2025

A practical path to energy efficiency for hospitals

While hospitals today recognize the need to reduce their environmental footprint and prioritize energy-efficiency initiatives, many find it difficult to mobilize an actionable plan. And for good reason: It’s complicated. Read on to find out more.

First things first

Knowing where to begin and what to do next can be the hardest part of planning. Our experience points to three general levels of energy efficiency upgrades to help you find your starting block or identify next steps. With tenured expertise in hospital energy efficiency solutions, we can help you shape—or streamline—your plan and expedite the process at every stage of your journey.

Where do you stand with your energy efficiency goals?

Basic Energy Upgrades
Lighting products, HVAC preventive maintenance, systems control installation
Mid-tier Energy Upgrades
Lighting, HVAC, building management systems
Advanced Energy Upgrades
Integrated facility-wide systems and equipment, smart technologies, alternative energy sourcing

Basic Energy Upgrades

Samples of basic projects include:

  • Lighting products
  • HVAC preventive maintenance
  • Systems control installation

Retrofitting a building with LED lighting is one of the best investments in energy efficiency a hospital can make. LED lights save between 72 and 80 percent of the energy cost of a traditional light bulb, representing thousands of dollars each year in savings for hospitals. 

The exceptionally bright light of LEDs also enhances staff and patient safety when used to illuminate entrances and exits, parking lots, and garages.1

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Mid-tier Energy Upgrades

Following are samples of slightly more involved projects that require a bit more planning and investment, but also offer greater returns:

  • New and optimized redesign of LED lighting systems
  • HVAC equipment, air controls, etc.
  • Energy-management tools
  • Updated Building Automation Systems (BAS)

Building Automation Systems

A BAS is an intelligent system consisting of both hardware and software that allows heating, venting and air conditioning systems (HVAC), lighting, security, and other components to communicate across a single platform.
Because its function is to automatically keep all of these critical components running smoothly, an up-to-date BAS could be considered paramount to a hospital facility’s infrastructure.

Advanced Energy Upgrades

Strategies and solutions in this stage of a sustainability plan yield the most substantial savings and environmental benefits. A short list of equipment and initiatives in this category include:

  • Power resiliency/redundancy
    (e.g., fuel cells, combined heat and power [CHP])
  • Boilers
  • Chillers
  • Internet of Things (IoT)

The Internet of Things (IoT)

The Internet of Things is a network of physical objects, or “things,” embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the Internet. IoT can monitor and transmit patient data, track and allocate inventory and equipment, optimize building controls, and delegate physical and material resources like biomedical assets, stretchers, patients, medications, etc.

The cost of doing nothing

The challenge hospital managers face to balance rising operating expenses (and deferred maintenance), shrinking budgets, reimbursement requirements, patient-centered outcomes and cost containment is enormous. While energy is indeed an unavoidable cost of doing business, most healthcare organizations see their utility budgets as fixed costs.

The fact is, forgoing energy efficiency measures could potentially mean leaving hundreds of thousands—if not millions—of dollars in savings on the table.2

The resiliency revolution

Climate change presents human and health effects as well as structural and financial impacts that are becoming increasingly hard for hospitals to ignore. Catastrophic weather events have illuminated the threat of power deficiencies for all U.S. hospitals and motivated U.S. Centers for Medicare and Medicaid Services (CMS) to increase patient-safety compliance standards. The value-based purchasing (VBP) program, for instance, is designed to assess outcomes and performance based on value rather than volume.3

Under these programs, healthcare providers are granted incentives or penalties based on regulatory measures ranging from equipment safety codes to building performance. With nearly 35% of hospital revenues coming from Medicare and Medicaid, power resiliency is becoming an integral component of hospital sustainability plans.4

Considering more than 35% of hospital revenues come from Medicare and Medicaid, it’s no wonder resiliency is becoming an integral component of hospital sustainability plans.8

Gridless power solutions

Combined Heat and Power (CHP)

Fuel cells

Gridless power solutions

Combined Heat and Power (CHP)

CHP generates electricity and captures the heat that would otherwise be wasted to provide useful thermal energy (e.g., heating, cooling, hot water, and steam). CHP systems play a vital role in keeping infrastructure operational during and after natural disasters, as well as in normal, year-round operation.

