A continuing journey12.01.11 by Jeff Ferenc
Hospitals cut costs by reducing waste and conserving energy
With looming federal reimbursement reductions poised to burden already financially challenged hospitals, sustainability's potential to cut costs stands like an oasis in the desert. But this is no mirage. More than ever, sustainability offers opportunities to cut costs and improve the environment.
In keeping with the pursuit of optimization and sustainable operations, exploring sustainability strategies inherently forces hospitals to assess whether each department and system serving a facility's infrastructure is a peak performer. Experience shows that cost-saving opportunities exist at even the environmentally savvy hospitals and often require simple actions with minimal investments that can pay substantial financial dividends.
Health care facilities also are learning that sustainability is an ongoing process rather than a single event; no facility climbs the green mountain in one day. Developing and executing effective plans that make efficient use of energy, water, waste management and environmental services take time.
After a brief lull in activity in 2010, it appears that taking steps to cut energy costs is experiencing a rejuvenation, according to the 2011 Energy Efficiency Indicator survey administered by the American Society for Healthcare Engineering (ASHE), Johnson Controls' Institute for Building Efficiency (IBE) and others.
"Reimbursements aren't going back to what they used to be and margins at hospitals are razor thin, so the importance of energy conservation is not going to go away,"says Dale Kondik, CEM, P.E., development leader, Johnson Controls Healthcare Solutions, Milwaukee, Wis.
The business case is too strong not to pursue energy-efficiency projects, says Kondik. "If we save a hospital operating at a small margin a couple hundred thousand dollars in energy costs, they'd have to bring in maybe $10 million or $15 million in incremental revenue just to realize the same benefit to their cash flow," he says.
Asked how important energy is to health care organizations, 78 percent of the survey respondents said they are paying more attention to energy than a year ago, which is up substantially from the 66 percent who responded similarly in 2010.
In addition, the survey found that 95 percent have taken actions to reduce energy use in the past year and 92 percent have invested in energy projects. The survey data also showed that 64 percent of the respondents call energy extremely important or very important, which is up from 58 percent in 2010.
During a webinar in which the survey results were discussed, Dale Woodin, CHFM, FASHE, executive director, ASHE, said that all hospital projects are undergoing increased financial review, but those aimed at improving efficiency are faring better than others and tend to get "greenlighted."
"The good news is that with the additional scrutiny energy-efficiency projects have held up incredibly well," he says.
Cost savings are king — again
While energy efficiency potentially offers multiple benefits, cost savings are still the number one driver in these decisions, the ASHE/IBE survey reports. It's the fifth year in a row it ranked first, says Kelly Smith, program manager for global energy and sustainability at IBE.
The 2011 Hospital Energy Management Survey conducted by Health Facilities Management and ASHE shows that hospitals over the past two years have tended to implement safer, low-investment strategies with a more immediate payback. The average simple payback period for energy conservation projects in health care is 3.8 years.
Common actions taken include retrofitting to more efficient T8 or T5 fluorescent lighting (76 percent) or light-emitting diode lighting, launching a preventive-maintenance program (88 percent) and upgrading building control and automation systems (55 percent), according to ASHE/HFM survey data.
Among energy-management strategies taken, 40 percent said they conducted an energy audit, the most common action taken and one that is still underutilized and can lead to the next tier of energy-saving actions, says Woodin.
"You need to get an energy adviser," he implores facility managers. "And that can be a consulting engineer, somebody from the local utility company. But you need to have somebody who can open up the realm of savings that you can get rather than just the things that are right in front of you."
Upgrading aging HVAC equipment is becoming more common as hospitals start to reach for the higher-hanging fruit in energy efficiency, he says. Those include changing out chillers, air handlers and boilers — replacements commonly paid for in part with more basic energy projects or through third-party funding such as utility incentives, explains Woodin.
