Reducing Energy Use Can Improve the Fiscal Health of Hospitals Nationwide

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    Targeting 100! Integrated Healthcare Design Strategies Overview
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    Targeting 100! Integrated Design Strategies
Innovative design strategies deliver a 62 percent reduction in energy use, a healthier environment for staff and patients — and a significantly better bottom line.

FOR IMMEDIATE RELEASE:

Seattle, Wash., May 14, 2013—In the wake of the economic recession and reforms instated by the Affordable Healthcare Act (AHA), the impact to hospitals’ bottom line remains uncertain. According to a recent report by Moody’s, the federal government will cut reimbursements to hospitals by more than $150 billion over the next 10 years. While the AHA increases the number of people who have access to care and lowers the levels of uncompensated care, it still remains to be seen whether the incremental revenue generated will offset the potential compression in margins. And recent cuts due to sequestration muddy the financial waters even more.

Facility managers now must find new ways to reduce costs and maintain already tight operating margins while providing quality care to patients and vital support to their communities. Many have simply looked for ways to trim any remaining fat, but some forward-thinking hospitals and health systems are starting to understand that greater energy efficiency can advance patient-care goals and are devoting more attention and resources to conservation initiatives.

To that end, a groundbreaking new study provides an innovative and cost-effective way for newly constructed hospitals nationwide to offset continuing economic challenges by reducing energy consumption by an average of 62 percent. The study, titled Targeting 100!, identifies a process that integrates architectural, mechanical and central plant systems to deliver significant efficiencies. The biggest breakthrough comes from addressing the reheating of centrally-cooled air — the largest contributor to wasted energy in a hospital — which represents more than 40 percent of annual heating energy usage.

“More than any other single research initiative, Targeting 100! is effectively transforming U.S. healthcare to meet the low-energy and low-carbon future,” said Robin Guenther, the sustainable healthcare design leader at architecture firm Perkins+Will. “Every project team should dive deep into this pool of resources and use it to inform early design decision making.”

By combining energy-reduction design solutions — including  sun and daylight shading controls, vacant room sensors, outdoor air supply with heat recovery systems, modified air delivery systems, thermal energy storage, and improved air-tightness and high insulation values in windows and walls — a newly constructed, code-compliant hospital in the range of Targeting 100! saves between $500 and $800 thousand a year in energy costs. By simply redesigning the way that healthcare facilities use energy, they can be both environmentally and financially sound. Hospitals looking to capitalize on AHA incentives to upgrade their current facilities may also improve energy performance by using similar strategies during renovations.

The newly released research, which is discussed in detail at the University of Washington’s Integrated Design Lab’s website, extends an earlier regional study conducted in Seattle in 2007. Those results prompted the U.S. Department of Energy and the Northwest Energy Efficiency Alliance’s BetterBricks to provide the research team — a close collaboration between the IDL and several partners, including NBBJ, one of the nation’s leading healthcare architectural firms, energy and engineering consultants SOLARC, and construction and cost-management firm TBD Consultants  — with a $1.3 million grant to determine whether the same results were achievable throughout the United States. The research also included intensive peer review by engineers, general contractors, utilities, hospital CEOs and facilities managers.

“That’s one aspect of our work that makes it unique,” said Heather Burpee, a health-design and energy-efficiency research assistant professor at University of Washington’s Integrated Design Lab. “Our peer reviewers — who came from all aspects of the design, construction and operation of hospitals — provided invaluable guidance and grounded our research in reality. Our primary goal is to get this research into the hands of people who are truly able to make a change.”

The new study looked at six distinct and diverse climate zones in the United States’ most populous regions —including New York City, Los Angeles, Chicago, Houston, Phoenix and Seattle — to determine if integrated design methods could cut energy consumption and operating costs for hospitals nationwide. The team conducted a complete reassessment of the architectural systems, building mechanical systems and central plant systems to find a code-compliant path that achieves the highest-quality, lowest-energy hospital design for the least additional capital cost.

The resulting integrated-design approach delivers a 62 percent average reduction in energy consumption across all climate zones—and a 9 percent year-over-year average return on investment. Depending on the climate zone, local construction and utility costs, and design scheme, hospitals can see up to a 51 percent return on investment. (see NYC building type A plant 2).

We started this research to confirm our ability to meet high performance goals. What we discovered was a world of complex relationships,” said Duncan Griffin, a principal and sustainable-design expert at architecture firm and study partner NBBJ. “We learned that only through integrated design are we able to realize the true potential of human comfort and high performance in a cost effective way. It’s changing the way we practice architecture today.”