In fact, CHP systems can provide an entire hospital’s energy services efficiently and indefinitely during grid outages.5 In addition to its reliability, other benefits of CHP include:

Superior efficiency

CHP systems can achieve efficiencies of over 80 percent, compared to 50 percent for typical technologies (i.e., conventional electricity generation and on-site boilers).6

Cost savings

Superior efficiency means lower energy costs. CHP is especially cost-effective for hospitals because they operate continuously, have high energy costs, and use both electricity and thermal energy.

Lower emissions

CHP systems use less fuel than conventional energy services, produce fewer greenhouse gas emissions like carbon dioxide (CO2), fewer sulfur dioxide (SO2) emissions, and fewer nitrogen oxides (NOx).

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Gridless power solutions

Fuel cells

Conventional
combustion-based
power plant

Hydrogen fuel cells

Similar to traditional CHP systems (typically powered by natural gas), fuel cells provide thermal energy while producing clean, efficient electricity.

In proportion to their equipment footprint, fuel cells produce the largest quantity of zero emissions electricity compared to any other technology currently on the market. Hydrogen fuel cells are three times more powerful than fossil fuels and nearly twice as efficient as conventional combustion-based power generation.7

For example, a conventional combustion-based power plant generates electricity at 33-35% efficiency compared to up to 65% for hydrogen fuel cells.7 Additional features and unique benefits that make fuel cells attractive to hospitals include:
  • Water (or steam) and heat produced by hydrogen fuel can be used for building / space heating, laundry and sterilization purposes
  • A modular design that allows for “always-on” operation
  • A faster build, uptime, and recovery time than an electric utility grid network
  • Long-duration backup generation (any period of length over 24 hours)
  • Smooth and seamless transition from and back to the grid during a power outage
  • No interruptions to the end user during power outages

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The people perspective

Broadening the circle of impact

Every stage of the sustainability journey offers the opportunity for hospitals to improve physiological conditions for patients and providers. Here’s an example of potential human benefits associated with three different types of upgrade initiatives:

1 

Increased cognitive function, reduced depression / anxiety

Simply upgrading to LED lightbulbs can positively affect mood and related conditions and help regulate the circadian rhythm8 while delivering energy cost savings.

2

8.3% performance improvement

One such study reported reduced fatigue and an 8.3% increase in performance improvement among staff members as a result of using the natural power of light to leverage human-centered lighting (HCL) technologies.9,10

3

Better air quality for everyone…

Patients and their families, doctors and staff and even suppliers benefit from an efficient HVAC system. According to one CEO of a multi-facility clinic, “a relatively invisible HVAC system improves the air quality for both patients and staff – to a great extent.”11

Practical, sustainable payment alternatives

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Key Equipment Finance is an industry leader with a dedicated energy team and tenured healthcare expertise. We’ve helped myriad healthcare organizations not only realize significant savings through equipment acquisition, but execute numerous energy efficiency projects and achieve their sustainability initiatives, as well.

If increasing productivity while reducing your overhead and environmental footprint seems daunting or cost-prohibitive, we’ve got the experience and expertise to make it possible. With quality, effectiveness and service at the forefront of our principles, we support you at every stage of your journey and provide the tools you need to succeed:
  • Comprehensive, single-source support
  • Customized, flexible funding solutions
  • Deep medical expertise and energy asset knowledge
  • Renowned structuring expertise
  • Strategic energy efficiency vendor partner alliances
  • Long-standing relationship with energy-focused legal team
  • In-house underwriting, operations, and asset management specialists

Regardless of your business goals, energy initiatives, and obstacles preventing you from achieving them, Key is well positioned to get you to the finish line.