‘SMART’ HEALTHCARE
While there is wide consensus around the need to make health estates ‘smart’, all countries and sectors need a way of making that conversion financially sustainable. How can this be done?
Financing the cost of conversion through energy efficiency The starting point is to use smart technology to reduce energy consumption in healthcare buildings. This produces hard financial savings that – through smart financing arrangements – can be harnessed to subsidise, or even pay for, overall smart buildings conversion. This can be done at an enterprise level, or in small incremental steps, each of which proves its return on investment. For whole building and multi-building
projects, budget-neutral schemes are available from specialist financiers to enable conversion. They are increasingly becoming known as ‘Building Efficiency as a Service’ (BEaaS) arrangements. The integrated solutions provider
introduces technology and systems to create smart buildings which deliver a clearly predictable level of energy savings. The reduction in energy costs is then harnessed to effectively fund the cost of conversion. While the level of energy reduction will vary – depending on external climate, cost of power, and other factors – in most cases the savings can be reliably reflected in a financing structure to deliver self-financing smart building upgrades anywhere in the world, although the technique, to date, is most mature in the Western world. After the end of the financing period, the facility benefits from the ongoing reduced energy consumption, along with all the other added benefits of smart buildings.
Small incremental steps Many building efficiency and smart buildings projects are undertaken in smaller incremental steps. If this approach is chosen, then the capital- neutral economics of BEaaS cannot be deployed. Nevertheless, there is a huge operating advantage in being able to spread conversion costs over a financing period – managing cashflow by aligning expenditure with the rate of energy savings. The building technology products which make energy efficiency and smart capabilities possible come to market through a supply chain of distributors, value-added partners (VAPs), solution builders, and engineering, procurement, and construction (EPC) companies. Various forms of smart equipment
and technology finance are available to manage the cost of acquiring upgrades such as energy-efficient HVAC control and building automation (on-premise or via cloud), remotely managed digital controls for fire safety and security, remote occupancy management
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The size of the investment challenge for hospitals in various countries according to an SFS paper, entitled Financing smart buildings: driving value in the “new normal”.
systems, touchless controls throughout a building, and much more. Where the solution-provider has teamed up with an expert financier (who understands the technology, its applications, and its benefits), then financing arrangements – often based on leasing structures – can be tailored to fit the building owner/ manager’s precise cash-flow profile, aligning costs with the rate of benefits and/or savings gained.
The investment challenge Evidence has also been offered showing how energy efficiency is the key financial starting point for meeting smart buildings aspirations, and that specialist financing techniques allow that conversion to happen without the need to source and deploy large amounts of capital. What, then, is the size of the investment challenge of energy efficiency conversion in healthcare buildings (that these financing techniques help to make happen in an economically sustainable way)? It is important to present an estimate of the sheer financial scale of energy efficiency
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conversion to appreciate how important the role of smart financing is – especially since many authorities in the public sector, for instance, have noted that it simply cannot be afforded out of public capital alone. The latest insight paper from Siemens Financial Services (SFS), entitled Financing smart buildings: driving value in the “new normal”, Autumn 2020, establishes the urgency and value of smart buildings conversion, as well as the mandatory drivers that are focusing attention on converting existing buildings to greater energy efficiency. This insight
Specialist financing techniques allow that conversion to happen without the need to source and deploy large amounts of capital
8468 21 28
558 937 1011 27
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In a budget-constrained environment, energy efficiency savings are increasingly seen as the ideal starting point for smart buildings transformation.
May 2022 Health Estate Journal 73
Source: Siemens Industries and Markets
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