SAN FRANCISCO – Energy costs pose a large financial drain on hospitals, but many are seeing an even larger concern on the horizon that will affect the bottom line.
As governments force businesses to reduce greenhouse gas emissions, these facilities will feel additional pressures.
Currently, California is the only state with legislation in place, but other states are looking at The Golden State as a belwether. In addition, both major presidential candidates have greenhouse gas reduction plans in their platforms.
The California bill, Assembly Bill 32, known as the Global Warming Solutions Act, was passed in 2004 and went into effect on Jan. 1, 2007. It requires a gradual rollback of greenhouse gas emissions to 1990 levels by 2020, an estimated reduction of about 20 percent.
That will have a huge impact on hospitals which, on a square-foot basis, consume more energy than any other business other than food service, said Walter Vernon, a principal with Mazzetti & Associates, a consulting and engineering firm.
AB 32 has a wide footprint and affects emissions related to transportation, shipping, building construction and operation and other sources of pollution, but Vernon expects that building operation will feel the brunt of regulation. That makes sense, because 76 percent of all electricity generated in the United States is used to construct and operate buildings, and experts believe that buildings will be among the first to be regulated by other governing bodies.
While consumption of electricity is one measure of a facility’s responsibility for greenhouse gases, hospitals may have other sources – for example, if they operate a boiler fueled by natural gas or use diesel gas in vehicles.
Mazzetti & Associates, which has formed a climate change consulting practice, is advising healthcare and other organizations to think proactively about greenhouse gas reduction. The California law provides incentives for organizations that work ahead and establish benchmarks.
Several healthcare organizations in the state are taking those steps now, including Catholic Healthcare West, St. Joseph Health System and Kaiser Permanente.
Early results for benchmarking have shown the scope of the challenge awaiting healthcare organizations, Vernon said. He said Kaiser’s measure of emissions went up in 2006 compared with the previous year, the result of rapid deployment of various technologies, including electronic health records.
The movement to reduce greenhouse emissions prompted the formation of a climate and energy collaborative in May by the Premier healthcare alliance. That initiative, called SPHERE (Securing Proven Healthcare Energy Reduction for the Ecosystem), is aimed at helping hospitals reduce cost and energy use while increasing the use of cleaner and renewable energy.
Premier collaborated with Practice Greenhealth and its Healthcare Clean Energy Exchange to lead the first large-scale healthcare reverse auction for energy in mid-June.
The Web-based electronic energy auction was designed to reduce prices of both energy and environmental commodities, such as renewable energy certificates and carbon offsets, to enable hospitals to lock in more stable pricing and increase their percentage of green and renewable energy purchases.
This risk-free reverse auction energy program is designed to achieve electric energy savings from 5 percent to 30 percent, said Gina Pugliese, vice president of the Premier Safety Institute.
Such auctions are likely to be active venues for healthcare organizations affected by laws limiting greenhouse gas emissions.