energysmart hospitals: a comparative review

EnergySmart Hospitals: A Comparative Review

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Richard Krasner

Florida Atlantic University

HSA 6937

Current Topics in Health Care Mgmt.

Dr. Radlauer

July 12, 2010


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Table of Contents

Introduction ..................................................................................................................... 3

EnergySmart Hospitals Initiative ..................................................................................... 6

BetterBricks Initiative ..................................................................................................... 10

Smart Hospital Efficiency Program ™ ........................................................................... 13

Conclusion .................................................................................................................... 16

References .................................................................................................................... 18


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Introduction

The oil spill in the Gulf of Mexico, and the wars in Iraq and Afghanistan, which are

basically about energy, have focused our attention on that issue as never before. For more

than thirty years, American presidents have talked about our need to move away from our

dependence on foreign oil, and more recently, to become more energy efficient. There

have been some meager steps taken in that direction throughout American industry, with

the introduction of hybrid cars and energy efficient heating and cooling systems, better

insulation, and solar panels, to name a few of the changes taking place.

As future healthcare professionals, the subject of energy efficiency in healthcare is

just as important as any other aspect of healthcare administration. In a business context,

the case for energy efficiency is compelling for hospitals; with energy costs representing

one of the few cost centers hospitals have significant control over (U.S. Department of

Energy [DOE], 2008). Spending by US hospitals amount to over $5 billion annually on

energy (Ray, 2010; USDOE, 2008), which is equal to 1 – 3% of total budget, and

equivalent to at least 15% of profits (USDOE, 2008).

According to the DOE’s Commercial Buildings Energy Consumption Survey

(CBECS, 2003), hospitals use 836 trillion BTU’s of energy annually and have more than

2.5 times the energy intensity and CO2 emissions of commercial office buildings, producing

over 30 lbs. of CO2 emissions per square foot (Ray, 2010; USDOE, 2008).


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The US health care sector ranks second, behind the fast food industry, as the most

energy-intensive industry, spending $8.5 billion on energy every year (Ray, 2010; World

Health Organization [WHO], 2009).

In two separate studies, one in 2007 and the other in 2008, the American Society

for Healthcare Engineering (ASHE), reported respectively that 91% of hospitals faced

higher energy costs over the previous year, and over 50% cited increases in double-digit

percentages. (2007 study, USDOE, 2008) In the second study, ASHE reported that health

care executives place a higher priority on energy efficiency than executives in other

industries, with 65% calling energy efficiency “extremely important” or “very important.”

(Ray, 2010; USDOE, 2009b)

For these reasons, forward thinking healthcare CEO’s are making a strong

business case for energy efficiency as a cornerstone of their sustainability policies.

Considering the economic, social and even personal impacts of their practices, healthcare

thought leaders have adopted a broad, systems-thinking approach to sustainability. The

result of this is that energy management now sits side-by-side with clinical and financial

governance (Ray, 2010).

The health care industry, Ray (2010) says, is embracing energy efficiency as a

viable and cost effective path to improve margins and reduce the impacts from their own

building operations (Ray, 2010). Lower reimbursements, an aging population and outdated

facilities, along with the added pressure of the current economic downturn, are


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pushing budgets to the breaking point and heightening competition for hospital dollars

(USDOE, 2009b).

There are many health care organizations, however, that are acting too slowly or

falling short on execution. Many have not integrated sustainability into their business

functions, nor developed a plan to measure, track and report their sustainability efforts.

They are still asking, according to Ray (2010), whether or not dedicating effort and staff

towards strategic resource management (SRM) is a good business investment and are

struggling to create and manage organization-wide sustainability initiatives (Ray, 2010).

In my research, I found many examples of healthcare organizations who are taking

energy efficiency very seriously. In doing so, they are relying on a number of initiatives and

programs, some government-sponsored, and some private, that are making a difference in

these organizations’ energy efficiency. The subject is too exhaustive for the scope of this

paper, but I will be focusing on reviewing three of these initiatives or programs. They

represent some of the best methods hospitals have for reducing their carbon footprint,

reducing their energy costs, saving money and even improving the overall care and health

of their patients, which is one of the main reasons for doing so, since improved energy

efficiency has a tremendous impact on the health and comfort of patients in a hospital.

