Hospital CFOs See Green Strategies "LEEDing" the Way to Sustainability

March 20, 2014- Hospitals are beginning to see the benefits of pursuing Leadership in Energy and Environmental Design, or LEED, certification.

In a roundup entitled "Planning for the Long Term: Why Hospital CFOs Should Consider Green Strategies," the website BeckersHospitalReview.com writes how new studies and analysis over the past few years "have concluded that healthcare sustainability investments are not only good for a hospital or health system's mission — they are also good for the bottom line."

Salient points in the BeckersHospitalReview.com article include:

• A study conducted by the architecture firm Perkins+Will showed that pursuing a LEED certification does not add much to the total capital construction costs. An analysis of 15 LEED-certified hospitals completed between 2010 and 2012 with less than 100,000 square feet added just 1.24 percent to capital costs on average. The average capital cost premium for hospitals larger than 100,000 square feet was only 0.67 percent.

• Factoring in sustainability and greening can improve communities, but also offset growing financial pressures. "In terms of sustainability, I try to look at the total cost," says Cadence Health CFO John Orsini. "It's easy to just say whether we're going to build something or buy something. You also have to think about what are the maintenance costs, what's the energy usage and — when you get into medical devices and patient care — what are the costs of disposing things?"

• Orsini points to "win-win" situations without much capital investment, such as medical device reprocessing. An outside vendor disassembles, cleans, remanufactures, tests and sterilizes single-use devices like, for example, ultrasonic scalpels. The hospital buys back the reprocessed device at a cheaper price. According to Orsini, "It reduces landfill waste and the 'high costs' associated with red bag waste." This approach to bottom-line savings can improve a hospital's financials ahead of taking on larger capital projects.

• Another example of taking a longer view towards sustainability and greening is Saint Peter's Healthcare System's solar power system. The initiative was created in 2011 as a partnership with New Jersey's Public Service Electric and Gas Co. to install solar panels at four different sites owned by Saint Peter's, including the hospital. The project cost about $9 million up front, but invoking solar renewable energy credits (SRECs) means that the hospital expects to save $10 million in electricity costs over the next 25 years. "If you look at hospitals, we are very high consumers of energy because of the technologies we use," says CFO Garrick Stoldt. "There's a lot of medical equipment that is high energy. Our energy needs grow every year. Finding ways to be more efficient with our base business is really important."

Read the full BeckersHospitalReview.com article here.

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