How Green Was My Hospital

Gary Baldwin, Editorial Director
Health Data Management Magazine, April 1, 2009

When it comes to environmentalism in health care, any push to "green" operations is driven as much by the folding kind of green as the leafy variety. It's not that hospital executives are opposed to becoming better environmental stewards. Few are immune to the issue.

Many of those who have made strides toward reducing energy consumption, however, candidly concede their primary motivator was trimming expenses - not softening their carbon footprint. The leaders driving energy reduction programs, electronics recycling and modernized building design are just as likely to wear a suit to work as Birkenstocks. Yet these leaders are keenly aware of the challenges facing health care - which, after the food industry, is the nation's second largest energy user.

While they may be aimed primarily at reducing the utility bill, many local initiatives do have positive impact on the environment. Trimming energy consumption is often the low hanging environmental fruit for hospitals. A culprit in energy consumption is usually the I.T. department. And the CFO is likely to be the leader in trimming the electric bill there and elsewhere.

Yet hospitals have many other venues through which they can become more responsible corporate citizens. Electronics recycling is one. Eliminating paper records is another with direct ramifications for I.T. Beyond that, some hospitals are looking at building design and even food consumption as part of their greening effort.

It's about time, some say. "Health care disproportionately impacts climate change," asserts Gina Pugliese, vice president of the Safety Institute run by Premier Inc., a San Diego-based hospital alliance and group purchasing organization.

Pugliese heads an effort called SPHERE, short for "Securing Proven Healthcare Energy Reduction for the Ecosystem." The cornerstone of the project is an online energy auction service that Premier offers its 200 health system owners.

And for some Premier members, the online auction has proven to be an innovative use of I.T. that results in direct savings - if not indirect benefit to the environment. "We are not opposed to green initiatives, but our primary focus is saving money," says Vince Pryor, CFO at 350-bed Ingalls Health System, Harvey, Ill. "We developed a strategy to do both, by becoming partially green and saving a fair amount of dollars."

Last fall, Ingalls served as a guinea pig for SPHERE's "reverse energy auction," an online service designed to put competitive bidding into the picture for a hospital's natural gas and electrical needs. Like most hospitals, Ingalls is a major energy consumer, spending some $2 million annually on electricity and $1.8 million annually on gas. By participating in the reverse auction, Ingalls shaved some $375,000 off its projected electricity costs over a three-year period and another $465,000 over 17 months off its gas prices. In addition to reducing its bill compared to historical levels, its three-year electrical contract with Texas-based Pepco includes a small portion of electricity - 5% of the total capacity - from green sources, such as wind or solar power, notes Harold Richards, director of materials management.

It may not seem like much, but Richards points out that by diverting just a small portion of its electrical power from traditional "brown" sources such as a coal, Ingalls is keeping more than 3,400 tons of carbon dioxide out of the atmosphere. "It's equal to about 430 homes," he says.

To participate in the auction, Ingalls sent a request for proposals to eight electrical utilities. Thanks to Illinois' deregulation of electrical suppliers, customers like Ingalls do not have to depend on one local utility company. Yet, in the pre-online auction era, getting a competitive bid was not easy, Richards says. "We would sit with a couple of brokers and try to get the best deal," he recalls.

Do I Hear Ten Thousand?

In the reverse auction, the suppliers already knew Ingalls' electrical power needs. The hospital provided 17 options on which the suppliers could bid. These options broke down the hospital's energy needs over multiple time periods, from two to five years, with varying percentages of green and brown energy. Once the auction started, the suppliers began submitting competitive quotes on the proposals, with Ingalls' executives watching the numbers on a large monitor. "It was like e-Bay," Pryor says. "A lot of hospital executives came in to watch," Richards adds.

In the end, Pepco bid down the number, providing the hospital with the best deal at a three-year price point. Its bid, for example, for a 95/5 brown/green ratio beat other suppliers' bids for 100% brown. Thus, Ingalls was able to get a better price for its electricity and reduce its carbon footprint to boot. "The challenge is to balance the additional cost of being more green versus the lower reimbursements we are getting," Pryor says. "Green initiatives can be more costly if you are not selective."

A Voracious Appetite

Going green, no doubt, is very difficult for health care organizations. Green electricity sources are still in their infancy. Moreover, hospitals face ever-increasing demands for electricity. Take OSF Healthcare System. The Peoria, Ill.-based delivery system operates seven hospitals across two states in addition to its 160 clinics. Its annual electricity consumption is approximately 195 million kilowatt hours, says Edward McKenzie, corporate plant operations manager. Add 6.5 million therms (a unit of natural gas) to the yearly energy consumption, and you've got a big utility bill.

One of the biggest users of energy is the I.T. department, McKenzie says. "I.T. does not have a good reputation" when it comes to energy savings, he says. Its data centers have voracious energy appetities. And running the servers and laptops needed to sustain 12,000 employees only adds to the demand. "Anything you can do to reduce energy consumption is what we look at," McKenzie says. The challenge, he adds, is keeping up with the increased energy needs of server racks. "They have gone from 10 to 20 to 35 kilowatts per rack per hour to run," he says. "It generates a tremendous amount of heat."

OSF is using the latest in building design technology to stem the tide. Its new data center in North Peoria, for example, will have a "free cooling" system. It will use naturally chilled air from outside to help maintain an appropriate temperature inside. And Ingalls also is upgrading its HVAC technology throughout the system, particularly when it builds new facilities. "We use the LEED guidelines," McKenzie says, referencing the building design standards advocated by the U.S. Green Building Council. Its Leadership in Energy and Environmental Design Green Building Rating System provides standards for environmentally sustainable construction. Before OSF adopts any LEED standards, however, it analyzes the technology for its return, McKenzie says.

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