NBBJ has designed several healthcare facilities that incorporate Targeting 100!’s strategies, including Seattle Children’s Bellevue Clinic, the University of Washington Medical Center’s Montlake Tower Expansion, and a large hospital in Northern California. That hospital will see an annual energy cost benefit of approximately $1,325,000 — a return on investment of more than 50 percent that will pay back the provider’s initial investment in less than 2 years. According to the project’s engineer, the total investment needed to implement the energy-reduction strategies amounted to less than one year of typical operating costs.

A Healthier Bottom Line

Hospitals are notorious energy hogs. Because they operate 24/7 and must follow strict lighting, air circulation and heating codes, they eat up 2.5 times the energy as a commercial building of the same size — and emit a similar proportion of CO2 into the atmosphere. According to ENERGY STAR, a program of the U.S. Environmental Protection Agency, the U.S’s 8,000 hospitals spend a whopping $5.5 billion on energy every year and use approximately 5 percent of all energy consumed in the U.S., including transportation, industry, and buildings. A typical hospital’s energy bill runs $1-3 million a year depending on its size and location.

Because energy represents just one or two percent of hospital’s operating costs, energy-efficiency advocates have long struggled to get the attention of the C-suite. But Targeting 100’s results should make even the most conservative administrators take note. Implementing its strategies requires a minimal 3 percent design and construction cost increase but leads to an average 9 percent return on investment each year.  An average hospital—functioning at a 2-3 percent operating margin—would need to generate an extra $20-30 million in revenue to have the same impact on the bottom line. Put simply, by reducing operating costs, a hospital can improve its operating margin by 25-33 percent.

Reducing operating costs means putting more cash towards other revenue-generating capital improvements like upgraded MRIs, cutting-edge medical technologies, renovations to aging facilities and increased levels of charity care, which in turn means hospitals are able to provide better service to their patients — and better support to their communities.

A Healthier Planet

The average hospital, many of which rely on power generated by coal, oil and natural gas, dumps about 15,000 tons of carbon into the atmosphere every year. Such emissions lead to and aggravate health conditions linked to poor air quality, like asthma and cardiovascular disease — an obvious inconsistency with the mandate to “first do no harm.” Yet many major players have been slow to go green.

The average energy savings for one Targeting 100! hospital prevents 4,500 tons of carbon from entering the atmosphere each year. According to the EPA’s greenhouse gas equivalencies calculator, that’s the same as the amount of carbon removed from the atmosphere by adding 3,400 acres of forests, taking 850 passenger cars off the road, or removing 600 households from the grid every year.  When explosive growth in developing countries is factored in — it’s estimated that over the next decade, China will build as many as twice the number of hospitals currently operating in the U.S. — the implications of reducing the carbon footprint of healthcare institutions worldwide are staggering. By reducing energy use, hospitals improve the health of the global environment and their local environment, as well.

Healthier Patients, Staff and Community

Designers, researchers and health professionals have long recognized that healthy, healing interior environments are imperative for patients, but they are now realizing that abundant daylight, fresh air, views of the outdoors, and individual control of light, temperature and fresh air are crucial for staff comfort, as well.

By incorporating strategies like daylighting and improved air circulation, Targeting 100! makes healing and working spaces healthier and more enjoyable. Better work conditions help recruit and retain high-quality staff, which can reduce a facility’s human-resource related costs by hundreds of thousands of dollars a year.

These same design strategies make hospitals more resilient in times of emergency, energy crisis and natural disaster. A Targeting 100! hospital can run longer on less energy and continue to function when less efficient facilities might be forced to shut their doors — or severely compromise their services and patient health and safety.

The Time Is Now

Facility managers, engineers, architects and builders have often passed up opportunities to design and build healthcare facilities more efficiently because the return on investment was not immediate or because they felt they had no choice but to follow traditional models. But the proven Targeting 100! strategies can be implemented today using existing technologies in any climate zone, meaning it has important national — and even global — implications.

“Targeting 100! has delivered to the healthcare sector a compelling and preferred response to deep cuts in federal reimbursements that will require dramatic reductions in operational costs,” said Richard Beam, the construction and sustainability system director for Providence Health & Services. “It prescribes an energy-efficiency remedy that will ensure our shrinking revenue supports quality patient care in an environmentally responsible way.  Targeting 100! is good for the patient — whether the Earth or humankind.”

