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Reducing Utility Costs: 4 Ways to Gain Buy-In From Your Hospital COO or CFO

Posted by Matthew Smith on Sep 11, 2017 4:38:30 PM

By Camelia Walker, MBA, Senior Consultant, GE Healthcare Camden Group

Hospital facility directors and managers can deliver value to their organizations by implementing energy efficiencies. In addition to the annual recurring savings from reduced utility bills, the organization can benefit by gaining community recognition, improved air quality for patients and staff, and extended equipment life. The process outlined here will increase your chances of obtaining approval to commence an Energy Consumption Reduction Program that will save the organization money and increase budget capacity for other facility needs through annual recurring savings.

1. Benchmark and Assess – Identify Opportunities

Analyzing the hospital’s existing operations by benchmarking its current energy spending is a necessary first step. While benchmarks will not provide all of the answers, they do provide a good starting point to give you some idea of current performance. After completing a high-level benchmark study, a detailed site tour audit with the facilities and operations staff will help identify where specific energy consumption reduction opportunities exist. Contracting with a seasoned energy specialist (also referred to as a certified commissioning provider or retro-commissioning agent) will help identify and categorize the opportunities. An energy specialist can assist in developing a detailed assessment that should, at a minimum, have these component parts:

  • Detailed infrastructure assessment
  • Benchmark detail
  • Energy conservation measures
    • Energy usage
    • Savings opportunities (energy and dollars)
    • Estimation of costs associated with implementing improvements
    • Energy model and validation methodology

An easy way to view the scope of work is to divide the work into three categories of opportunities:

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2. Identify Resources and Tools

Once the assessment has been completed and the energy measures have been agreed upon, the scope of work can be tailored to meet the organization’s goals. The next step is needed to capture the opportunity, grouping them into internal and external resources. Engineering Departments that have both the internal talent and the bandwidth can be deployed immediately to implement energy measures. The CFO and COO will be looking to the facility department to get the job done in the most efficient and cost effective manner, and utilizing internal resources is a good way to start. For more complex diagnostics or optimization measures, or for facilities that don’t have the resource bandwidth internally, identify which contractors should be used to complete the work. If possible, look at using the contractors that are most familiar with the facility and systems.

Consider using an energy specialist to guide you through the implementation. Depending on the specific needs and the bandwidth of the facility department, an energy specialist can help manage the project, facilitate the work with contractors and staff, and ultimately expedite the implementation of the energy measures. Additionally, contractors and staff can help build skill sets through knowledge transfer among the organization’s facility staff so that they are able to manage the systems and sustain the gains. Identify what tracking and validation tools you will use to measure success. There are many tools available - some are free while some have fees associated with their use. If you use an energy specialist, ask what tracking tools they use and be sure to inquire about weatheradjusted tracking and whether validation is included. Make sure that results are measured in the same way that the baseline savings targets were designed. Use the same units, nomenclature, and methodology.

3. Build and Sell the Business Case

After the assessment is complete and the resources and tools are identified, a business case should be developed to capture the benefits and risks associated with implementation. What is the return on investment? Be sure to show all upfront costs and how long it will take to recoup the costs before the annual recurring savings occur – the CFO/COO will want to build the upfront costs into the budget.

If time permits, obtain bids or commence the RFP process for the work so that when the business case is presented to the finance department, there is confidence in the budgetary estimates. The CFO/COO will want to know what energy measures are considered operational and which are considered capital items to be depreciated, i.e. what measures will extend the useful life of the equipment. Be sure to also highlight the non-monetary benefits such as patient, staff and visitor comfort, reduced complaints from visitors and staff, reduced mechanical maintenance calls and extended equipment life.


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Tip: Create a one-page summary document that highlights:

  1. Total savings
  2. ROI
  3. List of Energy measures
  4. Bids received or other work done to date
  5. Implementation and savings realization timeline
  6. Operational vs. capital expenditures

Note: It is important to limit the summary to one page. Keep it concise and visually appealing with graphics and charts that will keep your audience engaged and fully informed.


4. Showcase the Results

Share your progress with the CFO and COO. Identify the energy measures that have been implemented to date and the bottom line savings for the low cost/no cost energy measures. This will demonstrate to the C-Suite the department’s continued performance in contributing to savings. These energy savings can then be used to fund the Retro-Commissioning or other capital work that requires upfront costs. In conclusion, when asking your CFO and COO for funds and resources to support an Energy Reduction Program, building a convincing and detailed business plan and identifying the right team members will influence a hospital’s leadership decision.

The questions and pointers provided in this article help hospitals start the evaluation and assessment process. GE Healthcare Camden Group's integrated Non-Labor cost-reduction solutions enable clients to extract significant costs from their contracted services, and deliver sustainable savings against their bottom line. For clients, this means significant financial and operational improvements.

Non-Labor Expense Reduction


WalkerC.pngMs. Walker is a senior consultant with GE Healthcare Camden Group and has spent the past several years of her career focused on healthcare—specializing in leading teams of operational professionals who are experts at collaborating with clients to identify and drive efficiency improvements and reduce costs. She consistently provides leadership and direction in areas of planning and development in hospitals across the country, and works collaboratively with hospital executives and staff to ensure quality, positive outcomes are achieved. Ms. Walker has been able to showcase her architectural frame of mind by constructing detailed analyses of current perioperative throughput processes, departmental utilization, and physical space audits. She uses this information as a foundation to work collaboratively with clients to improve their perioperative process workflows and programming statements, and design concept plans. She may be reached at camelia.walker@ge.com.

Topics: Non-Labor Expense Reduction, Utility Costs, Camelia Walker

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