I will begin by discussing the U.S. Department of Energy’s EnergySmart Hospital

Initiative, then look at a private initiative from the Northwest Energy Efficiency Alliance’s


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BetterBricks initiative, and lastly, discuss the Hospital Financial Service Corporation’s

Smart Hospital Efficiency Program (SHEP) ™. In the conclusion, I will make some

recommendations on how a hospital can create a lower carbon footprint, and lower their

total energy costs.

EnergySmart Hospitals Initiative

One of the federal departments on the libertarian/tea party agenda for dismantling

is the U.S. Department of Energy, created in the late 1970’s by Jimmy Carter. The typical

cry one hears from this crowd is that government does not know how to do anything right

and therefore the private sector can do a better job. While this may be true in some areas,

in others, the government does a pretty good job. One of those areas is helping individuals

and organizations to solve problems such as energy efficiency.

One such way the government is helping healthcare organizations to solve their

energy problems is through the EnergySmart Hospitals initiative launched by the

Department of Energy in 2008. EnergySmart Hospitals was created to increase the use of

energy efficient technologies in US hospitals. It targets a 20% improvement in efficiency

for the 8,000 hospitals in the country, and a 30% improvement over current standards in

new construction (Ray, 2010).


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The EnergySmart Hospital initiative supports hospitals with the tools and resources

needed to integrate energy-efficiency and renewable energy technologies into hospital

design, construction, retrofit, and operations and maintenance. Through its’ partnerships,

design support, training, and outreach, EnergySmart Hospitals is validating the benefits of

energy efficiency and renewable energy strategies to meeting mission-critical goals while

impacting the organization’s bottom line (USDOE, 2009b).

EnergySmart Hospitals is supporting leaders of hospitals by developing technology

assessments and case studies as well as targeted factsheets on HVAC,

lighting/daylighting, boilers and chillers, power alternatives, medical equipment, and plug

loads, water efficiency, renewables, and benchmarking (USDOE, 2009b).

One such case study mentioned on the department’s website, focuses on the

Gundersen Lutheran Health System in La Crosse, Wisconsin. In 2008, Gundersen

Lutheran set out to improve the well-being of the community while lowering healthcare

costs. Their EnVision Program reduced baseline energy consumption and costs by 20%

by the end of 2009, and they are well on their way to realize their goal of offsetting

remaining energy consumption with renewables to achieve 0% net energy consumption by

2014 (USDOE, 2009b).

Goals of EnergySmart Hospitals

Promote 20% improved efficiency in existing buildings and 30% in new construction

Increase efficient and renewable energy applications in hospitals

Reduce energy use and operating costs

Create healthier healing and work environments


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Maximize successful hospital upgrades and design strategies

Ensure reliable backup power during disasters

Improve environmental performance

(USDOE, 2009b)

One way EnergySmart Hospitals is achieving these goals is through the Buildings

Technology Program from the Department of Energy’s Office of Energy Efficiency and

Renewable Energy. The Buildings Technology Program is primarily concerned with

improving design and construction through a combination of energy-efficient technologies

and Integrated Building Design (IBD) to maximize new hospital performance (USDOE,

2009a).

Integrated Building Design (IBD) is a process that unites people, systems, business

structures and practices through three phases: Pre-design, Conceptual/Architectural, and

Construction and Operations. Each phase consists of multiple steps and processes to plan

and build an EnergySmart Hospital (USDOE, 2009a). For existing hospitals, EnergySmart

Hospitals recommends creating a comprehensive Energy Management Program. To

initiate a program, they outline four steps hospitals need to take.

Step 1 — Create Awareness of the Opportunity: Let the staff

know and provide support

Step 2 — Perform Baseline Mapping: Create Hospital Energy

Map from energy use data and cost figures

Step 3 — Develop a Compelling Vision: Organize an Energy

Management Steering Committee


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Step 4 — Turn the Vision into Action: Establish metrics and

implement comprehensive “whole building” energy

management program

(USDOE, 2008)

Once you have completed step 1 through 4, you can create and implement your

energy management program as outlined below:

(DOE, 2009a)

1. Establish Target Energy

Goals & Baseline

2. Model Energy

Consumption & Review

3. Identify Improvements

4. Develop Financial Analysis

5. Select Activities

6. Implement Activities

7. Confirm Performance

8. Perform Necessary

Maintenance

30

/60

/90

% D

es

ign

Rev

iew

s


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BetterBricks Initiative

A different approach to energy efficiency in healthcare is happening in the Pacific

Northwest, which is an area of the country that is leading the way in energy conservation

and sustainability. The Northwest Energy Efficiency Alliance (NEEA), a non-profit

organization funded by Northwest electric utilities, introduced their BetterBricks Initiative,

which for the past four years has been working with healthcare systems, utilities, market

specialists and partners to validate the business case for change and implement long-term

solutions for strategic energy management (Ray, 2010).

