High Performance Hospitals Partnership M a r k e t P r o g r e s s E v a l u a t i o n R e p o r t E x e c u t i v e S u m m a r y

prepared by

Research Into Action

report #E06-159

July 18, 2006

529 SW Third Avenue, Suite 600 Portland, Oregon 97204 telephone: 503.827.8416 fax: 503.827.8437

Final Report

HIGH PERFORMANCE HOSPITALS PARTNERSHIP FIRST MARKET PROGRESS EVALUATION REPORT

Funded By:

Submitted To:

David Cohan Northwest Energy Efficiency Alliance

Prepared By:

Jane S. Peters, Ph.D. Marjorie McRae, Ph.D.

Robert Scholl Research Into Action, Inc.

June 2006

3% Energy Efficiency 27% Product Awareness 57% Customer Satisfaction 74% Market Share Market Potential 72% Consumer Confidence 46% Brand Recognition 82% Energy Savings 69%

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HIGH PERFORMANCE HOSPITALS PARTNERSHIP: MPER #1

ACKNOWLEDGEMENTS

We appreciate the time hospital facility managers graciously spent to answer our questions about their energy management and facility operations practices so that we might understand baseline practices for the region. The managers were willing and friendly respondents to our requests for information and without them we would have nothing to report.

We thank the HPHP business advisors and technical advisors with whom we spoke for their time and willingness to talk candidly.

We would also like to acknowledge the assistance of David Cohan of the Alliance, who served as our evaluation project manager. We thank Alliance commercial sector program staff: Skip Schick, Jennifer Stout, Elaine Miller, John Jennings, and Mark Tuffo for their willingness to talk about their experiences with the program; these people all provided on-going assistance to ensure that our efforts addressed the program as implemented.

Steven Scott of MetaResources Group conducted the assessment of the program’s cost effectiveness analysis generated by the Alliance Cost Effectiveness (ACE) model.

Finally, we want to thank Laurie Lago of Business Service Bureau, our able production specialist.

Acknowledgements

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TABLE OF CONTENTS

EXECUTIVE SUMMARY .................................................................................................................. I

1. INTRODUCTION....................................................................................................................... 1 MPER EVALUATION ACTIVITIES............................................................................................. 2

2. PROGRAM HISTORY, ACTIVITIES, AND INDICATORS OF PROGRESS.................................... 4 CHAPTER SUMMARY .................................................................................................................. 4 DESCRIPTION OF THE HIGH PERFORMANCE HOSPITALS PARTNERSHIP .................. 5

Strategic Energy Management Planning ........................................................................ 7 Advisors’ Role..................................................................................................................... 9

PROGRAM MODEL..................................................................................................................... 10 PROGRESS INDICATORS.......................................................................................................... 12 CASE STUDY: PROVIDENCE HEALTH SYSTEM.................................................................. 15

The Transition from Energy Efficiency Projects to Strategic Energy Management Planning at Providence....................................................................... 16

First Year Accomplishments........................................................................................... 17 Challenges to Implementing a SEMP............................................................................ 18

3. STAFF AND ADVISOR EXPERIENCES..................................................................................... 20 CHAPTER SUMMARY ................................................................................................................ 20 OVERVIEW OF EXPERIENCES................................................................................................ 21 RESPONSE TO SERVICE AND MESSAGES ........................................................................... 21 ROLE OF THE BUSINESS AND TECHNICAL ADVISORS ................................................... 22 PERCEPTIONS OF THE ALLIANCE ROLE ............................................................................ 24

4. BASELINE ENERGY-RELATED PRACTICES.............................................................................. 25 CHAPTER SUMMARY ................................................................................................................ 25

Building Operations Findings ........................................................................................ 25 New Construction Findings ............................................................................................ 25 Institutional and Policy Findings................................................................................... 26

BUILDING OPERATIONS.......................................................................................................... 26 NEW CONSTRUCTION .............................................................................................................. 28 INSTITUTIONAL AND POLICY................................................................................................ 30

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5. ACE MODEL REVIEW............................................................................................................. 35 CHAPTER SUMMARY ................................................................................................................ 35 REVIEW........................................................................................................................................ 35

Cost-Effectiveness Assumptions..................................................................................... 35 Energy Efficiency Measures ........................................................................................... 37 Documentation of Market Penetration .......................................................................... 38

