Greening the Health Care Safety Net

Consider a building that’s open all day, every day, with space and staff to accommodate an unknown number of people. The lights are never turned off and operations never cease. The resources needed to always be ready to serve — along with energy-intensive equipment, endemic waste, and a vast supply of goods and services — explain why hospitals and other health care organizations are among the largest energy consumers and greenhouse gas emitters on the planet.

Even among industrialized countries, the U.S. health care system stands out as carbon intensive: it accounts for about a quarter of all greenhouse gas emissions from health care activities worldwide, more than any other nation. Its outsized carbon footprint is not, however, reaping better health outcomes. Americans don’t live longer, healthier lives than residents of other high-income countries, and states with higher health care emissions don’t perform better on measures of health care quality and access. Our polluted air and water, along with more severe storms or heat waves, also take a toll on human health. In fact, experts estimate environmental harms caused by the health care industry, including greenhouse gas emissions and toxic air pollutants, cost as many lives as preventable medical errors: 98,000 a year.

Driven by concern for patients, the rising costs of energy and other business expenses, and anticipated government regulations that may soon hold them accountable for reducing their carbon footprints, some health care organizations have been working to become more energy efficient. In 2022, 116 organizations, representing 872 hospitals, signed on to the Biden administration’s Health Sector Climate Pledge, a voluntary effort to achieve a 50 percent reduction in greenhouse gas emissions by 2030 and net zero emissions by 2050.

In this case study, we describe Boston Medical Center’s decade-long journey to reduce its carbon footprint. Since 2011, the safety-net system in Boston’s South End has lowered its energy use by about 35 percent and reduced carbon emissions from energy consumption by 91 percent. The health system has done so by shrinking its campus’ square footage, undertaking more than 50 projects to reduce energy use, installing a cogeneration plant, and purchasing solar energy, among other initiatives. This has lowered the health system’s annual operational costs by about $40 million while expanding its capacity to serve patients.

Shrinking Campus to Achieve Efficiencies

Boston Medical Center’s (BMC) efforts to reduce carbon emissions were spurred by financial necessity. The health system, the result of the 1996 merger of Boston City Hospital and Boston University Medical Center, was essentially running two facilities separated by a city block. And like many large health systems, its clinical services and physical footprint had expanded over time. As a result of declining Medicaid reimbursements and other issues, it had negative operating margins for three years starting in 2009 and, by 2011, it was on the brink of receivership.

In 2011, BMC hired Robert Biggio, an engineer with decades of experience running health care operations, to develop a real estate strategy that would strengthen the organization’s financial position. In his first few months as senior vice president of facilities and support services, Biggio inventoried different departments’ occupancy levels and consulted with clinical leaders to understand their workflows. Eventually, he concluded that BMC could shrink by 400,000 square feet, yielding $25 million to $30 million savings a year in reduced operational costs by 2020. Biggio expected pushback from Kate Walsh, then BMC’s CEO, given the $300 million to $400 million investment required for retrofitting and construction. However, Walsh endorsed the idea.

At the time, Walsh served as cochair of the health care sector for Boston’s Green Ribbon Commission, a citywide effort to engage business leaders in adapting to and mitigating the effects of climate change. She also shared Biggio’s view that becoming greener wasn’t a virtuous activity, but central to BMC’s mission.

Together, they pitched the campus redesign to board members and other leaders, arguing it could achieve three mutually reinforcing goals: 1) lower operational costs, 2) reduce BMC’s carbon footprint, and 3) enable the health system to continue to serve all patients, regardless of their ability to pay. “As an industry, there tends to be a trend to supersize things,” Biggio says. “But there needs to be a balance between creating high-quality spaces and making sure you’re providing sufficient access for patients.”

According to Biggio, BMC’s clinical leaders understood that shrinking the campus could make services more efficient for themselves and their patients. Before the redesign, patients were routinely sent back and forth between different buildings: the health system spent $1.5 million a year just on ambulances for these transfers. Consolidating two kitchens into one has also reduced energy use while producing the same number of meals.

