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Hospital Energy Costs are Growing — But Can Be Managed

March 14, 2016 By Carl Weinschenk

hospitalHospitals are unique users of energy: They never close, use more energy-intensive equipment than other businesses and have demanding environmental requirements. In addition, the Affordable Care Act is pressuring budgets.

With that demanding dynamic as a backdrop, Grumman/Butkus Associates released a study last week that found that the proportion of a hospital’s budget that is used to pay for energy is growing. The firm also offered suggestions on how to reduce energy needs.

Chairman Dan Doyle said that the firm found that in 2015 117 hospitals in Illinois, Wisconsin, Michigan and Indiana spent $3.41 per square foot for energy. Doyle told Energy Manager Today that the figure has gone up for each of the past two years: Hospitals spent $3.25 per square foot in 2014 and $2.95 in 2013. The highest measure in the 21 years the firm has run the study was $3.75 in 2008.

Doyle said that focusing on a particular region – which experiences more of less the same weather in a given year – eliminates the need to normalize results across regions with dramatically different patterns. A hospital in California or Alaska can get a good idea of its spending by doing its own comparison of conditions between its region and the Midwest.

His firm has run retro-commissioning projects – changes that involve no or little cost – that cut annual energy spending in more than 30 Chicagoland hospitals by $125,000 – 5 percent – and offered payback periods of only five months. Deeper structure changes with an aggregate payback period of six years can save an additional 15 percent, he said.

Hospitals have to take greater care on energy issues than other types of buildings. Doyle says estimates ASHRAE has estimated that hospitals spend 51 percent of their budgets on energy. An average commercial building could be as little as half that. Higher proportional spending on energy is due to the fact that hospitals – unlike many other businesses – are 24/7 operations. They outpace other businesses – even other 24/7 operations such as hotels – because their ventilation and filtration requirements are greater and sophisticated imaging and other equipment are voracious power users.

“The only facilities that are more energy intensive are laboratories and datacenters,” Doyle said.

Climate is the single biggest variable. Size is a determining factor as well. Doyle says that facilities of between 250,000 and 500,000 square feet use the least amount of energy proportionately because they tend not to be acute care facilities that have a denser array of high energy using equipment. The next lowest proportional user of energy is facilities of more than 1 million square feet, which gain some economies of scale in their power acquisition and use. The highest proportional use is at hospitals in mid-size hospitals of 500,000 to 1 million square feet, Doyle said.

The Affordable Care Act, he said, is putting a tremendous amount of pressure on cutting spending. In some cases, hospitals meet these needs by cutting staff. Energy cuts can be more efficient, however. Doyle said that a 5 percent cut in energy use can be the equivalent of cutting staff 10 percent. Indeed, some hospitals actually are adding staff – in the form of energy experts as a way to ultimately save month.

“Really smart people are going after the energy budget,” he told Energy Manager Today.

Many of the ways of saving energy in hospitals are similar to those in other sectors. The lowest of the low hanging fruit is simply to turn off or reduce power to electronic equipment that is not being used. Though a hospital is a 24/7 operation, administration and some other departments work more traditional work days. Making sure PCs and other computer gear are prudently managed is a good step to energy savings. Other easy wins include moving to LEDs from legacy lighting, installing sensors that turn lights off in unoccupied rooms and changing steam traps.

Deeper savings also are possible. A more intensive energy study — Doyle recommends an ASHRAE Level 2 audit — will help point out what steps need to be taken and assess the progress being made. This is done by an intensive study of what is going on in the facility. The next step is to get busy.

Some of the possible improvements at the structure level are replacement of burners and use of stack economizers on boilers, installation of variable speed drives on chiller plants and conversion to control system constant to variable volume control systems.

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