6. CONCLUSIONS AND RECOMMENDATIONS........................................................................ 39 CONCLUSIONS AND RECOMMENDATIONS ........................................................................ 40

APPENDICES APPENDIX A: DETAILED FINDINGS FOR CHAPTER 2, PROGRAM HISTORY AND

ACTIVITIES .......................................................................................................................... A-1 Activities Prior to 2005 ................................................................................................. A-1 Activities in 2005 (through October) ............................................................................ A-2 Activities Planned for 2006........................................................................................... A-3

APPENDIX B: DETAILED FINDINGS FOR CHAPTER 3, STAFF AND ADVISOR EXPERIENCES..................................................................................................................... B-1

Information Business Advisors Would Like to Have .................................................. B-1 Potential Indicators Suitable for Evaluating Program and Team

Accomplishments...................................................................................................... B-1 The Need for Periodic Team Meetings......................................................................... B-2 Comments on Alliance Management Processes .......................................................... B-3 Program Evolution ........................................................................................................ B-4

APPENDIX C: DETAILED FINDINGS FOR CHAPTER 4, BASELINE SURVEY ............. C-1 Population and Sample ................................................................................................. C-1 Energy Efficiency Practices .......................................................................................... C-4

Staff Resources Devoted to Energy Management ........................................................ C-4 Awareness and Implementation of Efficiency Practices .............................................. C-5 Use of Computerized Management Systems ................................................................ C-7 Energy Use Measurement............................................................................................. C-9

Capital Projects Issues................................................................................................ C-11 Construction Activities ................................................................................................ C-11 Financial Considerations............................................................................................. C-15 Design Considerations................................................................................................. C-16

Training, Certification, and Professional Affiliations............................................... C-18 Institutional Practices and Policies............................................................................ C-21

Executive Commitment to Energy Efficiency............................................................. C-21 Executive Approval of Proposed Projects ................................................................... C-22 Institutional Policies and Practices ............................................................................ C-24 Equipment Purchasing Policies and Service Contracts ............................................. C-26

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APPENDIX D: DETAILED FINDINGS FOR CHAPTER 5, COST-EFFECTIVENESS ANALYSIS REVIEW ............................................................................................................ D-1

Market Size....................................................................................................................D-1 Limited Energy Use Intensity (EUI) Information ...................................................... D-2 Errata ............................................................................................................................. D-3

APPENDIX E: SURVEY INSTRUMENTS.............................................................................. E-1 HIGH PERFORMANCE HOSPITAL PARTNERSHIP Hospital Survey .................. E-1 HIGH PERFORMANCE HOSPITAL PARTNERSHIP Market Specialists

Interview Protocol .................................................................................................. E-22 HIGH PERFORMANCE HOSPITAL PARTNERSHIP Senior Manager

Commercial Sector Interview Guide..................................................................... E-27

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EXECUTIVE SUMMARY

The Northwest Energy Efficiency Alliance (the Alliance) is a non-profit corporation supported by Bonneville Power Administration, electric utilities, public benefits administrators, state governments, public interest groups, and energy efficiency industry representatives. These entities work together to make affordable, energy-efficient products and services available in the marketplace.1

This Market Progress Evaluation Report (MPER) was researched and written by Research Into Action, Inc. in the latter half of 2005. It documents the results of baseline measurement for the hospitals and health care segment served by the High Performance Hospitals Partnership (HPHP), as well as the progress made in this sector between January 2003 and October 2005.

The HPHP was originally approved in 2003 under the Commercial Buildings Initiative, an umbrella program for all Alliance commercial activities. It now operates under its successor, the Commercial Sector Initiative (CSI). CSI comprises all of the Alliance’s commercial sector activities. It currently addresses three “vertical” markets (hospitals and health care, groceries, and commercial real estate) and two “cross-cutting” markets (design and construction and building operations).

Between January 2005 and October 2005, the Alliance made progress in the High Performance Hospitals Partnership by putting into place the components of the full HPHP program. Complementing their efforts, Alliance technical advisors consulted on a number of new construction and building performance projects with hospitals during the period.