While planning the campus redesign, Biggio and his team invested in smaller projects that helped make the business case that going green could save money. Enlarging the air ducts and implementing systems to reduce heating and cooling when a building was unoccupied cost about $2.5 million, for example. But because the larger ducts use less energy to ventilate the building, doing so reduced BMC’s annual energy bill by about $1.35 million a year. Connecting water-cooling pipes into a continuous chilled-water loop saved about $250,000 a year.

To pay for the redesign, BMC sold off excess real estate freed up by the campus redesign and issued $200 million in green bonds — it was the first U.S. hospital to use this financing mechanism. Green bonds are special types of debt securities used to borrow money for climate-friendly projects that typically come with reporting requirements. In BMC’s case, lenders vetted their reconstruction plans and visited the campus to ensure changes would lead to efficiencies.

The redesigned BMC campus was completed in 2018. Even though it is about 10 percent smaller, this hasn’t hampered capacity: patient volume has gone up by nearly 30 percent. Meanwhile, energy use has declined by about 30 percent to 35 percent from having less space overall and from more efficient infrastructure, yielding roughly $10 million in savings each year. Maintenance costs have gone down about $2.5 million a year. Overall, the redesigned campus has reduced greenhouse gas emissions by 32 percent.

Increasing Resiliency and Energy Independence

As a coastal city sprawling across acres of land reclaimed from the Atlantic, Boston is vulnerable to flooding and rises in sea level. With memories of Superstorm Sandy in 2012 still fresh, BMC’s leaders sought to become more resilient to the effects of extreme weather through its campus redesign. While some hospitals that had their own power plants were able to stay up and running during the storm, many suffered. Lower Manhattan’s NYU Langone Medical Center had to evacuate more than 300 patients amid high winds and pounding rain after the hospital’s basement flooded and it lost backup power.

Armed with these examples, Biggio convinced BMC’s leaders to invest in a cogeneration plant — or a combined heat and power plant — which is more efficient than a traditional power plant because it produces multiple forms of energy from a single source. In BMC’s cogeneration plant, which opened in 2017, the heat generated from creating electricity is captured as hot water and repurposed to heat its buildings. In case of a blackout, BMC can use it to power inpatient operations without relying on emergency generators or temporary boilers. And because the plant sits on the roof of one of its buildings, it should be out of reach of floodwaters.

With the plant located on campus, less energy is lost during transfer, making it about 35 percent more efficient than a traditional electrical utility and saving $1 million annually, according to Biggio.

Offsetting Carbon Use by Purchasing Cleaner Energy

Even with its own cogeneration plant, BMC still buys power off the grid, some of which is created by burning fossil fuels. In 2016, to offset its carbon use and provide a hedge against volatile energy costs, BMC joined with other big consumers like the Massachusetts Institute of Technology and the nonprofit maintaining Boston’s Post Office Square to request proposals for jointly purchasing renewable energy generated by wind or solar power.

Among the 41 proposals the group received, they chose Summit Farms, a solar farm in North Carolina. BMC does not directly use the solar energy produced in North Carolina but instead uses this investment to offset its carbon footprint. Doing so gives BMC renewable energy credits, a commodity created by the federal government to show that a certain amount of electricity was generated from a renewable energy resource and fed into the grid. Collaborating on this purchasing agreement provided greater buying power — BMC was able to negotiate a 25-year contract with predictable annual increases — and mitigated the risks of investing in a new power source.

For BMC, this arrangement has meant the organization has offset approximately 100 percent of its electricity use on its main campus. “Some people would say this is not ‘pure’ green energy, because it’s similar to buying offsets,” says Biggio. “From my perspective, it accomplished everything we wanted to do as an organization. We got a new solar facility built and put green power on the grid at a cost structure that we could afford, which in turn allows us to continue to put resources into caring for our patients.”

Lessons

Boston Medical Center’s experiences offer lessons for other health systems interested in reducing their carbon footprints as well as for state and federal policymakers who want to support their efforts.

There is a business case for decarbonization in many areas of health care, including among safety-net organizations. Creative partnerships and financing mechanisms can help achieve returns on investments.

Safety-net health care facilities like BMC have thin margins. When surveyed in 2019, the roughly 300 safety-net members of America’s Essential Hospitals, a trade group, said that their limited resources hindered them from investing in green initiatives.

