Health Care Market to Spend on Efficiency

November 1, 2010
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Hospitals need to continually invest in their buildings and equipment, in order to stay competitive with other hospitals and ensure they can offer patients quality health care. Many savings and improvements can be found in the mechanical room.


HVAC contractors will be interested to know that a new survey shows health care organizations are more likely to invest in the energy efficiency of their facilities, compared to other industries in North America.

The 2010 Energy Efficiency Indicator (EEI) survey, commissioned by the American Society of Healthcare Engineers (ASHE), the International Facility Management Association (IFMA), and Johnson Controls, polled 2,882 executives and managers responsible for making investments and managing energy in facilities worldwide. According to Johnson Controls, 20 percent of the North American respondents came from the health care sector, which was more than any other sector.

According to the study:

• 58 percent of health care building decision makers said that energy management was very or extremely important to their organizations (compared to 52 percent among North American respondents in all sectors).

• 67 percent of health care organizations said they plan to make capital investments in energy efficiency over the next 12 months (compared with 52 percent overall in North America).

The survey also indicates that the health care sector has already implemented a variety of measures to improve energy efficiency:

• 73 percent have performed lighting retrofits.

• 57 percent made adjustments to HVAC controls.

• 56 percent installed occupancy or daylight sensors.

• 56 percent upgraded or improved building automation systems.

• 41 percent replaced inefficient equipment.

• 23 percent retrocommissioned major building systems.

The survey also indicated that an increasing number of health care executives have a goal of achieving green-building certification, or incorporating green elements into their new construction projects. This, according to some of the companies that work for them, is due to their desire to be seen as a good neighbor.

FIRSTHAND EXPERIENCE

Ed Brady, a service account representative and energy service specialist at Sauer Technical Services, found that it often takes more specific information to get a hospital interested in making efficiency upgrades. (See related article, page 8.)

What he is seeing is in line with their survey’s results. The Ohio hospital association, for example, “is starting to put together some verbiage to mandate a cut in energy consumption,” he said. The company is starting to see some spending on that side. In addition, “If they’re running steam boilers, I think they’re going to start running steam trap surveys.”

The contractor performs a lot of hospital/health care projects, but not maintenance. “They still do a lot of their work internally,” Brady said.

When a facility does request a PM proposal, this contractor puts together a standard proposal (filters and belts), then adds energy-related offerings such as performance assessment (benchmarking) and data collection. An energy service agreement includes maintenance, benchmarking (using utility and water bills), and an ASHRAE Level 1 energy assessment. Its Energy Plus Service Agreement includes design-build maintenance, benchmarking, and data loggers (to measure temperature, rh, lighting, and CO2 levels); reports are presented to the customer.

The Community Regional Medical Center is the centerpiece of a 58-acre medical campus in the heart of downtown Fresno, Calif.

CONNECTING THE DOTS

Rick Hermans, director of training and advance applications for McQuay International, is a member of the Department of Energy Hospital Energy Alliance steering committee and he is the ASHRAE liaison to ASHE. He recently told The NEWS that the 2010 Facilities Guideline Institute Guidelines for the Design and Construction of Health Care Facilities have been published and are available to be adopted by state jurisdictions. The 2010 Guidelines contain new ANSI-approved ventilation requirements.

As a result, when states adopt the guidelines, facilities managers have a new opportunity when it comes to controlling their buildings. Primarily, they may now be able to turn down or off ventilation in unoccupied rooms for energy savings.

According to the company, facilities managers are reluctant to admit what their energy efficiency may be. McQuay is working to teach them that how they control their buildings is one of the first steps in reducing energy usage.

Why are they so secretive? Hermans speculated that it’s partly embarrassment because their energy consumption tends to be “notoriously bad. Those that have good programs are really proud of them.”

What’s really important to them, he said, is getting their third-party rate reimbursements (from private insurance, Medicare, and Medicaid) to recoup the costs of providing health care.

Donald Decker, McQuay’s director of healthcare sales, also is a member of the American College of Healthcare Executives (ACHE), the American Society for Healthcare Engineers (ASHE). He said these clients are interested in quality and core measures (those that involve patient outcomes and similar quality measures).

“They are looking to increase the amount of money that moves in the door,” he said. This is the result of the health care system moving to a consumer-driven model. “Hospitals are looking at us as customers.” Hermans and Decker agreed that this culminates in health care providers focusing strongly on market share.

“Traditionally there hasn’t been a crossroads between HVAC and patient outcomes,” said Hermans. “I think someday there will be a [scientific] correlation between outcomes and HVAC,” but so far the industry has resisted measurement.

Decker pointed out a trend in space design. “If a patient could see outside or go to a green space, that does impact patient outcomes and healing.” This is leading to some facilities looking at the aesthetic qualities of heating, cooling, and noise. “We see the industry as a whole moving in that direction,” he said, “but it’s tough to nail down.” It’s a good thing to be able to say, “We need the money for capital improvement X because of its impact on the patient.”

The central energy plant for the medical center campus includes four McQuay dual-compressor centrifugal chillers with variable-frequency drives.