Program business advisors (initially referred to as market specialists) have a strong understanding of program objectives and have been active since mid-2004 in promoting the twin messages of high performance hospitals and strategic energy management planning. The program has worked with one large hospital system to develop and adopt a Strategic Energy Management Plan (SEMP) and is continuing to support the system in implementing its plan. In assisting this hospital system, Alliance program staff have developed and are continuing to develop methods and tools that will be used with other participating hospitals. Also, through assisting this hospital system, Alliance program staff and contractors are developing an increased appreciation for the challenges hospital staff face in implementing a

1 See website at www.nwalliance.org

Executive Summary

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SEMP. Business advisors have also started SEMP development with several other hospitals and hospital systems.

At the same time, Alliance program staff and business advisors are having positive responses to the HPHP. According to Alliance program staff and business advisors, facility managers and executives see the value of high performance hospitals and of a SEMP as a means toward that end. Executives appreciate the promise that a SEMP will reduce operating costs and facility managers appreciate that a SEMP will support their requests for the equipment and staffing resources necessary for good building performance.

The baseline survey of 65 facility managers, conducted in October 2005, found that 75% reported they had heard of the term “strategic energy management plan,” 66% had heard of “high performance building,” and 43% had heard of BetterBricks. The baseline survey found that facility managers were likely to report that their facilities engaged in energy efficiency operational practices. In contrast, institutional/managerial practices were rarely reported to be implemented. When asked, “What is the most important thing you would need to promote energy efficiency improvements from your position,” facility manager responses related to technical assistance desired (42%), managerial assistance desired (37% – such as could be provided by the Alliance business advisors and SEMP activities), and responses related to both technical and managerial assistance (5%).

The research led to following conclusions and recommendations.

Conclusion 1: The hospital market appears receptive to the HPHP concepts.

Conclusion 2: Alliance program staff appear to have clearly identified the products, services, policies, and procedures needed to support program delivery and are working hard to develop these supports.

Recommendation: The Alliance should empower HPHP contractors to meet the high market interest by using a generational approach to developing products and tools, whereby the first generation of infrastructure has the basic functionality needed for the program and subsequent generations revise and augment the early items.

Conclusion 3: The primary effort to develop the HPHP approach has been internal to the Alliance, and the technical advisors (both design and construction and building operations) are unfamiliar with many of the details of the approach.

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Recommendation: Communicate clearly with the technical advisors, both informing them of their roles and responsibilities, and also seeking their market understanding that has resulted from their field experiences.

Conclusion 4: Program planning and implementation would benefit from a team approach, where the Alliance program staff are the clear team leaders, yet the business and technical advisors are valued contributors to the program evolution. Program advisors (business and technical) would like the opportunity to work together with Alliance program staff—to closely discuss market experiences, ask the hard questions, grapple with possible responses, and contribute to the evolution of the program.

Recommendation: Periodically convene meetings of the Alliance commercial sector staff involved in the HPHP, the business advisors, and the key technical advisors. Allow sufficient opportunity to build the relationships that support candor and creative thinking. Consider the suggestion of a business advisor that such meetings be held twice a year for a two-day period.

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1. INTRODUCTION

The Northwest Energy Efficiency Alliance (the Alliance) is a non-profit corporation supported by Bonneville Power Administration, electric utilities, public benefits administrators, state governments, public interest groups, and energy efficiency industry representatives. These entities work together to make affordable, energy-efficient products and services available in the marketplace.2

This Market Progress Evaluation Report (MPER) documents the results of baseline measurement for the hospital/health care segment served by the High Performance Hospitals Partnership (HPHP), as well as the progress made by the program between January 2003 and October 2005.

In February 2003, the Alliance contracted with Research Into Action, Inc. to measure baseline conditions in several commercial market segments. Work on baselines for the HPHP began by identifying targeted behaviors and practices in late 2004; a refined list completed in summer 2005 enabled the hospital baseline effort to begin.

The HPHP was originally approved in 2003 under the Commercial Buildings Initiative, an umbrella program for all Alliance commercial activities. It now operates under its successor, the Commercial Sector Initiative (CSI). The CSI currently addresses three “vertical” markets (hospitals and health care, groceries, and commercial real estate), and two “cross-cutting” markets (design and construction and building operations), as shown in Figure 1.

Figure 1. Commercial Sector Initiative Markets

2 See website at www.nwalliance.org.