The strategy of starting small and building up to more ambitious sustainability projects has paid off handsomely for Spectrum Health, Grand Rapids, Mich. After getting a couple of cost-saving "wins under their belt" with recycling and lighting retrofit projects at two hospitals, Joshua Miller, sustainability coordinator, convinced initially skeptical C-suite executives that being green is good business.
He worked with hospital leadership to establish a $1 million sustainability program fund that replenishes itself with real and projected energy savings. The fund is key because it eliminates the need to compete with clinical departments for financing, he says.
"Once the system's executives saw there were cost savings from the first projects, they said we really need to push this out to the entire Spectrum Health system and get everybody on board — not only because it's the right thing to do but there are cost savings, too," says Miller."
Hospitals generate 6,600 tons of waste a day, with nonhazardous solid waste representing up to 80 percent of the total, according to the American Hospital Association's Executive Primer on Hospital Environmental Sustainability. All that waste represents an opportunity for cost savings.
Spectrum Health, for example, has launched a medical device reprocessing program that is saving $677,000 a year and growing, and implemented a reusable sharps container program in 2008 that saves up to $100,000 annually, says Miller.
For large systems such as health care giant Kaiser Permanente, Oakland, Calif., sustainability actions that eliminate or reduce waste streams can generate savings in the millions of dollars. Kaiser has started to reprocess single-use devices like blood pressure cuffs and compression sleeves, which in the past were thrown out after one use. The health care system contracted with a certified reprocessor so that appropriate devices could be reused, says Kathy Gerwig, vice president for workplace safety and environmental stewardship officer at Kaiser. The result is that last year 400,000 devices that weighed a total of 328,000 pounds were reused rather than dumped in a landfill.
In addition, the action eliminates repurchasing the devices and thus saves Kaiser about $8 million annually, says Gerwig. She is confident that Kaiser can double the amount of savings once it expands the reprocessing step to include as many devices as practical.
Baptist Health South Florida, Coral Gables, successfully has implemented a comprehensive recycling and waste diversion program that entails paper shredding across its system of six hospitals and outpatient medical centers, says Eric Wenke, LEED AP, assistant vice president for corporate development.
Materials diverted from landfills, thanks to the recycling efforts, amount to about 200 tons a month. Combined with a regulated medical waste program, Baptist Health has saved about $350,000 over each of the past two years from this initiative alone, he says.
A precious resource
The availability and price of water quietly has become a major issue for some regions, especially the South, Southwest and West. But even parts of the Northeast are grappling with surging water prices, says Breeze Glazer, LEED AP BD+C, research knowledge manager for health care sustainability, Perkins+Will, New York City.
"Water prices historically have been low. Not so any more," says Glazer. "Rates are increasing exponentially across the country. In New York City they have increased 60 percent in the past four years."
In response, Perkins+Will makes low-flow toilets, faucets and showers mandatory in any new hospital it designs. The technology can reduce water use by about 35 percent and still meet building codes, says Glazer. "The first level of water conservation in a project is smart fixture selection," he says.
The next level of conservation and an increasing trend for hospitals is to install large cisterns to capture rainwater for irrigation. While aesthetically pleasing, landscaping is an expensive water guzzler, he notes.
Lin Hill, director of awards, Practice Greenhealth says the organization's recent 2011 Sustainability Benchmark Report shows that up to 52 percent of their top award winners have implemented water conservation steps.
Those facilities have reduced their water use and costs by 10-14 percent, says Hill. That translates to a total annual savings of 162 million gallons of water and an estimated $610,000, she says.
Proof that small steps can add up to large savings, Karen Schwartz, FACHE, vice president, support services, Bon Secours St. Francis Health System, Greenville, S.C., says her organization cut water use by 10 million gallons in 2010.
Steps included replacing an old medical vacuum pump at one campus that used running water around the clock, she says. They also replaced existing faucets with automatic sensor faucets in public areas and staff bathrooms; replaced an inefficient dishwasher at one facility; and installed a rain barrel and solar-operated pump to irrigate a community garden.