NEEA partnered with the American Society of Healthcare Engineering’s (ASHE)

Energy Efficiency Commitment (EC2), launched in 2006, to encourage members to

benchmark the energy use of their facilities using ENERGY STAR® Portfolio Manager and

to recognize organizations that reduce energy consumption by 10% or better (Ray, 2010).

They have also been helping executives and facility managers at leading hospitals and

health systems to take a more strategic approach to energy and resource use (Ray, 2010).

Energy costs which typically represent up to three percent of a hospital’s operating

budget can be reduced, as Ray (2010) mentions, easily by 10 to 30% at little or no cost

(Ray, 2010). NEEA’s approach influences business practices across an


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entire organization including how hospitals can tune-up, operate and maintain equipment

and systems; how they can upgrade and purchase equipment and services; and how they

design and construct buildings. NEEA’s collaboration with healthcare systems has,

according to Ray (2010), produced impressive results (Ray, 2010).

Ray (2010) highlights several examples of healthcare systems that have achieved

such results, and I will highlight three of them here. The first system is Legacy Health in

Oregon. They realized savings of more than $1.3 million per year for the past three years.

They are on track to reduce energy use intensity by 10% per square foot (Ray, 2010).

Peace Health, in Bellevue, WA, with 925 beds and serving 53,000 inpatients and a

half a million outpatients in 2009, determined that a cumulative 10% reduction in energy

use could be attained over three years, leading to a savings of up to $800,000 a year

system-wide. In the first year of implementing its’ Strategic Energy Management Plan.,

they achieved a three percent reduction in energy consumption, representing $240,000 in

energy savings (Ray, 2010).

Lastly, Northwest Healthcare’s Kalispell Regional Medical Center in Montana, with

174 beds, identified more than $63,000 in total annual savings, reducing energy use by

1.6 million kWh (kilowatt hours) (Ray, 2010).

And this year, the University of Washington’s Integrated Design Lab, with the

support of NEEA’s BetterBricks Initiative, release a report titled, “Targeting 100!

Envisioning the High Performance Hospital: Implications for A New, Low Energy, High


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Performance Prototype” (University of Washington, 2010). The research in the report

provides a conceptual framework and decision-making structure at a schematic design

level of precision for hospital owners, architects and engineers. It offers access to design

strategies for new hospitals to utilize 60% less energy (University of Washington, 2010).

The report is designed as a tool and frame of reference for moving energy

efficiency goals forward, and a path toward achieving the 2030 Challenge energy goals,

adopted by architects, engineers and owners to reduce energy consumption and

greenhouse gas emissions in buildings. Every five years, a greater reduction in energy use

is targeted. The goal between 2010 and 2015 is 60%, with the goal of reaching net zero

energy demand by 2030 (University of Washington. 2010).

BetterBricks, therefore is making sure that they have the most up-to-date and

scientifically available data and technology to help healthcare systems and hospitals to

lower their energy usage and to save money. The 2030 Challenge is a reasonable

approach to solving the problem hospitals face in saving energy and money.

Unfortunately, it does not help those hospitals and healthcare systems that are not new

and therefore not able to take advantage of the findings of this report. Older hospitals and

healthcare systems may benefit from the next example, especially if they are unable to

spend revenue on refitting and replacing old lighting and roofing, which can be expensive

for some hospitals in major urban areas.


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Smart Hospital Efficiency Program ™

For nearly twenty years, the Hospital Financial Service Corporation (HFSC), along

with its’ principals, have been administering the privately funded Trade Grant Program

called the Smart Hospital Efficiency Program ™ (SHEP). This program is designed to help

facilities decrease energy consumption and increase efficiency through a combination of

innovative technology and Smart Hospital Efficiency Program funding (HFSC, 2010).

