From cleaner air to a reduction of greenhouse gases, energy efficiency offers an abundance of health and environmental benefits. But for health systems, there are other tangible impacts—energy efficiency can be a tool to achieve operational benefits and strengthen market position.
Healthcare buildings—and hospitals specifically—consume an incredible amount of energy. And while many of the country’s largest health systems have made public commitments to combat climate change, Kaiser Permanente is leading the charge by becoming the first carbon neutral U.S. health system in late 2020 and operating the country’s first net zero medical office building in Santa Rosa, California.
Below are three key operational benefits health systems should consider as they renew their capital asset plans or adjust their energy consumption in response to updated requirements, including those that carry financial penalties for noncompliance, such as the Washington Clean Buildings Act or the New York City Building Emissions Law.
Lower Operating Costs
The equation is simple: more-efficient buildings consume less energy, which results in lower utility costs. But in ECG’s experience, building and occupancy costs—the largest controllable expense in a healthcare organization’s operations[1]—are rarely controlled with the rigor needed to achieve cost savings.Reducing operating costs enables an organization to reinvest in clinical programs or facilities to meet the demands of a changing market. And the savings associated with energy efficiency can be significant:
- A baseline retro-commissioning project aimed at correcting inefficient operations can easily save an organization 5% to 10% in energy costs annually, with minimal investment to conduct the study and implement changes.
- In the instance of Kaiser’s net zero building in Santa Rosa, its solar panels produce more electricity over the course of a year than the building consumes, effectively eliminating its electricity bill, helping to offset carbon utilization elsewhere in the system, and even contributing to positive cash flows as electricity is sold back to the utility.
- In another example, Boston Medical Center is expected to save $153 million in expenses between 2010 and 2030—more than $7.5 million annually—based on its energy savings.
Increased Employee Satisfaction
By placing climate policy and energy efficiency front and center, organizations can achieve significant improvements in employee engagement and satisfaction. And by highlighting its mission and commitment to the environment, an organization can appeal to a wider pool of candidates when recruiting new providers and staff. In the healthcare environment, better-engaged staff translates to improved patient experience and greater market share.
- A study published in the American Journal of Public Healthfound that employees working in green buildings not only view their work environment more positively but are also more productive and report lower levels of stress.
- A separate study by the U.S. Green Building Council (USGBC) found that “a majority of office workers want to work for companies that are value-oriented, take stances on important issues like sustainability, and do their part for making a positive difference in the world.”
A third benefit to healthcare organizations that embrace energy efficiency is improved brand strength, which can lead to higher patient volumes and better market position. Although a building’s energy use intensity (EUI) or LEED certification might not attract patients to any given facility, a strong climate policy can improve a healthcare organization’s image overall and influence patient choices.
As the healthcare environment continues to evolve, increasing price transparency and consumerism will change the way patients engage with their providers. Consumer choice will be driven by brand strength, recommendations from providers and staff who live in communities, and overall quality of care. As healthcare organizations look to the future, it will be critical to manage a patient’s overall health and well being, in addition to managing episodes of care or doctor’s visits. Executing this strategy will require more connectivity with patients, and only organizations that can build trust with their communities will be able to maintain these connections. A commitment to community health, led by an intentional policy to combat climate change, will help build and maintain that community trust.
Takeaway
By championing energy efficiency, an organization can achieve operational savings, maintain greater staff satisfaction, and even improve brand strength within a community. Compared to Kaiser Permanente, the majority of health organizations are standing flat-footed in this arena, leaving ample opportunity for savvy organizations to establish a position of strength in their markets—all while saving money and lowering the cost of care in the process.
For more about how to start on the path to energy efficiency by defining a strategy, taking advantage of utility incentives, or improving cash flows through retro-commissioning, contact ECG’s Facility and Capital Asset Planning team.
Footnotes
- 1.
Based on analysis of ECG's Medical Group Cost and Infrastructure Survey.
Published October 20, 2021