Every $1 your nonprofit hospital saves on utility costs is equal to generating $20 of new revenue

Charles A. Cannon, Jr., Memorial Hospital, Jefferson, North Carolina
90,000 Sq. Feet
Annual Cash Savings: $82,849
Annual Energy savings: 55,700 gallons
Payback period: 0.3 years
Prevented 633 tons of CO2 pollution

Preventive Medicine: Hospital Prescribes Energy-Saving Measures
Nestled high in the Appalachian Mountains and surrounded by ski resorts, the Charles A. Cannon, Jr., Memorial Hospital in Banner Elk, North Carolina, is one of just a few medical facilities in sparsely populated Avery County. So when the hospital had cash-flow problems, Edward C. Greene, Jr., president of Avery Health Care System, knew he had to cut operating expenses without jeopardizing the vital health care services and programs that his hospital offers to the community. Investing in energy-efficient equipment seemed like a good way to reduce energy and maintenance costs, but like a wise patient, Greene sought a second opinion.

Diagnosis: Bad Boilers
In 1990, Cannon Memorial Hospital paid approximately $2.80 per square foot in energy costs for its 90,000-sq.ft. facility. The audit noted that a primitive heating, ventilation, and air-conditioning (HVAC) system heated and cooled the hospital, and that two old, inefficient, oil-fired boilers caused much of the high energy costs. The 30-year-old, 6,550-MBH boilers were oversized for the hospital’s energy needs. Therefore, they ran at partial loads, magnifying their inefficiency. In the winter, for instance, both boilers had to be in use continuously, usually operating at low loads and sucking away energy dollars. Given all that, plus the fact that both boilers were in poor condition, it’s easy to understand why Greene made replacing the boilers his top priority.

Prognosis: Huge Energy Savings
Tight budgets make it hard for many health care managers to consider large capital expenditures, such as replacing boilers. But based on the energy audit, Greene knew that replacing the two antique boilers could drastically lower his operating costs. He also knew that he needed financial help, so he applied to the state energy-conservation program and received a $200,000 grant. The grant covered most of the cost of replacing the boilers and associated auxiliaries with a new, energy-efficient system consisting of three 3,300-MBH oil-fired boilers. The total cost was more than $250,000, but the energy savings added up to more than $80,000 a year. Thanks to the grant, the boilers paid for themselves in only a few months. Even without the grant, they would have paid for themselves in about 3 years.