In the face of widespread uncertainty about the fiscal impact of healthcare reform, these strategies reduce the pressure on hospitals to increase the volume of services to sustain already minimal revenue margins—or to cut corners or shed low-margin services. Forward-thinking, fiscally-healthy facilities can implement these strategies today to provide future opportunities for both gain and good.

To see comprehensive study results, visit the Targeting 100!website. To read an executive summary of Targeting 100! click here.

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Contact

For additional information or to set up interviews with members of the research team, please contact:

Callie Fromm

Communications Manager

NBBJ

Direct 206.223.5239

223 Yale Avenue North, Seattle, WA 98109

cfromm@nbbj.com

Heather Burpee

Research Assistant Professor

Health Design & Energy Efficiency

University of Washington, Integrated Design Lab

Direct 206.616.6566

1501 E. Madison, STE 200, Seattle 98122

burpeeh@uw.edu

Jodi Sommers

Marketing + Communications Director

SOLARC Engineering and Energy+Architectural Consulting

541.349.0966; direct 541.868.1403

223 W 12th Avenue, Eugene, OR 97401

www.solarc-ae.net

Martin Connor

TBD Consultants

206.571.0128

mconnor@tbdconsultants.com

Study Background:

The initial Targeting 100! study began in the Pacific Northwest in 2007 and joined several parallel efforts related to testing the validity of high-performance hospital designs.  These efforts were orchestrated by architects, engineers, contractors and hospital owners dedicated to discovering design solutions that would reduce a “typical” hospital’s energy use by half and eventually down to zero. NBBJ’s Sustainable Healthcare Energy Challenge (SHEC) project was one research effort that began the conversation about reducing healthcare’s energy footprint in the Pacific Northwest.  NBBJ joined forces with UW’s IDL and NEEA’s BetterBricks initiative working collaboratively with SOLARC Engineering and Energy + Architectural Consulting and TBD Cost Consultants to develop a roadmap to cost effectively meet deep energy reduction goals in the Pacific Northwest.

The study’s results were profound enough to garner a $1.3 million grant from the U.S. Department of Energy and the Northwest Energy Efficiency Alliance in 2010 to determine whether the regional results had national significance. 

Previous research conducted by the UW’s IDL of Scandinavian hospitals showed that a hospital could achieve an EUI of 100 and still provide patients and staff with an exceptional work and healing environment. This study shows that hospitals across the U.S. can also target an EUI of 100 and achieve similar successful outcomes while fully complying with U.S. energy and health codes and standards.

What does Targeting 100! mean?

Targeting 100! is a roadmap for key stakeholders in the design, construction, and operation of hospitals to develop radically more energy efficient hospitals at little additional first capital cost investment from the owner. It provides climate-specific guidance for hospitals to achieve the 2030 Challenge for 2010-2015, with a 60 percent energy reduction from the current US average energy performance of 250 KBtu/Ft2 Year while complying with US energy and health-related codes and improving the quality of healing and work environments. Through comprehensive energy modeling, cost modeling, and stakeholder input, Targeting 100! provides a framework for developing high-performance healthcare projects today and into the future.

Most U.S. hospitals have a total energy use of 225-300 KBtu per square foot, annually. This is called the Energy Use Index (EUI) and is normally reported in units of KBtu/Ft2 Year. This measure is similar to using a miles per gallon rating for cars – it enables a side-by-side comparison of buildings’ energy use footprints.  Design strategies researched in this study seek to deliver an EUI of 100, while still fully complying with ASHRAE Standards, AIA Guidelines and regional building codes. Targeting an EUI of 100 significantly reduces energy use and effectively puts dollars back into hospitals’ operating budgets.

By conducting a detailed costing of a prototype, the study team found a hospital designed to target an EUI of 100 added from 2-4 percent to the total design and construction upfront cost when utility incentives were included. Return on investment on these incremental costs would can be as high as 51%, and the hospital sees a benefit every year to reinvest in their patients’ critical care needs.

About the Integrated Design Lab at the University of Washington

The Integrated Design Lab (IDL) is an extension of the University of Washington’s College of Built Environments, Department of Architecture.

The IDL recently moved into Seattle’s Bullitt Center, a Living Building that is the greenest commercial building in the world.  The IDL operates the Urban Ecology Partnership at the Bullitt Center, an outreach partnership that serves to educate about best practices for sustainable building.

