Independent Healthcare Systems Working Together
A Case Study in Optimizing Energy Management
Managing energy consumption is more than negotiating the lowest rate per unit of measure. With our collective membership in TPC, we knew working together generated better results for our individual organizations in other areas such as Supply Chain and other Purchased Services. Because of that commitment and the outcomes produced, we chose to explore opportunity in the consumption and management of energy.
Our initial work in this unique journey produced a measurable result of 47% savings over three years. The bottom line impact represented $17 million for participating Members. Interestingly, our collaboration enabled more than just the power of shared purchasing and negotiating better rates. It also led to the investment of time within a structured, open, peer-to-peer environment developing operational best practices for reducing consumption. The results included:
- Modifying equipment (i.e. energy-efficient bulb replacement)
- Scheduling energy utilization according to demand
- Using education to facilitate meaningful change in employee behavior
From implementation to analysis of the work, the journey continued. We reconnected at least quarterly to discuss the results. We used, and continue using, simple analytics to share results and discuss solutions to overcome obstacles. That work led us to consider more aggressive tactics in reducing wasted consumption and cost. We eventually agreed to exit a fixed rate contracting model, engage a third party energy optimization firm, and assumed risk through a variable rate contracting model.
Applying best practices in managing energy consumption within healthcare facilities is delicate work. It requires the fabric of our cultures to include a commitment to conservation. Working together, we made a substantial positive impact to our bottom lines, contributed to the conservation of the environment, and affected change in behavior ... all while preserving our abilities to deliver excellence in patient care.
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RESULTS AT A GLANCE
47% reduction in cost over three years representing $17 million in total savings
Developed and applied best practices in managing energy consumption
Moved to shared risk contracting in pursuit of additional 5-10% savings