Eco-nomics

June 24, 2011
Stan Schatt Prior to the economic downturn, the movement for environmentally friendly or “green” practices had begun carving out a small but
Stan Schatt
Prior to the economic downturn, the movement for environmentally friendly or “green” practices had begun carving out a small but noteworthy niche in the healthcare IT industry. According to a 2008 survey by CDW Healthcare, 57 percent of providers had plans to actively pursue energy-efficient IT/recycling practices by 2009, and 21 percent said green IT policies guide the majority of their purchasing decisions.

But when the recession hit, and health systems across the country suddenly had to deal with capital freezes and layoffs, green initiatives were forced to take a backseat. Some organizations, however, have been able to forge ahead with eco-friendly plans by tying them to financial gains. What these leaders have discovered is that green initiatives - if done right - can lead to more greenbacks.

“The major driver is the fact that healthcare, as well as every other industry, is spending more and more each month on utility bills,” says Stan Schatt, vice president and practice director at New York-based ABI Research. “Utility bills are going up and becoming an increasingly larger part of the IT budget, and data center space is at a premium. Those are going to be drivers that will push organizations toward this movement. In other words, their own economic well-being is going to drive them.”

There's also the public image factor. Schatt says, as public awareness of environmental issues and green initiatives continues to grow, patients will start to question whether providers are taking the necessary steps to reduce their carbon footprint. And a number of health systems are responding by installing motion-sensitive lights, and implementing recycling programs for computers, X-ray film and other items. Others are incorporating features into building design that reduce consumption of electric power and limit water usage, and utilize materials that don't require solvent cleaners.

But while many executive leaders would certainly like to integrate eco-friendly programs into their strategies, they're finding that green IT won't fly if it doesn't make financial sense. At Phoenix Children's Hospital, Vice President and CIO Bob Sarnecki says, “You have to go ‘practically green’ before you go ‘real green.’ And that usually happens at the point where equipment starts to get old and needs to be replaced.”

That's where the vendors come in. According to an ABI Research report authored by Schatt, companies such as IBM, Hewlett-Packard, Dell and Cisco are offering more products in the way of virtualization software, and featuring equipment that promotes environmental responsibility. “What's happening is, as healthcare facilities go through the normal replacement cycles, the equipment they purchase is going to be more energy efficient,” he says. “It's going to come through the fact that vendors are changing their product mixes to offer greener products. This, by its nature, will make hospitals greener than they were before.”

Powering down

For organizations looking to reduce their carbon footprint, the logical starting point seems to be the data center, one of the biggest culprits of power usage.

At Phoenix Children's, an organization that has adopted “tree-hugger thinking,” greening the 1,500-square-foot data center was done more out of necessity, says Sarnecki. “Like most IT organizations, we're constantly struggling for more power and more air conditioning. And not just the initial power in, but the UPS (uninterruptible power supply) you need if the power fails to come in. So we've had to do a lot just to get more efficient.”

The organization achieved that goal by installing a secondary chilling system in the data center, which had been using the same system as the rest of the hospital. The data center chilling system is only used throughout the hospital when the desert sun is at its strongest, usually in July and August.

Schatt says this type of thinking is becoming more common. “We're seeing a lot of innovation when it comes to greening of the data center. For every dollar that's spent for power consumption, you're spending another dollar to cool the equipment and cool the room. Now, we're starting to see technologies with very innovative ways of keeping equipment running cool.”

Another trend gaining momentum is virtualization. Phoenix has started transitioning physical servers to virtualized servers, resulting in a much smaller footprint. “It's been a real savings in power and AC,” he says. “My data center is cooler now than it was six months ago. Even though we've added new servers to the mix, we've actually reduced the physical footprint within the data center substantially.”

At Beth Israel Deaconess Medical Center (BIDMC) in Boston, the IT staff has leveraged virtualization to keep the data center at under 200 kilowatts, despite 25 percent growth every year for storage. According to CIO John Halamka, M.D., the department has added 305 virtual servers and just 16 physical servers since 2005. “The place where you see real measurable reductions in power is in the data center, where we've done extensive use of VM-ware, and we have really tried to look at power and cooling,” he says.

As part of its effort to reduce power, Halamka's team replaced all of the CRT monitors with flat screens, and developed a po licy in which computers went into hibernate mode after 20 minutes. Although powering down machines completely when not in use would save even more energy, says Halamka, it would also prevent IT from being able to apply anti-virus software or put in operating system patches. “So the balance we struck was to power down the hard drive, and if an update comes over the wire, it wakes up again.”

For Halamka, who describes himself as a staunch environmentalist, the reward of these efforts comes in reducing the organization's carbon footprint.

However, sometimes added motivation is needed. With that in mind, he structured his direct reports' evaluations so that they are rewarded for reducing energy or power usage (although BIDMC, like most organizations, has had to eliminate bonuses in 2009). “The expectation is laid out as, you will deliver this quality of service and it will be at this energy cost,” he says. “When you actually bake green criteria into performance criteria, it really motivates everybody to say, ‘We really have to think about this.’”