As part of their research, education and project consultation, the IDL gives design and ownership teams access to the best building performance knowledge available. They provide project-by-project support, education and training on how to design, construct and operate the healthiest, most productive and energy efficient buildings in North America. For more information about the lab, visit idlseattle.com

About BetterBricks and the Northwest Energy Efficiency Alliance

BetterBricks is the commercial building initiative of the Northwest Energy Efficiency Alliance (NEEA), supported by Northwest electric utilities. Through BetterBricks, NEEA advances ideas to accelerate energy savings in new and existing commercial buildings. BetterBricks education & training, online resources and recognition of industry leaders guide and inspire building professionals to embrace best practices, improve energy performance and achieve their sustainability goals. Visit www.BetterBricks.com.

About NBBJ

NBBJ is a global architecture, planning and design firm with offices in the United Kingdom, North America, the Middle East and China. Its healthcare practice was recently named Firm of the Year by Healthcare Design, the No 1. Green Healthcare Architect by ENR magazine, and Most Admired by Peers in Healthcare by Interior Design magazine. The firm has collaborated on nine of the top 14 US News and World Report Honor Roll Hospitals, including the Cleveland Clinic and Massachusetts General Hospital. In addition to architects, NBBJ’s healthcare practice is comprised of nurses, MBA’s, economists, energy experts and policy advisors who bring a more complete understanding of how to deliver better health outcomes through design. NBBJ is firmly dedicated to designing sustainable, healthy and performance-driven hospitals and has instituted its own in-house R&D initiative to achieve these goals.

About SOLARC

SOLARC is an engineering and energy and architectural consulting firm with offices in Eugene, Portland, Seattle and Salt Lake City. They provide mechanical and electrical engineering, energy analysis, commissioning, and sustainable design consulting to engage architects and owners in the environmentally responsible design and operation of high performance buildings and systems.

About TBD Consultants

TBD Consultants is a project and construction cost management firm headquartered in San Francisco, with offices in Seattle and San Diego, that offers guidance and control for all types of architectural construction projects. They have extensive experience in health care, educational facilities, research labs, high tech office buildings, hospitality and resort, aviation, museums, art galleries, retail, industrial, government, and commercial office buildings.

Additional Quotes/Sources: 

“Targeting 100 is more than just a comparative benchmark for better performance; it represents a clear and achievable roadmap to immediately and dramatically reduce energy consumption in healthcare today and moving forward. This research should be in the hands of all those involved in designing, managing and operating modern facilities who want to lessen their own exposure to uncertain future energy costs and an ever-changing regulatory environment.”

Benjamin Shepherd, LEED AP BD+C, Associate Director Atelier Ten, Environmental Design Consultants + Lighting Designers

“Hospitals are energy-intensive life savers — operating round the clock, all year, in all seasons. As such, they are the nexus between our care for ourselves and our care for the planet on which we live. The Targeting 100! study demonstrates that throughout the United States, in all climatic regions, it is physically possible and economically feasible to dramatically reduce energy consumption and greenhouse gas emissions. This study shows us the way, shows that it is possible and, most importantly, shows that caring for and healing people need not be incompatible with caring for the environment on which we all depend.”

Hubert Murray FAIA RIBA, Manager of Sustainable Initiatives, Partners HealthCare Inc.

“Until the Targeting 100! project, many healthcare facilities believed that a 24/7 operation like a hospital simply could not reduce its energy use. As the design engineer for Net Zero Energy projects across the country, CMTA implements the Targeting 100! strategies and has a unique understanding of and appreciation for the incredible impact this research will have on energy and cost reduction in healthcare facilities nationwide.”

Mark Seibert, Project Engineer, CMTA Consulting Engineers, Houston

"Targeting 100! combines compelling research and integrated design methodology into a climate-specific roadmap for hospitals to radically reduce their energy intensity —lowering operating costs while also creating environments conducive to patient healing and staff well-being. The report is a pragmatic wakeup call that positions hospitals to be visible leaders in the public-health imperative to mitigate climate change within a financially positive framework and to reveal the intimate connections between building design and human health."

Gail Vittori, LEED Fellow, Co-Director, Center for Maximum Potential Building Systems

“The biggest impact of Targeting 100! for engineers and others in the healthcare construction industry is that it provides a road map for energy-efficient design of high-performance healing environments. There are so many requirements, so much regulation, and so much oversight that it tends to stifle innovation. Innovation is often seen as increasing risk to the owners, to construction companies and to design teams. But Targeting 100! gives people a roadmap—it reduces perceived risks by presenting a concept that has been well researched and thought-out and has been through a very rigorous process to prove that it is technically and financially feasible.