SHEP consists of two separate programs, one for roofing and one for lighting. As

the table below shows, both programs are nearly similar, but the roofing program carries

with it a little higher funding percentage than that of the lighting program.

Program Description

Energy Conservation Roof (ECR)

Up to 70% Funding R-19 Roof Programs Maximum: $2,000,00 Roof Grant, Energy Reduction Roof Funding, Roof Financing, Green Roofs

Energy Conservation Lighting (ECL)

Up to 50% Funding Inside & Outside Efficient Lighting Solutions Maximum: $2,000,000 Lighting Grant, Energy Reduction Lighting Funding, Lighting Financing

(HFSC, 2010)

To get an even better picture of the how the two programs work, let’s first look at the

roofing program and explore how HFSC provide assistance to hospitals needing a retrofit

to their roofs.


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The Energy Conservation Roof Program (ECR) offers hospitals financial assistance

from 35% to 70% of the cost of retrofitting their roof. The requirements for approved retrofit

solutions vary depending upon the unique specifications for each application, but there are

two basic requirements for eligibility. The project must include, as part of the

specifications, an average insulation value of R-19 to increase energy efficiency of roofing

system, and that the project must also be at least 25,000 square feet (HFSC, 2010).

Once a project is approved, the applicant has one year to complete the project. The

funding solutions applied to a particular project are outlined below.

Part A Trade Grant

Cash Grant Financial Assistance

Hospital Grants: Cash grant of up to 35% of the cost of the approved energy efficiency project.

Part B Trade Funding

Optional Roof Financing

Hospital Funding: Roof funding of up to 35% of the cost of the approved energy project.

Energy Reduction Funding

Funding for Government Facilities Only

Energy roof funding of up to 35% of the cost of the approved energy project.

(HFSC, 2010)

The other program administered by HFSC is the Energy Conservation Lighting

Program (ECL). Unlike the Energy Conservation Roof Program (ECR), the Energy

Conservation Lighting Program has three solutions. The first is the Indoor Lighting

Solutions (ECL-Indoor), which provides financial assistance to hospitals in need of funding

for interior lighting retrofit projects. Some of the technologies used for these indoor

projects include LED T-8 lamps, energy efficient T-5 and T-8 fluorescent lamps (HFSC,

2010).


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The second solution, the Outdoor Lighting Solutions, provides financial assistance

for exterior lighting retrofit projects. As a requirement of the program, all lamp technology

must be Energy-Star approved that saves energy, reduces CO2 emissions, and are

maintenance free up to 100,000 hours (HFSC, 2010).

The last solution is the Fluorescent Lighting Efficiency Boost Solutions (ECL-

Efficiency). It utilizes patented technology that is designed to lower kWh (kilowatt hour)

consumption in fluorescent lighting systems. The savings that can be achieved can be up

to 15% without much foot-candle loss (HFSC, 2010). The following table will, as in the

previous table, highlight the funding solutions for approved ECL projects.

Part A Trade Grant

Cash Grant Financial Assistance

Hospital Grants: cash grant of up to 25% of the cost of the approved energy efficiency project.

Part B Trade Funding

Optional Lighting Financing

Hospital Funding: funding of up to 25% of the cost of the approved energy project.

Energy Reduction Funding

Funding for Government Facilities Only

Energy Reduction funding of up to 25% of the cost of the approved energy project.

(HFSC, 2010)


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Conclusion

We began this look at the idea of EnergySmart Hospitals with the crisis in the Gulf

of Mexico, and the two wars in Iraq and Afghanistan bringing the focus of the nation on the

issue of energy back on the front burner. Every day we hear about new ideas and

technologies being developed to end our dependence on oil and to lower our carbon

footprint. States, counties, cities, towns, businesses large and small are finding new ways

to conserve energy, save money and protect the environment. The healthcare industry is

no exception.

The three initiatives and programs we have looked at are no means the final word

on the subject, and represent only a tiny fraction of the energy-saving solutions that exist

for hospitals and healthcare systems to avail themselves of. As we have seen, many

hospitals and healthcare systems are already on the road to energy conservation, energy

efficiency and sustainability. From my research, there are many others that are just now

beginning to make the same decisions the leaders of these organizations have already

taken.

