Providers Spend Little, Save Big with Energy Upgrades

During and after the financial crisis, the senior housing industry set itself apart for being “recession resilient.” For some senior living companies, however, the financial crisis turned into a wake-up call.

Leaders in these organizations found they needed to conserve more money, and fast—without making sacrifices that would negatively impact residents. And as some companies figured out, it’s possible, and attractive, to conserve money by conserving energy.

Several “green” initiatives at different communities have turned out to be selling points for current residents, company employees—and for incoming baby boomers. Accordingly, senior living companies that have “gone green” are cutting costs—by as much as $1.5 million annually—and luring the environmentally-conscious generation of future residents.

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A ‘Perfect Opportunity’

For some senior housing communities considering “going green,” there is confusion about where and how to start. That was the case at Simpson House, one of three continuing care retirement communities (CCRCs) owned and operated by Pennsylvania-based Simpson Senior Services.

Simpson House, which is home to about 320 residents in Philadelphia, needed to make major improvements to its energy infrastructure, Simpson Senior Services President and CEO Kim Williams tells Senior Housing News. Complicating matters, though, was the fact that the projected costs of doing so were beyond what was feasible for the community.

That’s where ENER-G Rudox Inc., a cogeneration energy efficiency company based in Carlstadt, New Jersey, came in.

Simpson House signed a contract with ENER-G Rudox, according to which it receives almost $3 million worth of equipment that it otherwise would not have been able to capitalize. As part of the contract, Simpson House can purchase the equipment once the 20-year agreement expires, Williams says.

Additionally, under the terms of the contract, Simpson House is expected to receive about $350,000 in guaranteed energy savings in each calendar year, while also decreasing the community’s carbon footprint by approximately 300 metric tons annually.

The fact that Simpson House would not have to make a capital outlay on its own to achieve the energy infrastructure that it needed was the driving factor behind the partnership, Williams said.

And while other senior living could benefit from the same sort of contract, the “combined heat and power” (CHP) model is not as widely known in the U.S. as it is in Europe, ENER-G Rudox President Ryan Goodman told SHN.

CHP, also known as cogeneration, involves the simultaneous production of electricity or mechanical power and useful thermal energy from a single source of energy. Often, it involves a suite of technologies that can utilize a variety of fuels to generate power or electricity at the point of use, enabling the heat that would usually be lost in the power generation process to be recovered to provide needed heating and/or cooling.

“This is a perfect opportunity for the CCRC,” Goodman explained. “The biggest problem we run into is just people not believing us.”

Boosting Customer Appeal

The benefits of “going green” extend beyond the financial bottom line. For Dillsburg, Pennsylvania-based Presbyterian Senior Living—which has committed to reducing operational costs for energy and water consumption, utilizing alternative energy sources, decreasing waste and increasing recycling—the benefits have also been more intangible.

“I’ve found a lot of the greener systems are more consumer-friendly—they provide better heat, less draft, a better environment for residents,” Jeff Davis, senior vice president and chief financial officer at Presbyterian Senior Living (PSL), tells SHN.

But PSL also boasts some eye-popping numbers when it comes to their cost savings. The provider shared its results at the LeadingAge annual meeting and also made the slides available to the public.

Conservatively, PSL has saved $1.5 million per year through the conversion and usage of more energy efficient systems, packaging and appliances. The company’s energy sourcing saves about $500,000 more a year through bulk sourcing of electric and gas.

For example, upgrading windows and heat pumps at PSL’s Glen Meadows CCRC outside of Baltimore resulted in over $115,000 in annual savings.

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Front-line employees at PSL appreciate the company’s energy-saving initiatives because they free up money that ultimately gets used to better help care for residents, Davis said.

This excitement is not lost on current residents, either. A solar array was recently installed at one of PSL’s campuses, and when the other campuses heard about it, they wanted one, too.

“Going green” also appeals to PSL’s future customer base, Davis said.

“Baby boomers love the idea of green initiatives,” he explained. “They all embrace it, they’re excited by it.”

Written by Mary Kate Nelson

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