Executive Interview_Rich
Jeff Rich joined the 325-bed Gundersen Health System in La Crosse, Wis., in October 2006 to lead the health system’s efficiency improvement department. At that time, neither Rich nor his employer knew Rich’s original mission of reducing costs would lead him to develop Gundersen’s “Envision” environmental program, a program that will enable the health system to meet all of its facilities’ energy needs through improved energy efficiency and the use of renewable energy sources by 2014. 

Since joining Gundersen, Rich has become an advocate and steward for energy and environmental improvement within the healthcare sector through the Envision program’s consulting arm. “Our goal is to contribute to making the healthcare industry more energy and environmentally conscious while helping to save money for patients,” he says.

hfm: How did the Envision program start? 

Rich: When I came to Gundersen, I focused on using my experience in Lean Six Sigma process improvement to reduce costs and increase efficiency. One of the first things we noticed was our big utility bill—in 2008, our utilities expenses totaled $5.3 million. We conducted an energy audit in early 2008 and found opportunities not only to save money through conservation efforts, but also to do the right thing for our patients’ health and the environment. [See the sidebar below to read about how Envision approaches an energy audit.] 

hfm: What are some of the results of the initiative so far? Can you describe the ROI of the initiative?

Rich: In the first six months of implementing our first energy conservation measures, we experienced a 10 percent improvement in energy efficiency, and by the end of the second year of the initiative, we had recorded a 20 percent improvement. We’re now sustaining a 25 to 30 percent improvement in energy efficiency compared with energy use before we implemented the initiative. 

It took us a little while to implement the conservation plan, which required some capital and infrastructure. We spent about $2 million on that initial two-year effort, and we’ve seen more than $1 million a year in savings result from the program. 

So we see conservation as a sound investment. It’s a hedge against future energy prices, and it neutralizes the energy-bill portion of our patients’ healthcare expense. 

hfm: How has the project evolved?

Rich: In late 2008, we set the aggressive goal of becoming energy independent in 2014. For a couple of us, working on the renewable energy aspect and providing services to others has become our full-time work. And our facilities team now has several engineers who focus on the conservation of energy as part of their work.

As I tell people, you can’t conserve your way to zero. We still need power to do what we do as a health system. So we started trying to offset the energy we use with clean renewable energy options that we own and operate. With the renewables effort, the payback cycle is longer. But we still are projecting about a seven-year payback on our entire energy program—the conservation and renewable investments. 

hfm: Can you describe some of the renewable energy technologies your organization is using?
Rich: We have entered into two wind turbine joint ventures and have established a landfill gas project with a local landfill; the landfill project alone has made our 350,000-square-foot Onalaska, Wis., outpatient campus the first-known energy-independent healthcare campus nationwide. We pipe the landfill gas to the campus and use it to run an engine on campus. This system makes more electricity than we consume at that campus. We’ve also found ways to take the heat off that engine and use it to heat our buildings. 

We’ve also purchased a biomass boiler, which will account for 38 percent of our energy independence goal. We’ve installed a geothermal heat pump system in a behavioral health facility we constructed last year. That system also will provide heating and cooling for our new hospital. And we are working on a dairy digester project, where dairy-cow manure feeds into some digesters that produce gas for another engine that can make more renewable electricity. That process also helps keep phosphorus nutrients from getting into the water table.

hfm: Why did Gundersen decide to use these particular technologies? 

Rich: When it comes to renewables, you’ve got to use what you have around you. And we’re in what they call the “Saudi Arabia of biomass” up here in Wisconsin: We’ve got lots of agriculture and woods, and we have lots of cow poop.

On the coast, you have wave energy and some good wind. Arizona and California have great sunlight for solar resources. So energy initiatives are not a one-size-fits-all approach for healthcare organizations. That’s why we have a balanced portfolio of renewables. Each of these technologies has different advantages, so you have to make sure the technologies you choose meet the criteria for your situation.

hfm: How has your renewables portfolio changed, if at all, along the way?

Rich: When we first laid out what we call our “road map to independence,” we thought our renewable projects would consist of either all biogas or all wind projects. We didn’t think we’d be throwing in biomass, geothermal, and these other things. But occasionally as you’re developing, you find new opportunities you didn’t realize were near you, or a partnership comes along. And I think you have to be open to the possibilities.

hfm: How did Envision’s energy consulting business come about?

Rich: We had performed energy audits on several external clinics in our system. We also had a couple of health systems ask us to help them replicate what we’ve done, which we did gratis. 

