When we measure hospital capacity, we count beds. Operating budgets and square footage are sweeping measures of hospital size, but bed counts stand in for patient care, and patients are the purpose. As city and state leaders work with operators to maximize bed counts in anticipation of peak COVID-19 admittances in 30-60 days, hospital administrators are throwing out last year’s balance sheets.
For instance, hospitals and medical centers have reduced higher-margin elective procedures and outpatient surgeries. This loss, coupled with static or rising operating costs, and lower non-operating revenue from investments, will impede the pandemic response. Operating cashflow, net position, days cash-on-hand, even credit worthiness is at risk.
How do we optimize medicine when resources are thinnest?
At Bernhard, we have been implementing a way for hospitals and medical centers to offload a critical piece of operations that has little to do with direct patient care and nothing at all to do with doctors and administrators—energy.
Energy-as-a-Service (EaaS) is a partnership between energy systems experts and professionals in entirely different business verticals who are saddled with facility operations. Our systems engineers evaluate water, electrical, heating and air conditioning systems to optimize performance, conserve energy and generate cost savings. EaaS providers like Bernhard create custom improvements so clients may shift capital back to their core. For hospitals, that’s patient care.
EaaS was created in response to the prolonged “perfect storm” that has confronted the health-care industry for years. Consider its value, beginning on Day 1:
- Asset Monetization U.S. hospitals need critical liquidity to meet the daily challenges of operation, and EaaS shifts energy systems from the maintenance-expense column to one that monetizes the asset. EaaS providers buy the right to use the hospital’s energy infrastructure, offering an immediate injection of cash at a cost of capital less than the hospital’s current incremental borrowing rate. For many, the arrangement equates to 50-100 days cash-on-hand.
- Risk Transfer EaaS transfers the risks associated with plant maintenance, operation, and most of all, scheduled upgrade and capital improvement plans so health providers can be laser-focused on their core mission during this national health emergency.
- Infrastructure Renewal EaaS immediately offloads critical systems repairs and renewal while cutting energy expenses. EaaS providers are there to serve facilities in the event of a surge in inpatient census.
- Balance Sheet Flexibility EaaS is structured to be off-balance-sheet for hospital auditors, preserving key credit metrics and satisfying administrators’ aversion to long-term debt.
Further, Bernhard is positioned to provide qualified, trained technicians to run HVAC and plumbing systems when employees are unavailable to work. For Trauma Center-level hospitals around the nation, we help them functionally reallocate critical manpower and budgeting back into care.
These clients are facing a capacity shortage, and we’ve seen EaaS play a critical role:
- Jumpstarting energy systems in previously unused structures, wings or floor space that create additional emergency response locations.
- Managing energy and utility operations of any health care provider, from midsize clinics to campuses.
Bernhard has served health-care, educational, government, commercial and industrial clients nationally for more than 100 years and, today, we are working with those clients and partners to plan and execute a response to the COVID-19 pandemic.
DISCLAIMER: The information provided in this article was prepared solely for informational purposes and should not be construed as an offer or solicitation to buy or sell to participate in any transaction. The information provided is not intended to be a source of advice or credit analysis with respect to the material presented, and the information contained herein does not constitute investment advice.