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Hospitals See Early Signs of Cost-Savings through Energy Efficiency Project

Hospitals are notorious for being energy hogs. With 24/7 operation, lots of energy-consuming equipment, and strict codes for lighting, air circulation and heating/cooling, there should be little wonder why. In fact, it’s estimated that the operation and construction of hospitals uses five percent of all the energy consumed in the U.S. (ENERGY STAR).

Linda Barlow

Linda Barlow

Targeting 100! is making inroads to reverse this trend. The research project is a roadmap for hospital design, construction and operation, seeking to develop more energy-efficient hospitals at little additional first capital cost investment from the owner. It provides climate-specific guidance for hospitals to achieve the goals of the 2030 Challenge for 2010-15, with a 60 percent energy reduction from the current U.S. average energy performance while complying with U.S. energy and health-related codes and improving the quality of healing and work environments.

“At a time when health care reimbursements are decreasing for many health care organizations, spending on energy is one area that can become less costly with greater efficiency,” said Heather Burpee, Research Assistant Professor, Health Design & Energy Efficiency, University of Washington. “Reducing energy use also has a direct impact on carbon emissions, thus having a positive impact on environmental health.”

Though energy represents a small portion of a hospital’s overall operating costs, reducing utility expenditures can create a low-risk, high-yield and stable investment:

  • $1 of net savings translates into $50 of gross revenue.
  • For a typical Targeting 100! hospital that saves 60 percent on energy and 35 percent on annual utility costs, the average annual savings of $575,000 equates to $28.5 million in gross revenue that would have otherwise been generated through providing patient services.

“In this way, the operations of the hospital are less expensive and the extra ‘revenue’ can be used to service additional care, acquire new equipment or go back into additional energy efficiency upgrades,” Burpee said.

According to Targeting 100!, one of the biggest uses of energy within a hospital is re-heating centrally cooled air. For example, at Vancouver, Washington’s Legacy Salmon Creek Medical Center (LSCMC), a 220-bed, state-of-the-art facility – which acted as a benchmark for the program – re-heat consumed 40 percent of the hospital’s energy.

The Targeting 100! program saves re-heat energy expenditures by reducing loads on the building envelope through solar control, turning down air changes in unoccupied areas, and other mechanical ventilation strategies.

Burpee highlighted several recent Targeting 100! projects that are starting to demonstrate positive results:

The Swedish Issaquah Hospital in Issaquah, Washington is exceeding its energy goal of 125 kBtu/SF (amount of heat required to change the temperature of one pound of water by one degree fahrenheit at sea level) per year by a significant margin after just nine months.

Seattle Children’s Bellevue Clinic at the University of Washington Medical Center is on track to see an annual energy cost benefit of approximately $1.32 million – a return on investment of more than 50 percent that will pay back the provider’s investment in less than two years. According to the project’s engineer, the total investment needed to implement the energy-reduction strategies amounted to less than one year of typical operating costs.

“Developing a healthier and more sustainable hospital environment requires an exceptionally high level of owner support to achieve carefully gauged high performance goals,” Burpee said. “A project team structure and culture that enables cooperative decision-making with key stakeholders is essential for creating a truly high-performance hospital: one that has a low-energy footprint and embodies qualities that foster health, productivity, and well-being.”

Targeting 100! notes that implementing energy-efficiency options incurs a three percent incremental cost premium, with the inclusion of a utility incentive, and that cost savings in some categories can offset incremental cost increases for energy improvements in other areas. These energy options would pay back, on average, in less than 11 years, a nine percent return on investment.

Should a three percent increase in capital cost be considered “cost-neutral?” Are relatively modest increases in initial costs for strategies that yield projected long-term energy savings a good investment?

Categories: Cost-Savings