Green initiatives can help improve hospital finances

$1 in energy savings equivalent to $20 in new revenues
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Hospitals and hospital systems could reap millions of dollars a year in savings by making their infrastructure greener, according to a new guide published by the American Hospital Association (AHA).

The guide places a value on some of the sustainable practices that acute care providers can implement. "In the current healthcare climate, sustainability efforts must be financially viable to succeed long term. Hospitals and care systems around the country are already saving resources by adopting sustainability measures," the guide states.

For example, Kaiser Permanente saved $4 million a year by investing in energy efficient computers. Gundersen Health System in the upper Midwest shaved its energy use by 25 percent and is saving $1 million a year.

"By trimming just 5 or 10 percent from energy bills, hospitals and care systems can make a real impact on their finances. Every $1 a nonprofit hospital or care system saves on energy is equivalent to generating $20 in new hospital revenues, and for-profit hospitals can raise their earnings by a penny a share by reducing energy costs just 5 percent," the guide said.

The U.S. healthcare system spends up to $8.8 billion a year on its energy needs. To cut energy costs, many hospitals follow the recommendations of the U.S. Department of Energy's retrofitting guide for healthcare facilities.

However, getting the right hospital executives to sign off on green initiatives can be a challenge, particularly given the typical upfront costs. As a result, many experts suggest healthcare organizations have an executive champion or advocate, have sustainability values in its mission, and strong measurement systems to chart progress.

But implementing green initiatives can pay off in ways other than savings, the guide noted. For example, they can improve brand image and reputation and provide credibility in regards to population health and other patient-centered initiatives.

To learn more:
- check out the AHA guide (.pdf)

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