Making the case for green

Getting staff on board, however, isn't usually the challenge; the tougher sell for green IT is with CEOs and boards.

“I think for most CEOs, (going green) needs to be something their heart and soul is behind, or it's something that you need to make a case to them for,” says Sarnecki. “For our CEO, it was a no-brainer to buy a less physical (server) and to reduce our power and air consumption in the data center as we added new devices. So I didn't have to go back and sell him on green; I just had to sell him on virtual technology as a practical way of managing the capacity of his data centers.”

Phoenix Children's, which is in the midst of a $580 million expansion that will triple the total square footage of the hospital and double its bed capacity, has found ways to incorporate energy efficiency principles into the new tower. For example, says Sarnecki, the design includes curved surfaces that dissipate some of the desert sun, and avoids using flat surfaces that tend to get particularly hot.

Situations like this, in which choosing environmentally responsible practices can also result in cost savings, present the perfect opportunity for CIOs, says Halamka.

“What you hope is that because green IT can also be economical IT, green and cost-cutting can go hand-in-hand,” he says. “We're spending less money on energy, we're spending less money on cooling and we're spending less money on hardware, so what's not to like?”

Finally, there's the notion that implementing green initiatives can result in a secondary return-on-investment by appealing to patients' sense of environmental responsibility. “With green IT, the hard ROI is the reduction, ultimately, of their power consumption, and the soft ROI is the public relations benefit of showing that they're contributing to the environment,” says Schatt.

Is it a stretch? Halamka doesn't think so. “I think many, many people at this point are concerned about passing on a good environment to the next generation. It just makes you look like a good community system,” he says.

Sidebar

Bidding for Green IT

Vince Pryor
The challenge many organizations face is to reduce costs while also demonstrating a commitment to the environment. Ingalls Health, a Chicago-based system that includes a 563-bed hospital, as well as an outpatient network, found a unique way to achieve that goal.

Last fall, Ingalls purchased a three-year electric power contract through a Web-based reverse auction program that included 5 percent green electricity (from renewable resources). Offered by Premier, Inc. (Charlotte, N.C.) in partnership with Practice Greenhealth, an Arlington, Va.-based organization devoted to environmentally responsible healthcare, the auction featured a virtual marketplace in which suppliers bid downward to compete for contracts with hospitals and other businesses.

Ingalls opted to try the program after energy costs skyrocketed in the summer of 2008. “We were concerned about what was going to happen going forward with our costs, and we were attracted to the concept of trying to ‘go green’ to help the community, so it seemed like a good combination to at least explore,” says CFO Vince Pryor. “The way it worked, there was no risk on our part to at least try it and see if it provided us with an opportunity to meet our goals.”

While Pryor's team helped prepare for the auction by submitting RFPs to eight different suppliers to gage interest and generate competition, Practice Greenhealth conducted the actual event, eyeing bids for electricity with varying mixes of conventionally produced energy and renewable energy. Ingalls was able to purchase a contract for 5 percent green energy at a cost competitive with conventional energy. As a result, the organization is expected to achieve a 3,433-ton reduction of carbon dioxide, along with a total cost savings of more than $1.5 million over the course of the contract.

Pryor was very pleased with the outcome. “At the beginning, we were hopeful that if we could just make it neutral, we would've been excited about being able to have a green footprint. We were fortunate enough that it went beyond that,” he said. “As a not-for-profit, we have an obligation to try to benefit our community, and this is just one more way we believe we're able to do it.”

Sidebar

How Green is Your IT Strategy?

As a CIO, to what extent do you consider energy consumption as a factor in making IT decisions?

  • To a large extent. 29.73% (blue)

  • Somewhat. 32.43% (red)

  • Hardly at all. 27.03% (green)

  • Not at all. 10.81% (purple)

Source: Healthcare Informatics online poll

Healthcare Informatics 2009 July;26(7):33-35

Sponsored Recommendations

Going Beyond the Smart Room: Empowering Nursing & Clinical Staff with Ambient Technology, Observation, and Documentation

Discover how ambient AI technology is revolutionizing nursing workflows and empowering clinical staff at scale. Learn about how Orlando Health implemented innovative strategies...

Enabling efficiencies in patient care and healthcare operations

Labor shortages. Burnout. Gaps in access to care. The healthcare industry has rising patient, caregiver and stakeholder expectations around customer experiences, increasing the...

Findings on the Healthcare Industry’s Lag to Adopt Technologies to Improve Data Management and Patient Care

Join us for this April 30th webinar to learn about 2024's State of the Market Report: New Challenges in Health Data Management.

Findings on the Healthcare Industry’s Lag to Adopt Technologies to Improve Data Management and Patient Care

2024's State of the Market Report: New Challenges in Health Data Management