When planning green initiatives, Biggio’s rule of thumb is to aim for at least an eight-year return on investment, a goal that was achieved for the campus redesign. When the price tag to build BMC’s cogeneration plant came in it at $15 million, with projected savings of $1.5 million a year, he looked for ways to offset some of the upfront costs. At the suggestion of state officials, BMC collaborated with the City of Boston to apply for and win a $3.5 million resiliency grant from the state; in return, BMC has agreed to use the plant to provide back-up power for the city’s communication systems for its EMS, police, and fire departments. BMC also received a $1.5 million incentive payment for reducing energy use from its electricity supplier, bringing the costs to BMC down to $10 million.

Along with grants from government agencies that support resiliency and clean energy, BMC has benefitted from incentives, such as renewable energy credits. It also has secured lower financing rates through green bonds and, more recently, through sustainability bonds. And BMC’s green initiatives have attracted at least $11 million in private donations, according to Biggio.

Financing Mechanisms and Resources for Green Initiatives in Health Care

• List of financing mechanisms that support green construction and operations
• Database of state incentives supporting renewable energy and energy efficiencies, from the U.S. Department of Energy
• Primer on reducing health care carbon emissions, from the U.S. Agency for Healthcare Research and Quality
• Report on Inflation Reduction Act incentives and other policies to help health care organizations decarbonize, from the Georgetown Climate Center
• Strategies to reduce greenhouse gas emissions, from the U.S. Environmental Protection Agency
• Compendium of federal resources and tools for reducing greenhouse gas emissions and becoming more climate resilient, from the U.S. Department of Health and Human Services
• Resources for health care organizations, from the federal Office of Climate Change and Health Equity

Start small and empower everyone to be part of the solution.

Taken together, BMC’s reductions in carbon emissions have been dramatic, but they have been accomplished incrementally. Having champions like former CEO Walsh and Biggio to educate staff about the benefits of going greener and encourage them to look for opportunities has been key. “I tell people, ‘It’s like panning for gold. I want you to go out there every day and find the ideas to make the organization more efficient,’” Biggio says.

After learning that a certain anesthetic, sevoflurane, is very polluting, BMC’s chief of anesthesia began pushing the organization to reduce its use. In recent years, Providence, Virginia Mason, and other health systems have greatly reduced or eliminated use of another polluting anesthetic gas, desflurane.

BMC has reduced scope 1 emissions (direct emissions from sources the health system owns or controls) and scope 2 emissions (indirect emissions from buying energy) by 91 percent since 2011. To achieve its goal of being carbon neutral by 2030, the health system will have to tackle scope 3 emissions: those emitted through the production of goods and services that health systems procure. Nationally, scope 3 emissions account for the majority of health care greenhouse gas emissions.

As health care organizations take on green initiatives, they are likely to encounter regulations that hinder their efforts. Policymakers may need to step in to evaluate the environmental impact of regulations.

This has already begun to happen. For example, in March, the Centers for Medicare and Medicaid Services instituted a waiver allowing health care organizations to supply emergency power from renewable energy sources.

Biggio notes that mandates for levels of air exchange in treatment spaces drive up energy use but may not always be evidence-based. And the Federal Guidelines Institute, which publishes guidelines for health care construction that most states adopt, published a recommendation about 15 years ago that all new hospital rooms must be private. Some research has found having only private rooms reduces transmission of infections among patients and increases their sense of dignity, while others suggest it can make patients feel lonely and isolated. Biggio points out that having only private rooms substantially drives up hospitals’ energy use, not to mention their ability to move to surge capacity during pandemics and other emergencies.

Value-based payments that incentivize health care organizations to invest in prevention could also help them reduce their carbon footprints.

If executed well, this could create a virtuous cycle: as more payers insist on value-based contracts, more health care organizations would be encouraged to invest in disease prevention and the social determinants of poor health. And if such efforts made people healthier, it would reduce demand for health care services — thus reducing the health care industry’s carbon footprint and, in turn, its contribution toward disease.

Boston Medical Center began its green initiatives out of financial necessity. Its success, however, has helped the organization flourish under its value-based contracts, under which it’s accountable for the health outcomes and costs of care for about 75 percent of patients who receive primary care. “Reducing your carbon footprint is something you can’t afford not to do,” says Biggio.