By Bradley S. Pollitt / Special to Healthcare Facilities Today

Even with the fall of natural gas prices due to fracking, the overall rising cost of energy has captured the attention of American consumers and is now casting a long shadow over everyone’s budgets.  What was once just a cost to bear has now become a management concern even in private homes.  

Energy – what we typically know as oil, natural gas and electricity – are the primary sources that heat, cool and light our homes, offices and hospitals.  At a community level, coal, oil, natural gas, geothermal, and bio mass are the primary fuels used by our electric companies to make transportable energy; electricity that we can use.  

At a facility level, we use many primary fuels (electricity, coal and natural gas) to create other useable forms of energy with hot water boilers and chilled water systems.  At the end of the day, they are all forms of energy that either are purchased on a volatile market or are converted at an efficiency loss that now represent escalating costs of thousands of dollars a year. 

Shands HealthCare was faced with the phased, multi-year development of a new, 3-million BGSF academic medical center campus and the immediate need for an energy package to support the Phase I development of a 500,000 BGSF cancer tower.  How best to manage the purchase, production and distribution of all the necessary energy sources needed by a modern hospital – electricity, emergency power, steam, natural gas, hot water, and chilled water?  Who is best situated to purchase fuels in a volatile market?  Who is best suited to manage a multi-million-dollar energy package and extract the most efficiency from the process?  Is this part of a hospital’s core business?

The fundamental answer to this discussion was “not Shands.”  Shands must invest capital in patient care to ensure continuous improvement and re-invention.  Others are better suited to hire and manage the highly technical staff required to operate an energy conversion process.  There are professionals that buy energy and fuels on the world markets; hedging futures, managing purchase prices on a daily and even hourly basis, who are more experienced than any hospital purchasing agent.  It quickly became apparent that Shands was not the most experienced energy purchaser, producer, or consumer in the region and from there the search was on.

The power plant, with chillers, boilers, and emergency generators is the heart and soul of a traditional plant operations business.  A business where heroics count; where “We will stay online at all costs”; a business in which long-term commitment to hospital staff and patients is critical and fundamental;  a business that is essential to hospital operations;  a business that is faced with tremendous financial pressure.   We asked, “Is there a partner that we can trust as well as we can trust ourselves?”

The process for discovering and selecting the right partner was multi-faceted.  We issued a Request for Qualifications to find firms that had the knowledge, depth, strength and commitment and understood the essential nature of the healthcare business.  We issued a Request for Proposal seeking to allow potential partners to outline their business practices, financing methods, staffing plans and management style.  We then conducted interviews to discover the character of individuals and the corporate commitment of potential partners. We took great care to discover how our potential partners would handle emergency situations, ensure the quality of proposed maintenance operations and provide the depth of resources to meet our needs.

We discovered several benefits to selecting Gainesville Regional Utilities as Shands’ Energy Partner.  First, the partners share a home community.  Local government, press, pride and community ties would provide a strong motivation for both teams to succeed.  Second, GRU added significantly to the depth of emergency resources that the hospital could call on.  An organization with energy as its core business and a staff over 800 strong provides incredible support to augment hospital support services.  Third, a utility company invests substantially in the purchasing of raw fuels at the best prices from bulk purchases to futures and options.  Fourth, a power company is invested and committed to making sure that we are powered to meet our critical needs at all times.  That is their business.  Fifth, alternatives to power production, on-site generation and capturing waste heat are options that a hospital could not easily manage on its own. 

A significant advantage to Shands was GRU’s offer of on-site power production that would satisfy the full hospital load.  A 4.3-MW, gas-fired turbine generator is assigned a “must run” status giving the hospital a highly reliable standby power system.  Of course, a code-required Essential Power System is provided but it is designed to meet minimum code requirements.  The waste heat recovered from the turbine is converted to steam, powering a 1,200-ton, steam-driven chiller and providing all heating, cooking and sterilization requirements in the hospital.  The savings in energy is equivalent to powering over 2,000 homes and a carbon offset equivalent to over 4,000 cars.

An energy partnership with a qualified, competent, committed partner offers significant opportunities and benefits to each entity.  There are challenges from the CFO office because of traditional accounting methods.   There are complications with local AHJs due to introduction of new codes from differing industries and novel design approaches.  There are challenges due to industry language barriers and business models.   But for the groups who are willing to put forth the extra effort to overcome these obstacles, the rewards are significant.

The GRU South Power Plant supporting the new Shands at the University of Florida Cancer Hospital will went online in February 2009.  The new hospital achieved LEED Gold status in part by the inclusion of innovation credits due to the energy recovery system in the power plant.

Brad Pollitt is the Vice President of Facilities for Shands HealthCare, a nine hospital system in North Florida including Academic Medical Centers supporting the University of Florida in Gainesville and Jacksonville.