 “The systems outlined in the roadmap perform significantly better than traditional systems.  Taking a comprehensive look at the both the cost and energy implications was a stroke of genius. When people decide not to innovate, cost is almost always the justification. Targeting 100! brought a rigorous process to cost evaluation and shows the real picture—that energy efficiency is possible, cost-effective, and can have a significant return on investment.”

Steve Guttman, Principal, Director of Quality Assurance, Guttmann & Blaevoet Consulting Engineers

“Targeting 100! shows us the value of integrating conservation methods as a team. Architects, engineers and owners have the ability at an early stage of the project to analyze their options, spend money wisely, and get the biggest bang for their buck. Energy costs continue to rise unpredictably, and the impact on the bottom line can be quite dramatic. As those costs rise, the payback picture for investing up-front in energy-efficient solutions looks even better.”

Jeff Nudi, Principal, Cannon Design

“Targeting 100 has provided very valuable insight into opportunities to improve energy efficiency.  The in-depth analysis of energy use in hospital has shifted some of our strategies on more aggressive management of reheat.  We have also changed some of our design philosophies based upon the information.   The information presented helps improve energy efficiency in both new and existing facilities.”

Timothy M. Peglow, P.E., MBA, MSE, Associate Vice President, Patient Care and Prevention Facilities

NBBJ

207-223-5239

http://www.nbbj.com

NBBJ is a global architecture, planning and design firm with offices in the United Kingdom, North America, the Middle East and China. Its healthcare practice was recently named Firm of the Year by Healthcare Design, the No 1. Green Healthcare Architect by ENR magazine, and Most Admired by Peers in Healthcare by Interior Design magazine. The firm has collaborated on nine of the top 14 US News and World Report Honor Roll Hospitals, including the Cleveland Clinic and Massachusetts General Hospital. In addition to architects, NBBJ’s healthcare practice is comprised of nurses, MBA’s, economists, energy experts and policy advisors who bring a more complete understanding of how to deliver better health outcomes through design. NBBJ is firmly dedicated to designing sustainable, healthy and performance-driven hospitals and has instituted its own in-house R&D initiative to achieve these goals.

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Quick Facts

The average US hospital uses 249 KBtu/SF Year. Based on a 477,000 SF hospital, that translates into 15,000 tons of CO2 emissions annually.
The average hospital’s utility bills cost between $1-3 million annually.
The average Targeting 100! hospital saves 4,500 tons of CO2 emissions annually, which equals the amount of carbon removed from the atmosphere by: taking 850 passenger cars off the road; taking 600 households off the grid; adding 3,400 acres of U.S. forests
If a Targeting 100! hospital operates for 50 years, it would save 225,000 tons of CO2, which equals the amount of carbon removed from the atmosphere by: taking 42,500 passenger cars off the road; taking 30,000 households off the grid; adding 170,000 acres of U.S forests
An average Targeting 100! hospital will save $570,000 annually on energy expenses and is 62% more energy efficient than a typical hospital.
A 62% energy reduction translates to an average of 35% energy cost savings. That level of cost savings is equivalent to $20-$30 million of gross revenue for hospitals that operate at a 2% - 3% margin . *calculated as: $50 * $570,000 and $33 * $570,000

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The average US hospital uses 249 KBtu/SF Year. Based on a 477,000 SF hospital, that translates into 15,000 tons of CO2 emissions annually.
The average hospital’s utility bills cost between $1-3 million annually.
The average Targeting 100! hospital saves 4,500 tons of CO2 emissions annually, which equals the amount of carbon removed from the atmosphere by: taking 850 passenger cars off the road; taking 600 households off the grid; adding 3,400 acres of U.S. forests
If a Targeting 100! hospital operates for 50 years, it would save 225,000 tons of CO2, which equals the amount of carbon removed from the atmosphere by: taking 42,500 passenger cars off the road; taking 30,000 households off the grid; adding 170,000 acres of U.S forests
An average Targeting 100! hospital will save $570,000 annually on energy expenses and is 62% more energy efficient than a typical hospital.
A 62% energy reduction translates to an average of 35% energy cost savings. That level of cost savings is equivalent to $20-$30 million of gross revenue for hospitals that operate at a 2% - 3% margin . *calculated as: $50 * $570,000 and $33 * $570,000

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