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Hospitals strive to earn an 'Energy Star'

Experts predict improvements in health care facility energy conservation

Topics: Communications and Public Relations, Marketing, Cost Management, Margin Performance, Finance

November 03, 2011

Industry experts say the health care sector is poised to make major improvements in energy conservation and pursue Energy Star certification, Modern Healthcare reports.

Since its creation in 1992, the Environmental Protection Agency's (EPA) Energy Star program has helped reduce U.S. greenhouse gas emissions by more than 170 metric tons and lower U.S. utility bills by more than $18 billion. However, while the Energy Star designation logo has become a common feature on computers, printers, and fax machines, it remains uncommon in the health care sector, which spends an estimated $8.8 billion on utilities each year.

To qualify for program designation, a hospital must demonstrate that it is more energy efficient than 75% of its peers over a 12-month period. According to Clark Reed, EPA's national health care manager, only 134 hospitals have received Energy Star certifications to date. However, he says that more than 85% of acute-care hospitals use Energy Star benchmarking tools to monitor improvement.

Hospitals strive to reduce energy use
For health care facilities, improving energy efficiency can be challenging because of the "complex and vital services and systems they provide, such as life support and infection control," Reed says. Moreover, medical equipment is often energy intensive and frequently operates 24 hours per day.

Nonetheless, a growing number of hospitals are seeking to reduce their energy use because of pressure from investors and physician groups, as well as the possible impact on operating margins, Modern Healthcare reports. According to the EPA, every dollar saved on energy is equivalent to a $20 revenue increase for a hospital or a $10 revenue increase for a medical office building.

For example, energy conservation measures at the Cleveland Clinic reduced the facility's gas and electricity bills by 5% and 8%, respectively. Overall, the reductions saved nearly $4.2 million in one year, which is equal to the cost of hiring 64 additional nurses.

Trending toward certification
To reduce energy use, hospitals are turning to Energy Star standards to develop strategies for meeting reduction benchmarks. However, many of those hospitals currently do not pursue certification because of the documentation and cost required to obtain it, according to Peter Belisle, president of energy and sustainability for real estate service firm Jones Lang LaSalle.

Despite the challenges, Belisle predicts that Energy Star certification will increase "dramatically" for both hospital construction and medical equipment. In addition to its financial impact, he notes that reducing energy and earning certification also can positively influence marketing and fundraising. According to the American Society for Healthcare Engineering, the certification from Energy Star and other respected programs often distinguish legitimate energy conservation initiatives from public-relations efforts to establish a reputation as a "green" hospital (Robeznieks, Modern Healthcare, 10/31 [subscription required]).

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