As future leaders in the healthcare industry, it is incumbent upon us to be aware of

the need, necessity, and ethical and moral imperative to become energy efficient in the

healthcare industry. It is not just about saving money, or the earth; it is about saving the

lives of every man, woman and child we as healthcare leaders will be responsible for in


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our many roles in the future. Reducing energy consumption and building a more

sustainable healthcare system also will improve the health of our patients.

So in order to prepare ourselves to tackle this vital issue, here are some of my

recommendations for creating an EnergySmart hospital or healthcare system. First, seek

out any and all assistance that is available in or out of the healthcare industry. The

Hospital Financial Service Corporation is one avenue to pursue within the healthcare

arena. Second, check with the Department of Energy, your state energy conservation

agency, or local agency for their advice and assistance. Third, contact your local electric

utility or gas company and find out what programs they offer to reduce energy

consumption. Fourth, find out if there is a similar alliance in your region of the country like

the Northwest Energy Efficiency Alliance. And finally, keep up with trends in healthcare

administration that offer ideas and solutions to your organizations energy needs, so that

your organization can become a leader in energy efficiency and sustainability.


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References

Energy Weekly News, (2008, August). Healthcare Executives Place Higher Priority on

Energy Efficiency Than Others, Research Shows, as cited in Ray, D., (2010).

Healthcare: A Business and Ethical Case For Sustainability. BetterBricks Initiative

Retrieved from http://www.betterbricks.com/graphics/

assets/documents/BB_Article_EthicalandBusinessCase.pdf

Hospital Financial Service Corporation, (2010). Smart Hospitals Efficiency Programs ™,

Retrieved from www.hospitalfinancial.com

Ray, D., (2010). Healthcare: A Business and Ethical Case For Sustainability.

BetterBricks Initiative, Retrieved from http://www.betterbricks.com/graphics/

assets/documents/BB_Article_EthicalandBusinessCase.pdf

U.S. Department of Energy, Commercial Buildings Energy Consumption Survey

(CBECS) (2003), as cited in U.S. Department of Energy, Office of Energy

Efficiency and Renewable Energy , Building Technologies Program,

EnergySmart Hospitals Creating Energy Efficient. High Performance Hospitals,

Retrieved from http://www.iowadnr.gov/waste/p2/files/08h2e_doefact.pdf

http://www.betterbricks.com/graphics/

http://www.hospitalfinancial.com/

http://www.betterbricks.com/graphics/

http://www.iowadnr.gov/waste/p2/files/08h2e_doefact.pdf


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U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy ,

Building Technologies Program, (2008). EnergySmart Hospitals Creating Energy

Efficient. High Performance Hospitals, Retrieved from


U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy,

Building Technologies Program, (2009a), EnergySmart Hospitals: Improving

Design and Construction, Retrieved from

http://apps1.eere.energy.gov/buildings/publications/pdfs/energysmarthospitals/esh

_improving-designfs.pdf

U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy,

Building Technologies Program, (2009b), Energy Efficiency and Your Hospital’s

Bottom Line, Retrieved from https://www1.eere.energy.gov/buildings/

energysmarthospitals/bottom_line.html

University of Washington, (2010). Targeting 100! Envisioning the High Performance

Hospital: Implications for A New, Low Energy, High Performance Prototype

Executive Summary, Retrieved from


http://apps1.eere.energy.gov/buildings/publications/pdfs/energysmarthospitals/esh_improving-designfs.pdf

http://apps1.eere.energy.gov/buildings/publications/pdfs/energysmarthospitals/esh_improving-designfs.pdf

https://www1.eere.energy.gov/buildings/


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http://www.betterbricks.com/graphics/assets/documents/Targeting100_ExecutiveSu

mmary_Final.pdf

World Health Organization, (2009), Health Hospitals, Healthy Planet, Healthy People:

Addressing Climate Change in Healthcare Settings, as cited in Ray, D.,

(2010). Retrieved from

http://www.who.int/globalchange/publications/climatefootprint_report.pdf

http://www.betterbricks.com/graphics/assets/documents/Targeting100_ExecutiveSummary_Final.pdf

http://www.betterbricks.com/graphics/assets/documents/Targeting100_ExecutiveSummary_Final.pdf

http://www.who.int/globalchange/publications/climatefootprint_report.pdf

energysmart hospitals: a comparative review

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