2013 Study: Extra Costs Minimal for LEED-certified Hospitals

Gail Vittori co-authored this article with Robin Guenther, FAIA, LEED AP, Perkins&Will, and Breeze Glazer, LEED AP, Perkins+Will.

Green hospitals, especially LEED-certified ones, represent a strategically significant segment of the broader green building movement, with ambitious goals to curb greenhouse gases, conserve natural resources, use healthy materials and protect air and water quality. Already, hospitals are on the high end of all building sectors in the U.S. relative to energy and water intensity per square foot. So what is the capital cost premium of a LEED-certified hospital?

To answer this question, we refreshed a 2008 study that surveyed 13 LEED-certified healthcare buildings — including hospitals, ambulatory and mixed-use facilities — by interviewing project teams associated with 15 LEED-certified hospitals completed between 2010 and 2012. Consistent with the 2008 study, the 2012 results soundly refute commonly held opinions that these costs are too high. In fact, the average capital cost premium for LEED-certified hospitals was only 1.24 percent, and for the 13 subject hospitals more than 100,000 square feet, only 0.67 percent. Based on aggregated findings spanning costs and benefits, we believe LEED certification is one of the most prudent investments a hospital can make given the dynamic nature of today’s economy, delivering measurable economic, environmental and human health benefits.

And when you consider the state of the healthcare sector’s carbon footprint in the U.S., going green is becoming a key imperative to keeping operational costs low, providing workers and patients with healthy environments while remaining competitive in the marketplace. To date, the U.S. healthcare sector is responsible for 8 percent of the nation’s total carbon footprint. The U.S. Energy Information Administration Commercial Buildings Energy Consumption Survey data identify hospitals as the second-most-energy-intensive building type per square foot, with an average 234 kBTU per square foot per year; the Environmental Protection Agency Portfolio Manager calculates hospitals’ average water intensity to hover around 315 gallons per bed per day.

The newly released study reveals market trends between 2008 and 2012 and shows a steady downward movement of capital cost premiums over the last nine years, approaching cost neutrality. Both the 2008 and 2012 studies found first cost premiums ranging from 0 to 5 percent, with modest average construction cost premiums: 2.4 percent in the 2008 study and 1.24 percent in the 2012 study; for hospitals more than 100,000 square feet, the average is only 0.67 percent. The average for all 28 LEED-certified healthcare projects (combining both studies) is a modest 1.2 percent.

Another consistent finding between the two studies is that there is no correlation between LEED certification level and capital cost green premiums. For example, the capital cost premiums for the five LEED Silver-certified hospitals in the 2012 study ranged from 0 to 5 percent, while the seven LEED Gold-certified hospitals ranged from 0 to 4 percent. This trend, along with reduced capital costs over time, mirrors data in other building sectors.

The 2012 study also addresses a commonly discussed issue: the notion of building to “LEED equivalency” without formally submitting for LEED certification. Study participants identified the top five soft costs that contribute to their definition of a LEED cost premium. Participant responses largely cited energy modeling and commissioning. However, these services are increasingly considered an integral part of best practice healthcare design and construction today. The costs inherent to LEED certification itself (LEED registration, review and consultant documentation fees) may range from only one-tenth to one-twentieth of 1 percent of the construction budget of a large hospital, a minimal expense at best. For this incremental cost, an owner is provided substantive due diligence and third-party review of the design and construction processes to ensure that the investment in LEED will yield significant benefits. Reduced length of stay, patient and staff well-being, increased staff retention and reduced absenteeism, in addition to reduced energy and water use, become part of the “return on investment” calculus.

Yes, more studies are needed and will be conducted to better understand the multifaceted operational benefits associated with green healthcare facilities. However, the next time you hear someone wail about the capital cost challenges associated with LEED-certified hospitals, share these compelling results and encourage them to embrace the opportunity to design, build and operate green. A modest investment, if any, will yield a spectrum of benefits to patients and staff and to the hospital’s direct bottom line, and will align with the healthcare sector’s fundamental mission of “do no harm.”