The Impact of Energy Performance on Hospital Life Cycle Costs

Posted by |Industry News|May 7, 2019


As with any facility, the true cost of a hospital goes well beyond the initial construction investment. To assess the real cost of building ownership, the scope needs to include the entire life cycle of the building.

What is Building Life Cycle Cost?

Life cycle cost is the total cost of designing, building, owning, operating, maintaining, and disposing of a building over its life. This includes fuel and water, energy, labor, and replacement equipment and components. For hospitals, building-related costs typically fall into the following categories:

  • Initial Costs—Purchase, Acquisition, Construction Costs
  • Fuel
  • Operation, maintenance, and repair
  • Equipment/building component replacement
  • Disposal
  • Finance charges

Hospital Energy Performance and Building Life Cycle Cost

Hospitals are among the biggest energy consumers in the country. When you think about it, this makes perfect sense—hospitals operate 24/7, their occupants include hundreds (or thousands) of employees, patients, and visitors, and they require sophisticated HVAC systems to control temperature and airflow. Add in the energy-intensive activities that happen within hospitals—medical equipment use, complex IT infrastructure, food service, refrigeration, laundry, and more—and it’s no wonder that hospitals have such high energy use requirements.

Initially, when a hospital project is being planned, the project costs are scrutinized intensely by owners, board members, and the public. This directly relates to the energy performance of the hospital, because HVAC and process systems represent significant portions of the initial cost of a facility. As a result, design choices, trade-offs and compromises often need to be made in these areas.

And yet, despite this scrutiny, energy costs can actually be difficult to predict accurately in the design phase of a project. Estimations for use profiles, occupancy rates, and schedules—all of which impact energy consumption—are all based on assumptions about how the buildings will actually function.

What does this mean for the building’s life cycle cost? It means that, while money may be saved on the initial building cost, over time, the building will be more expensive to operate.

Operating under tighter budgets than ever, hospitals are expected to minimize life cycle expenditures while also optimizing operation productivity. The most effective way to do this is by making an upfront investment in energy performance.

What happens when facilities cut corners on energy infrastructure?

  • Increased energy costs
  • More frequent repairs and maintenance
  • More frequent equipment replacement
  • More necessity for deferred maintenance budgets

Hospital Energy Use and the Triple Aim

Beyond maintenance and replacement costs, hospital energy use impacts the facility’s life cycle costs in a more important way: it affects how well the hospital is able to deliver on the Institute for Healthcare Improvement Triple Aim:

  • Improving the patient experience of care (including quality and satisfaction);
  • Improving the health of populations; and
  • Reducing the per capita cost of health care.

Energy performance impacts each individual area of the Triple Aim, directly affecting a hospital’s ability to improve the quality of their care, maintain the health of everyone inside, and especially reduce the cost of health services. If the hospital can accomplish these three goals, not only will they be optimizing their operations, but they will be reducing the life cycle cost of their buildings.

By being more energy efficient, hospitals around the country can save money, reduce or even prevent greenhouse gas emissions, improve the air quality within their communities, and support their commitment to public health. Hospitals can then reinvest savings from improved energy performance into improving patient care or the facility itself.

It is never too late for hospitals to evaluate their energy consumption and work toward improvement. Take the first step today – contact North Country Mechanical Insulators for an Insulation Energy Audit and find out how much money and energy your facility could save.

Subscribe to the NCMI Blog

Catch the latest product details, tests, and industry updates.

Sign up to receive our latest blog content to your inbox once a month.

Subscribe Now