July 26, 2018

Hospital management - how to save on energy

Starting 2020, all hospital administrators will have more opportunities as managers to develop their institutions. However, this also means more responsibility. While hospitals’ bills are currently covered by the budget, in one and a half year administrators will have to think for themselves where to get money.

Hospital financing after 2020

The reform will transform healthcare institutions into municipal or state enterprises. Among other things, this means that they are becoming self-sufficient. In the past, funds for a hospital would come from the budget, regardless of the extent and quality of work done by the medical staff. Now the National Healthcare Service of Ukraine (NHSU) and local budgets will be buying a certain amount of services from hospitals. In addition, medical institutions will be able to rent out unused premises and medical and other equipment, as well as provide services not paid for by the NHSU (e.g. massage, medical research, cosmetic surgery, etc.).

Follow this link to see a short video on how to manage the costs of a medical institution in the new way: https://www.youtube.com/watch?v=5JtBORptGjI

Many administrators are already thinking how to manage their hospitals, which costs to get rid of and which to optimize while preserving the quality of medical services.

One of the factors that can really help save money is a hospital’s energy consumption (electricity, heat, gas). The money saved can then be used to raise the salary of medical personnel, improve their skills, buy new medical equipment, equip and modernize the hospital itself, etc.

There are already examples of how energy efficient measures can improve the microclimate inside a building, driving utilities down, such as the boiler equipment installed in an educational institution in one of the villages of Mirgorod Rayon, where gas savings amounted to 63.4%, or 30.8 thousand m3 in three months.

Where does a hospital’s energy efficiency begin?

It is necessary to start with an energy audit:

  • to survey the premises of the medical institution,
  • to determine the efficiency of the use of fuel and energy resources in it,
  • to determine the measures necessary to improve energy efficiency,
  • to determine the payback period.

After the audit, hospital administrators should gauge their financial and organizational resources and determine the project objectives: wall insulation, window replacement, modernization of the heating system, etc., or several things at once.

Then it is necessary to choose a legal model of cooperation, based on which you will be implementing energy efficiency measures:

  1. Contractor agreement on the implementation of energy efficiency measures
  2. Energy service agreement
  3. Public-private partnership

We will discuss the first option in more detail here, and the rest will be explained in other articles.

Contractor agreement on the implementation of energy efficiency measures

Under this contract, the contractor carries out work to improve the energy efficiency of a building (wall and roof insulation, window replacement, installation of individual heat points, modernization of heating, lighting and ventilation systems). The client pays for the work performed and supplies used.

The advantages of this option are as follows:

  • simple and fast contract conclusion: it is done under the public procurement procedure, which takes no more than three months);
  • lower project cost: the contractor does not include the cost of financial resources, risks associated with savings achievement, inflation, etc. in the price. The client pays strictly for the work, equipment and building materials;
  • the client gets to decide what energy efficiency measures will be implemented: the contractor adheres to the client’s instructions and only receives payment for their implementation.

Contractor agreements are not without their drawbacks though:

  • all work is carried out at the expense of the client. Hospital administration can count only on the funds on their accounts, or on those that they are sure will be provided to them;
  • the client (in our case, the administrator or local authorities) will have to decide for themselves what measures will be most effective with the funds available, and to correctly formulate the instructions and contract agreement.
  • the contractor’s obligations are considered fulfilled immediately after the completion of work. Whether the work leads to an actual increase in energy efficiency is not their problem.

Learn more about energy efficiency here: http://www.ilf-ua.com/ru/blog/?q=&sc=7&sr=