One was in 2010, at the request of the state’s Energy Office, helping a small hospital in the northwest part of the state with an energy audit. 

As of last year, we started to officially contract with other hospitals. Our goal isn’t necessarily to become a big consulting business. We want to help people begin their programs successfully. Today, we are just looking at supporting salaries for the small group that leads the Envision program. 

hfm: What other environmental efforts besides the energy program has Gundersen initiated? 

Rich: Gundersen has always been environmentally conscious and has had a good recycling program. But the Envision program is heavily involved in reducing pharmaceutical, surgical, and medical waste; packaging; and parts and equipment. We’ve eliminated plastic foam from our campuses. We’ve reduced our food waste off our cafeteria line by 17 tons a year—about a 70 percent improvement. All of these efforts save us money. 

We also look at reprocessing items. We’ve achieved a great recycling rate that we continue to improve. We’re above 35 percent for our solid waste stream recycling each of the past four years, and the waste management recycling savings we’re achieving total more than six figures annually. 

hfm: What’s next after you meet the 2014 energy independence goal? Is Gundersen considering other “green” initiatives? 

Rich: We have a duty to take care of what we’ve got in place and make sure these projects can sustain themselves and operate properly. Although we don’t have a formal plan together yet, a next step might be to look at how we could operate our fleet vehicles more sustainably, reducing emissions and also saving money, such as through the use of biodiesel, mass transit, natural gas instead of petroleum, hybrids, and so forth. Another goal might be to make Gundersen a zero-landfill campus. Maybe that’s not possible, but if you never consider the goal, you won’t find out.

hfm: What advice do you have for other organizations that are considering going green, even on a smaller scale? 

Rich: A non-energy-related effort that’s a good place to start is reducing food waste. There are new ways to manage that process better. But I really stress to people that energy conservation is the best place to begin. You can find some low-hanging fruit—initiatives that are low in cost and very quick to implement. You don’t need to make huge capital investments. The investments you would make are the kind you could plan for. 

Examples of some simple investments like this might be insulating pipes or fittings better, reprogramming building controls such as thermostats, re-lamping some of a facility, or investing in a chiller or a boiler. Different types of infrastructure in a health system’s facilities might be old, or there might be a new opportunity, but the health system would need to dedicate some capital to capture those savings.

To put it in perspective, the healthcare industry spends about $8 billion a year on energy and is responsible for 8 percent of the nation’s energy consumption [U.S. Department of Energy’s Healthier Hospitals Initiative; Hospital Energy Alliance]. Health systems in particular are 2.5 times more energy intensive than typical office buildings of the same size. From what we’ve seen, most healthcare facilities could save 20 to 30 percent—maybe more—on their energy bill if they knew how to analyze their energy use and manage it better. That’s a lot of waste and a lot of impact on the environment, and it’s not helping anybody. We think it’s important to try to awaken others and help them take the first steps.

When we did our initial energy audit, we were in the middle of the pack compared with industry benchmarks. That’s why we think that a lot of healthcare systems have this opportunity.



Envision’s Energy Audit Process 

Envision applies Lean Six Sigma principles to manage the energy audit process for the health systems it consults with. The process includes measuring energy consumption, controlling the conservation process once it’s in place, and making sure the system is getting the right results. Jeff Rich, the program’s executive director, says the energy audit is like a “Lean Kaizen” event, a Lean process improvement process where a team is brought together and focuses on an opportunity or a project in a short period of time and then takes actions right away. The audit can be a one- to three-day event, depending on the size of the health system’s facilities.

Rich first establishes a baseline and helps health systems benchmark their energy use, determining how much energy costs their organizations compared with what energy costs should be for their climate, using available industry benchmarks. One key metric, the energy utilization index, is basically how many British thermal units (BTUs) are used per square foot in a year. Energy Star metrics and local surveys also can be used as benchmarks. “For instance, in Wisconsin, we know about how many BTUs a hospital should use per square foot,” Rich says. “Most median hospitals have a 20 to 30 percent energy savings opportunity. If they’re above the benchmark level, they’re worse on their energy use.”

Rich then brings together and facilitates a group comprising the client’s staff, engineers with whom the client might have already worked, and manufacturers in the energy field. He leads the group through a series of checklists, going over steps they know are going to be problems, prioritizing them, and then developing a quick business case on the ones that look most promising. “The client gets quantification and an action plan quickly, so they can get started and see results right away,” Rich says.

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