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  Health Care Institute News and Insights
  HCI Advisory Board Member Gives Hospital CFOs Five Stage, Holistic Approach to Reducing Energy Costs
  by Site Administrator | Aug 22, 2012
  Alan Whitson, IFMA HCI Advisory Board Member and seminar leader for “Economics, Efficiency, Energy & Environment: Making the 4Es Work Together in Healthcare” program, gave CFOs some rules of thumb to implement energy savings programs that can increase a hospital’s operating margin by 20 percent or more. The key, Whitson tells CFOs, is to bypass the “engineering speak” that too often rules the conversation in hospitals and analyze per square foot costs.

Whitson’s five-stage approach appears as a featured story in the Healthcare Financial Management Association’s online publication Healthcare Cost Containment.

Many healthcare organizations fall into the trap of “cherry-picking” projects for reducing energy load that require little capital and have a simple payback period of less than three years. The downside of this strategy is that it fails to consider that buildings are a series of interrelated systems. As a result, many opportunities for synergistic improvement are missed. A better method considers where and when energy is used and how a hospital’s various systems interact to produce a systematic plan for improvement.

A systematic approach to energy efficiency is best, as small performance improvements in one area can create larger savings in other areas. This creates leverage, which multiples the financial and engineering impact of every dollar invested and increases the total return.

Cutting energy use by 50 percent in an existing hospital is achievable with today’s technology and best practices. Using current averages, reducing hospital energy use by 50 percent will increase a hospital’s total margin by 20 percent or more.

The full text of Whitson’s article to CFO’s can be downloaded HERE.