The healthcare design and construction picture has been muddied by uncertainty over the new healthcare law. Hospital systems are in a bind, not knowing what levels of reimbursement to expect. Building Teams serving this sector will have to work even harder to meet growing client demands.

March 01, 2012

6. Look into performance contracting for energy-efficiency 


Musgrove Park Hospital, a World War II-era public hospital, will save $1.1 million a year in energy costs over 12 years through retrofits made under a performance contract with Schneider Electric.

Rising energy costs are of increasing concern to hospital administrators. While energy expenses are not a huge percentage of operating budgets, new energy-efficiency options offer more ways to trim utility bills—savings that will only get better as utility costs go up. And because capital investment funds are hard to come by, performance contracting has become a more viable means to upgrade systems without a capital outlay.

Healthcare Providers Agree: DESIGN COUNTS

Improving facilities and their physical design substantially:

  • Improves patient experience 74%
  • Improves staff effectiveness 60%
  • Improves staff recruiting/retention 59%
  • Improves patient outcomes 57%
  • Attracts new patients 54%

Nearly three-fourths (74%) of healthcare providers surveyed by Mortenson Construction agreed that improving facilities and their physical design “substantially” improves patients’ hospital experience. Source: Mortenson Construction, “Healthcare Industry and Facility Design Trends,” January 2012

In the United Kingdom, Musgrove Park Hospital, a World War II-era public hospital in Taunton, Somerset, is in the midst of a massive upgrade of its steam, hot water, heating, and lighting systems. Acting under a performance contract with the hospital, Schneider Electric is implementing technologies such as combined heat and power, automated lighting, and HVAC controls that power down fans when a space is unoccupied.

Funded with private capital, the agreement guarantees about $1.1 million in annual energy savings over 12 years. Schneider is paid back from the savings on utilities. If the improvements fail to reduce energy consumption by the amount stated in the contract, Schneider must make up the difference, according to Simon Rigby, divisional director, clinical support at Taunton and Somerset NHS Foundation Trust. The initiative is also projected to slash the facility’s carbon emissions by 43%, which is significant because hospitals in the U.K. are under mandate to reduce greenhouse gas emissions 34% by 2020, and 80% by 2050.

According to Schneider Electric’s Tammy Fulop, performance contracting is starting to make inroads in the U.S. healthcare sector. “It’s not as far along as it is in the university and government sectors,” she says, but it is starting to attract interest in hospital C suites.


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