By Rob Guthrie, Executive Vice President, Bernhard
As COVID-19 continues to change the health care landscape, hospitals and medical centers are forced to reduce higher-margin elective procedures to reposition resources. This loss, coupled with static or rising operating costs and lower non-operating revenue from investments, is leaving health care leaders scrambling for new solutions.
Facilities now face a balancing act of optimizing patient care while trying to recoup financially… all while resources are thinnest.
Creative solutions are available that allow hospitals and medical centers to offload a critical piece of operations that has little to do with direct patient care, and nothing at all to do with doctors and administrators — energy.
Energy-as-a Service (EaaS) is a partnership between energy systems experts and professionals who are saddled with facility operations. Systems engineers evaluate water, electrical, heating and air conditioning systems in order to optimize performance, conserve energy and generate cost savings. EaaS providers create custom improvements so that clients may shift capital back to their core. For hospitals, that core is patients.
Consider the value of EaaS, beginning on Day 1:
- Infrastructure Renewal: Immediately offload critical systems repairs and renewal while cutting energy expenses. These infrastructure improvements and energy optimization services are geared toward improving reliability and resiliency.
- Asset Monetization: Monetize core hospital assets, while also transferring the hospital’s risk over a long period of time. EaaS providers purchase the right to use the hospital's energy infrastructure, offering immediate liquidity through an upfront payment that can be invested back into the facility to address near-term capital renewal, energy efficiency upgrades and investments in patient care.
- Focus on Core Mission: Provide flexibility in the future and the ability to focus on your core business of providing world-class patient care.
Health care facilities are already seeing the benefit of EaaS in the face of conflict. East Alabama Medical Center in Opelika, Alabama, entered a 30-year energy asset concession agreement during the onset of COVID-19. The agreement provided crucial upfront energy optimization improvements, substantial projected annual energy savings and a significant upfront cash payment to EAMC. The transaction is set to provide $826,000 in annual estimated energy savings and $30 million in improvements to the facility.
“The increasing demands on our facilities led to a daunting backlog of deferred maintenance, which was exacerbated during this time,” said Sam Price, EAMC CFO. “We found a solution that allowed us to get ahead of the virus and keep our community as safe as possible.”
EaaS is the answer for many medical centers across the United States. Shifting focus from operating energy facilities back to their communities can be a life-saving decision in many cases. Now more than ever, the health care field is being called upon to get creative and find solutions that strengthen their core business and keep their focus on what really matters — patients.
About the Author
Rob Guthrie, Executive Vice President, Bernhard
Rob Guthrie is the Executive Vice President for Bernhard’s Development Division where he is responsible for leading the Bernhard team in the successful development of turnkey Energy-as-a-Service projects for clients in health care, higher education and commercial sectors. With more than 15 years of experience, Rob is a qualified leader in helping clients realize long-term operational savings and is a recognized expert in developing projects including public-private partnerships, power purchase agreements, energy savings performance contracts and energy asset concessions. Rob is a graduate of The University of the South (Sewanee) and a Certified Energy Manager.