of requests. And expediency certainly matters: Merit very recently had a shipment held up in customs in one market until we could provide proof all of the products used in shipping (from carton material to the paper products to the labels themselves) were sourced from sustainable forestry areas. A similar concern also applies to vendors in our supply chain; for instance, some of Merit’s products require the purchase of materials like gold, tungsten, and tin. Some of these materials are produced in known conflict areas, so Merit takes precautions to be absolutely sure they are not sourced from sanctioned areas lest we risk access to certain markets. Meeting compliance with those kinds of standards entails a detailed understanding of not only our own business practices, but also those of our vendors and exactly what third-party operators they are dealing with as well.
One of the challenges inherent to the manufacturing of medical devices is we have a need to use a tremendous amount of plastic. In particular, many of the products Merit produces and sells are single-use devices, which is a necessity for our customers—and in turn, for patients—to reduce the risk of spreading bloodborne pathogens. With the law of unintended consequences, though, single-use devices create logistical challenges for manufacturing and order fulfillment.
In response, we have taken a two-fold approach. First, reducing extraneous plastic use in the molding process and recycling and reusing all plastic pieces used during manufacturing, including purge material and molding parts that do not make it into the end product. We recently spent a significant amount of money updating our manufacturing facilities to use hot runner molds, which reduces waste. As a further step, we have begun to investigate whether it may be feasible to collect used devices from our customers and recycle parts that do not come in contact with blood or other fluids.
The second part relates to how we manage order fulfillment. For the past 15 years, we have actively looked for ways to reduce the environmental impact of our packaging and shipping protocols. This has taken a variety of forms, including reducing box dimensions and weight, material thicknesses, and finding new ways to ship items to reduce the corrugated materials used. For instance, Merit’s Smart Shipping program uses more robust single cardboard boxes for packaging and shipping rather than two or three different boxes with overpack and filler used for the same purpose. Importantly, we only use corrugated boxes that are made from 40 percent recycled materials, again ensuring we are only using environmentally friendly materials. In large part because of these efforts, we have reduced our use of corrugate by 72 tons over the past 12 months. There are certainly cost implications to this approach, as the sturdier, single-use box is more expensive. That is somewhat offset by the fact our handlers are assembling only one box instead of multiple boxes, and we also save on overpack and filler (bubble wrap and the like). Overall, it is likely a wash financially, but since we have a net positive effect on the environment, Merit considers these costs prudent and justifiable.
Conclusion
Merit’s environmental initiatives to date really demonstrate three important facts. First, making an impact starts with a commitment. Second, the spirit of innovation that drives success in the medical device industry is translatable to finding unique solutions to help preserve our planet. Third, making an impact on the environment can result from small and large efforts, such programs can touch every aspect of an operation, and a comprehensive commitment to environmental stewardship is feasible while still maintaining and growing a global business entity.
Merit’s efforts, so far, are by no means perfect, nor are we willing to stop finding new ways to improve. One area in which we have been deficient is in developing and tracking metrics that measure and demonstrate the results of our various programs. We have measured some of our efforts like tons of materials recycled, kilowatt hours of energy saved, plastics recycled, CO2 emissions reduced, and renewable energy supported. We could do a better job in things such as measuring water, waste, and energy usage in our global operation; setting benchmarks for reduction; implementing programs designed to have a positive effect; and then measuring outcomes for more transparent reporting. The financial side of Merit already functions in a similar capacity in terms of establishing profit and growth goals, and that really speaks to the point about using the lessons we have learned as a medical device manufacturer to improve our standards with respect to the environment.
What we hope others will take away from Merit’s desire to be a leader in environmental sustainability efforts is commitment can take many forms. Making a true global impact is cumulative. While we continue to seek out large-scale opportunities to practice good environmental stewardship, we also have many smaller programs (e.g., a garden at our main campus annually contributes 1,200 pounds of food used in our cafeterias; we now haul hard food waste at a reduced cost with a company that uses it to produce renewable energy) that contribute to our overall initiative. The bottom-line truth is the demand for better environmental consciousness may be driven by market forces, but reducing our impact on the environment is also something we should all be concerned about as citizens of a planet in crisis.
Neil Peterson is vice president of operations for Merit Medical Systems Inc. He has more than 30 years of experience in medical device manufacturing.
Alisha Jerauld, CPA, is vice president, environment, social & governance for Merit Medical Systems Inc. In her role, Jerauld works with internal and external stakeholders to design and implement initiatives related to environmental sustainability.
Matt Wold is a packaging engineer for Merit Medical Systems Inc. He has been with the company for 15 years and helped design Merit’s Smart Shipping program.