HVAC AND INFECTIONS

According to Hermans, making a direct correlation between HVAC and nosocomial (hospital-acquired) infections has been avoided due to the litigious nature of the business. “The causation of infections is up for great debate,” he said. “Some day I think we will know the mechanisms for infections caused by airborne pathogens, but it’s tough to find the research money.”

“Facility guys worry about it all the time, and they try to prevent nosocomials that could be airborne,” added Decker. “They want to make sure the ventilation system is doing everything it can” to prevent them.

“The best info is in bone marrow and TB areas, which have been well studied,” said Hermans. “We have a number of prescriptive steps, such as space pressurization.”

The current debate focuses on patient rooms. Are current air requirements too much? “I think compromise is where we’re going with the new ventilation rates being written,” said Decker. “Operating margins are so thin; every saving goes to the bottom line.”

“The health care ventilation standard recently ruled that fan coils have a place in patient rooms, so instead of moving energy around with air, you’re using a medium like a fluid or refrigerant,” added Hermans. Displacement ventilation is another mechanism to reduce the amount of incoming air; very low-velocity air is introduced close to the floor. “It’s somewhat warmer than you would get from the ceiling,” Hermans explained; “when you fill the room with cold air, it’s like water in a glass. Stagnant, warmer air is at the top. It’s great with high ceilings, in warm climates.”

Is there an increased need for maintenance? Yes, both agreed. “They’ve got to be able to maintain and work on it,” said Decker, “and they are being asked to do more with less.”

Joint Commission on Accreditation of Healthcare Organizations (JCAHO) Environment of Care Standards call for the use of compliance criteria that addresses the risk management of infection control and exposure to air- and waterborne pathogens in a health care facility, said Ken Bodwell, COO and CFO of Innovative Service Solutions (ISS).

The company is told prescriptively what it needs to do to work in these facilities in order to comply. “The whole thing is about best practices,” Bodwell said. “You start with your own people. We tell them, ‘We know you’re going into those facilities; do you want to bring that disease home to your family?’”

CONTRACTOR'S TRENDS

Robert Armistead, P.E., is the president of Armistead Mechanical. In his experience, “Health care reform law is causing many hospitals to pause in their expenditures. Before making any decisions on expansions or renovations, everyone is trying to get a better sense of what this will mean for their bottom line.

“Because of this, and the fact that we are still in a down economy, we are seeing a lot of consolidation of facilities and services, instead of investments in new construction and facility updates.” Health care has made up 35 to 40 percent of total sales for the contractor for the past three years.

Hospitals, however, need to continually invest in their buildings and equipment, “in order for them to stay competitive with other hospitals and ensure they can offer patients the best quality health care, including the latest technologies and treatment centers that are made possible by these expenditures.”

The current challenges facing contractors, he said, can be traced back to the lack of funds. “There is less work available to bid and a lot of contractors bidding.” In addition, private work is being driven more by a low-bid mentality, “instead of looking at the contractor’s qualifications and experience in health care mechanical systems. Best-value contracting is going by the wayside.”

Fabrication may not be a new trend, Armistead said, “but it is still very relevant and important for mechanical contractors to offer.” He also pointed to the increasing importance of performance contracting. “Owners can realize significant energy savings over time, and they are looking to save money.” And preventive maintenance contracts are also growing, because hospitals are cutting their maintenance staff.

“They have a significant amount of money invested in sophisticated equipment that needs to be maintained properly,” Armistead said. Contractors need to be quite clear in their PM contracts as to what will be done, and what will not be done, by the contractor.

He advised contractors to look towards the future. “Technology is the key. The BIM process is one way owners can save money by minimizing change orders and improving on the schedule.”

Contractors should also learn how to perform turnkey energy audits, he said. “This usually involves changing out steam traps, installing economizers, electronic filters, and energy-efficient equipment,” he said.

The survey is managed by the Johnson Controls Institute for Building Efficiency. For more information, visit www.institutebe.com.

Sidebar: Image and Efficiency

Hospital cost breakdowns show operating expenses ranging around 20 to 25 percent, and utilities 2 to 3 percent. “It doesn’t sound like much,” said Donald Decker, McQuay’s director of healthcare sales. “That’s why energy efficiency doesn’t have much urgency.” These days, social awareness of being good environmental stewards can play a bigger role with decision makers. “Hospitals are the largest energy users, and HVAC is probably the largest energy user in these facilities.

“Our society as a whole is more conscious of being green.” The company tries to facilitate understanding between facility managers and upper executives, “basically helping each side of the table and put it into language the executive can understand,” Decker said.

Hermans pointed out that a lot of health care facilities “are trying and succeeding at LEED, but there is a cost associated with it. A lot get into it for market share reasons.” They want to be able to tell the public, “We’re LEED certified and we’re a good place to come for health care.”

They also want to convey an image of being a good neighbor. “We’re a good member of your community,” said Decker, providing good stewardship.

The growing trend, he said, is that it’s a consumer-driven comfort model. “You can choose where you want to go. They want you to choose their facility again.”

Publication date: 11/01/2010

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