April 2011

Data is Key to Energy Use Reduction

By gathering energy usage data to inform buying decisions, CHI's facilities saved a total of more than $1.2 million on energy costs during fiscal year 2010 and are on track to save more than that this year.

"Our facility managers identified energy use as a cost reduction opportunity, but we found that CHI's accounting systems capture energy costs, not energy use," said Dennis Smith, assistant director of facility services. "In 2008, we selected National Information Solutions Cooperative (NISC) to serve as our clearinghouse for energy use data. About 50 of our hospitals now process all of their utility bills through NISC. Along with our group purchasing organization, HealthTrust Purchasing Group, we use that data to make better energy buying decisions."

In addition to systemwide savings, the data identifies potential for energy use reduction at individual market-based organizations. "The data shows us which hospitals have the best opportunities to reduce energy use and achieve savings," said Smith. "We performed an energy audit at St. Joseph Medical Center in Reading, PA, which identified an opportunity to achieve energy cost savings of at least $370,000 this year."

Several of the larger market-based organizations within CHI are now in the process of evaluating their options for energy use reduction. "However, we find that it isn't necessarily the size or the age of a hospital that indicates whether it is a candidate for an energy audit," said Smith. "There are opportunities across our facilities. For example, a major lighting retrofit project in the Fargo division produced a $200,000 annual reduction in energy costs."

Currently, CHI and NISC capture data on about $40 million worth of energy usage within CHI, while Smith estimates that CHI facilities as a whole spend $60 million or more on energy each year. "As more of our facilities participate in this program, we will capture more complete data, better understand energy use across the entire system, and possibly achieve additional cost reductions for all of our facilities," said Smith. "Our energy use reduction work also has a beneficial effect on the environment and our natural resources." For more information, contact Dennis Smith.