Saint Alphonsus Regional Medical Center

An engineering manager at Boise’s Saint Alphonsus Regional Medical Center learned to use persuasive financial arguments and irresistible utility incentives to convince administrators that energy management could improve the hospital’s bottom line. Operational changes and capital investments are expected to reduce energy consumption by 25% and save the hospital up to $2.5 million over five years.

Bill Morgan, engineering manager at Saint Alphonsus Regional Medical Center, Boise, Idaho, and past president of the American Society for Healthcare Engineering, knows that managing energy use is a dependable way for hospitals to save money. Yet it takes money to save money, and he’s aware that most hospitals have little funding available to invest in energy management.

“It costs a lot to run a hospital, and there’s not much left over,” acknowledges Morgan: “Any extra usually goes to new MRI machines and CT scanners. You’re competing against a never–ending stream of new clinical technology.”

When Morgan arrived at Saint Alphonsus, the 358–bed hospital was building a new patient tower, so there was even less chance of funding energy management efforts from the hospital’s capital pool: “Too many feeding at the trough,” explains Morgan.

The situation began to change when natural gas prices climbed the winter after Hurricane Katrina, just as St. Alphonsus was using large amounts of natural gas to cure fire–stop materials during tower construction. “Gas prices doubled right when our consumption doubled,” recalls Morgan, who recognized new possibilities for persuasion.

But the engineering manager’s breakthrough came when he found out about BetterBricks’ strategic approach to energy management, and the tools available to help develop a strategic plan and enlist needed top–level support. “For me, that was the turning point,” says Morgan. “I learned how to make a well–planned financial case for energy management, one that clearly demonstrates how it can directly contribute to the hospital’s bottom line. Engineers may hate me for saying this, but engineers are not money people. Yet when you talk with financial people, you need to show up with financial arguments to get your idea across. If you don’t understand finance – learn it.”

Morgan also learned to tap into any and all additional sources of project funding, including support from his local electric utility, Idaho Power. “Utility support means a hospital doesn’t have to foot the entire bill,” says Morgan.

Using these strategies, Morgan floated a proposal to install energy–efficient variable–frequency drives on two large central air–handling units that would help support the new tower. “We presented a quick two–year payback, with annual electricity savings of $75,000,” says Morgan, and the proposal included a commitment from Idaho Power to pay fully half the capital cost.

“Idaho Power’s $81,000 check made the project irresistable,” says Morgan. Hospital administrators were beginning to see energy management the way Morgan saw it – a source of revenue – and they gave the okay.

This project paved the way for a more ambitious strategic proposal: an engineering analysis of Saint Alphonsus’ 1970s–vintage South Tower to identify energy management opportunities. The hospital had planned to renovate this older tower once the new tower was built, and now energy–saving improvements might help pay for renovation, suggested Morgan.

Idaho Power again sweetened the deal by offering to fund nearly half the cost of the study by one of BetterBricks’ Integrated Design Labs. Saint Alphonsus gave its assent, and several months later received word that the Boise lab had identified improvements that could save the hospital up to 25% a year in energy consumption, annually adding back as much as $500,000 to the bottom line. Best of all, many of the improvements were no–cost/low–cost operation and maintenance practice changes rather than capital projects.

Thinking big, Morgan is now using BetterBricks tools to develop a Strategic Energy Management Plan (SEMP) to carry out as many of the capital and operational improvements as possible. If all are implemented, Saint Alphonsus could save a total of $2.5 million over five years. Morgan hopes to persuade hospital administrators to fund these efforts by reinvesting energy cost savings: “I want to roll operational savings back into capital projects.”

His facilities team has already begun making inexpensive, hospitalwide O&M practice changes: “For example, we’re reviewing our HVAC system operational programs, set points, chilled water and reheat temperatures, and outside air percentages,” says Morgan. Even newly installed systems such as the chillers that support the latest hospital tower are under scrutiny.

Morgan’s final advice to fellow facilities engineers and managers: “Don’t think with the narrow focus of ‘I’ve got to upgrade my boiler.’ Develop a comprehensive strategic plan, use financials to make a passionate presentation to management, and get them to commit.”