The trend toward the application of green or sustainable cleaning, generally defined as cleaning techniques and products that protect health without harming the environment, continues to increase, according to Hill. The percentage of Practice Greenhealth's most sustainable member hospitals who reported a formal green cleaning plan at their facility rose substantially from last year, she says.
"Formalizing green cleaning at a facility is significant because it shows an increase in awareness of environmental issues by ES teams as well as an increase in commitment from hospital management," says Hill.
Formalizing a green cleaning program has two major effects. It improves the indoor environment for patients and staff and guarantees that the program will continue if the hospital's so-called "green champion" leaves, she says.
"In the bigger picture, green cleaning by hospitals can really drive the market toward offering more environmentally friendly products," she notes.
Patti Costello, executive director, Association for the Healthcare Environment, agrees there is a trend toward sustainable cleaning, but that the issue gets somewhat complicated. There is a growing number of so-called green cleaning technologies such as ultraviolet light machines and hydrogen peroxide misters that can eliminate or minimize the use of chemicals.
While their effectiveness shows promise, it is still being researched, she says. She cautions environmental services managers and directors to conduct due diligence before purchasing newer, costly technology.
"These are very promising technologies and can revolutionize the way we think about surface disinfection. However, like anything else, there are a lot of questions and we typically have more questions than answers," Costello says. "Know before you buy. What does the research say? What do the experts say? What do the test results say?"
Back to basics and beyond
Gundersen Health System, La Crosse, Wis., has raised the sustainability bar to levels most hospitals can only dream about for now. Gundersen continues to forge ahead toward its goal of being energy-independent by 2014 through a number of progressive strategies. Tom J. Thompson, sustainability coordinator at Gundersen, says the hospital is on track to meet its objective.
The system plans to offset 12 percent of its total energy use by turning biogas from a local landfill into electricity and heat. The hospital already offsets 5 percent of its energy at two campuses by turning waste biogas from a local brewery's waste treatment process into electricity. Solar panels have been installed at parking facilities and plans call for generating power with wind turbines.
Low- or no-cost retrocommissioning has improved energy efficiency by 25 percent at Gundersen. That strategy along with commissioning and recommissioning are underutilized actions that practically ensure optimal systems operations, say facility experts.
Michael Hatton, system executive, facilities engineering, Memorial Hermann Healthcare System, Houston, has followed that advice to the tune of about $9 million in energy savings over the past three years at the system's 12 hospitals and multiple medical buildings, he says.
As a result, four hospitals and four medical office buildings are Energy Star labeled, he says. In addition, 10 of 12 hospitals were given the ASHE Energy Efficiency Commitment (E2C) award this past spring and the remaining two will be E2C-eligible by the end of this year, he adds.
"Proper commissioning and startup of the HVAC systems favorably impact patient care and reduce energy consumption," he says. "Recommissioning HVAC systems, optimizing building control systems to automatically tune HVAC systems to weather conditions, and new technologies — such as condensing boilers — have provided immediate improvements to the bottom line."
What's next for sustainability? Kaiser Permanente, in a partnership with Bloom Energy, this year was set to deploy fuel-cell generators that would reduce use of fossil fuels for electricity by 34 percent at seven locations. It also planned to install solar power systems at 15 facilities.
Kaiser also is establishing an engineering committee assigned the task of exploring the highest, affordable levels of energy efficiency possible, says John Kouletsis, vice president of facilities planning. Looking at design innovations is part of the plan, he adds.
Of course, Kaiser and Gundersen are among the sustainability leaders. For many hospitals, the path to green may mean taking more basic steps for now. Others may be ready to step up to the next tier of options. Either way, there are a variety of ways for health care facilities to cut energy use and reduce waste streams and, therefore, save money.
"We're all early in this process," says Wenke. "This is a journey and we're all just starting out. Some of us are definitely further along than others. But we are trying to keep our mindset in the right place and do the right thing."
Jeff Ferenc is senior editor of Health Facilities Management.comments powered by Disqus