The Cost of Going (or Not Going) Green

January 3, 2013
The Cost of Going (or Not Going) Green
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What if it was possible to reduce hospital spending nationwide by $5 billion in just five years, and to triple that in 10? A study from nonprofit organization The Commonwealth Fund is saying it isn’t just possible, but it’s already being done—at least on a smaller scale.

So what’s the secret? Sustainability.

We all know healthcare facilities are energy guzzlers and account for a large percentage of greenhouse gas and carbon dioxide emissions. And then there’s the massive amounts of waste that emerge daily from these buildings.

Introducing all of these decidedly unhealthy components into the environment isn’t quite what the mission of healthcare is all about, not to mention the financial burden associated with running facilities around the clock is especially heavy in the face of healthcare reform.

But if it’s so easy to reduce energy usage, waste, and costs through sustainability efforts, why isn’t everyone doing it? According to a survey released in 2011 by the Corporate Realty, Design & Management Institute and the Healthcare Institute of IFMA, one of the top three reasons cited by architects, designers, engineers, hospital facilities managers, and healthcare engineers, among others, for not pursuing green projects was that buying decisions were being based on first costs.

Likewise, The Commonwealth Funds states in its report, “Can Sustainable Hospitals Help Bend the Healthcare Cost Curve?”, that it’s been assumed by health systems that efforts would cost more to undertake than any potential savings.

Based on its findings, though, the organization says that concern is misplaced.

For example, a study of energy use reduction at five hospitals focused on a return-on-investment framework that analyzed operational costs one year prior to implementation of their programs and up to five years after, establishing what savings were realized from the effort. The group “sought exemplar rather than representative hospitals to demonstrate the costs savings that are possible.”

The hospitals ranged from a tertiary care teaching hospital in a large Northeast city to a community hospital in a West Coast city. Energy interventions included lighting upgrades, variable-frequency drives, high-efficiency electric motors, occupancy sensors for public areas, high-efficiency boilers, central plant chiller replacements, and solar film on windows.

The average reduction in energy use was 27.2 kBtu per square foot by the fifth year, with a total five-year gross cost savings of $2.12 per square foot. That dropped to $1.40 per square foot after the cost of the interventions was deducted. Using these totals and applying them to the total square footage of U.S. hospitals, The Commonwealth Fund reports using such interventions could save an estimated $980 million in five years, nationwide.

And that’s just in energy programs. The study also tackles waste management and operating room efficiencies.

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