One of the biggest challenges facing hospitals and other healthcare facilities is finding the best way to manage costs. It’s a goal of the Affordable Care Act, yet with an aging population—as well as aging buildings—the physical plant of hospitals can be a drag on achieving successful cost management.
This is particularly important when it comes to energy use, as the business of medicine uses an exceptional amount of electricity and heat. Nevertheless, Geisinger Health System, a network of 10 hospitals with about 10 million square feet of space spread throughout 350 buildings in 44 counties in Pennsylvania that serves up to 2.6 million people, has managed this problem with surprising effectiveness.
Situated in Danville, Pennsylvania—a mostly rural area between Philadelphia and Pittsburgh—Geisinger has the added challenge of serving lower-income and older patients, which is typical of most regions outside of big cities. The American Hospital Association reports that rural hospitals also tend to have less access to capital when it comes time for modernization projects.
Yet, as Alan Neuner, vice president of facility operations for Geisinger, points out when speaking to university students, President Obama himself has cited Geisinger for delivering quality care at costs well below national averages. In 2009, the president told the American Medical Association, “We have to ask why places like the Geisinger Health System in rural Pennsylvania . . . can offer high-quality care at costs well below average.”
Much of the credit goes to administrators, doctors, nurses, and other care providers for achieving this national recognition. What shouldn’t be overlooked is the fact that all this was happening while Neuner found ways to save a lot of money on energy use. For example, he shaved $2.5 million off annual energy costs at a single hospital by switching its campus from a traditional power system to a cogeneration power system.
Also referred to as a combined heat and power (CHP) system, cogeneration is a greener, economically efficient means of capturing waste energy from a combustion turbine that’s used to generate electricity; excess heat, previously vented to the outdoors, is redirected to a heat recovery boiler. Excess heat also powers the air-cooling system in the summer, which, in combination with chilled water storage, takes advantage of lower nightly utility rates and cooler air.
The cost to build the CHP system, as designed by ZF Energy Development LLC of Wayne, Pennsylvania, was $5.3 million. With a savings of $2.5 million per year, the system paid for itself very quickly (additionally, half the capital expenditures were offset by a green energy grant from the state Department of Environmental Protection). Neuner says this is phenomenal in terms of healthcare expenditures.
“Overall, healthcare operates at about a 3 percent margin, which translates to a 30-year ROI,” he says. “This obviously is much less.”
Still, for Neuner, the story isn’t purely about saving money. He is comfortable discussing the “triple P’s”—people, planet, and profit—that green advocates use in business applications. Through cogeneration and multiple other initiatives, Geisinger can lay claim to reducing emissions that affect global atmospheric carbon levels and air quality in the region the system services.
“Coal power plants have the largest impact,” he says, referring to the source of soot, heavy metals, sulfur dioxide, and nitrogen oxides that are emitted from utility power generation in that part of the country. More to the point, those emissions directly impact community health by contributing to chronic and acute bronchitis, asthma, congestive heart failure, chronic lung disease, and pneumonia, among many other maladies.
“This really started as cost savings,” Neuner says. “Once we became aware of the Energy Impact Calculator, we became keenly aware that much more than costs were involved.”
Practice Greenhealth—a nonprofit organization that promotes environmental stewardship in healthcare—provides that calculator. It’s based on an Environmental Protection Agency analysis of power plant emissions on human health.
“Once we became aware of the Energy Impact Calculator, we became keenly aware that much more than costs were involved. As a healthcare provider, it made all the sense in the world that we take a more holistic, mission-centric approach.”
“As a healthcare provider, it made all the sense in the world that we take a more holistic, mission-centric approach,” Neuner says.
The cogeneration scheme has been so successful that it’s now being integrated into a new $18 million central utility plant for Geisinger’s Wyoming Valley Medical Center. Throughout the system, Neuner has assiduously applied the “triple P” approach to facility upgrades. Nine of Geisinger’s structures are LEED-certified, with seven more in progress. Motion-sensor-activated lighting is now used in thousands of offices and exam rooms, and lighting is migrated to more efficient lamps, first from T-12s to T-8s and now to LEDs. Simple changes such as these have a short ROI, and also can positively affect patient care.
Neuner notes that there hasn’t been a need to change the thermostat settings. “LED lights actually provide a better read on patient skin tones, which is something doctors and nurses need to assess [patient] health,” he says.
Geisinger’s work in energy conservation has been recognized nationally by multiple organizations, including Energy Star. The organization also won the Donald M. Sauerman Award from the Pennsylvania Society for Health Facility Engineering.
About 30 percent of Geisinger facilities, many of which were added in recent acquisitions, will be modernized in the near future. The work will likely be done in a similar vein of energy efficiency, because Neuner’s success at favorable economics gets him fast-track approval from the company’s CFO. Evidently, the approach works.