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.
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."
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 appetites. 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.
OSF Healthcare is replacing its legacy electrical chillers with more modern technology, he adds. The newer chillers are far more energy efficient, a major plus in keeping the hospital temperate and avoiding a boiler room in the data center. In fact, one modern chiller may only cost $35,000 annually to operate, compared to its $50,000 predecessor. Moreover, the modern chiller does not use ozone-depleting refrigerants, McKenzie notes.
CIOs are not oblivious to the energy demand created by their department. Lior Blik, acting CIO at Hoboken (N.J.) Medical Center, transitioned in 2007 to a "virtual server" environment in part to drive down operating costs. Rather than having a dedicated server for each application, the virtual infrastructure enables Hoboken to run multiple applications on fewer servers. His department maintains an armament of nearly 70 servers, but would have required 100 under the old set-up. "The electrical bill is down 25%," says Blik, who is CEO of NITConnect, a New York-based consulting company.
Hoboken's next big project will be digitizing its paper records. The hospital spends some $750,000 annually on paper alone, including specialized carbon forms, he says. Eliminating the paper, he adds, can only help the environment.
Other areas figure into hospitals' green-supportive projects. Cook Children's Healthcare Network, Fort Worth, Texas, for example, redirected its electronics recycling program about one year ago. To keep old computers out of landfill, Cook Children's sells the equipment to its staff. But the labor required to cleanse the computers of confidential data, store the computers and maintain the inventory proved overwhelming, says Michael Zachary, interim director of operations in the information systems department. "The amount of time needed was a distraction," he says.
Cook Children's turned to a local company, Grand Prairie, Texas-based Argus Connection Inc., to handle the device cleansing. Argus picks up used equipment each month, documents the inventory, removes confidential data and recycles any equipment not suitable for re-sale to the staff. Proper recycling of electronics is a must, says Zachary, who points to reports that many used U.S. computers wind up as third-world landfill. Cook Children's also offers free electronics recycling to employees who tote in old televisions or cell phones.
The unstated irony in all these projects is that the modern hospital is perhaps among the most environmentally unfriendly settings around. That's the viewpoint of Kathy Gerwig, vice president of workplace safety and environmental stewardship officer for Kaiser Permanente, an Oakland-based delivery system than encompasses a health plan and more than 30 hospitals across nine states.
Kaiser's taking a multi-pronged approach to becoming a greener organization, she says. It wants to reduce its greenhouse gas emissions and ensure safety in the use and destruction of chemicals. The program includes eliminating vinyl, an almost ubiquitous substance found in older hospitals. Its manufacture and destruction can be highly toxic, Gerwig says.
As it retrofits old hospitals and builds new ones, Kaiser is turning to rubber flooring to replace the vinyl. Rubber, Gerwig says, is the new environmental standard for hospital flooring. "It is not environmentally benign, but it has a longer lifespan and does not require chemical cleaning," she observes. In addition, Kaiser is promoting locally grown and organic produce by hosting farmers' markets at most of its hospitals. In some underserved areas, they provide the only source of fresh produce, Gerwig says.
When it comes to thinking green, health care executives also need to think big, Gerwig says. "People understand the cost benefits around energy savings, but they don't make the direct link to people's health," provided by a healthy care-giving environment, she says. "There is only so much you can do in the doctor's office. People also need a healthy place to live and work."